Netezza Still Sparkles After Acquisition By IBM

In November 2010 I attended two separate user conferences, both at the same venue (The Mayfair Hotel in Central London) and hosted by two different enterprise solutions companies with a common heredity.

Both were innovative entrepreneurial start-ups offering disruptive technologies; both have c. 500 employees; both have recently been acquired at an attractive premium price (c. $1.8Bn) by a larger software supplier. The companies? Omniture (acquired by Adobe) and Netezza (acquired by IBM).

Two years ago the Omniture conference in London was electric. Their CEO, Josh James, was buzzing around with great vigour, and preached the gospel of web site analytics to an adoring audience. There wasn’t a dry eye or a free seat in the place. Youthful exuberance, funky beards and hair gel were everywhere. Stand-out presentations included ‘how BT uses web site behavioural targeting’.

Not this time. In Omniture’s recent ‘Clicks to Cliques’ conference there were no customer presentations. Content was thin and presenters relied mostly on jokes to enthuse the audience. At lunch the attendees I talked to felt little had been learned, and there were few action points. “I am not sure why we are all here” said one. Earlier this year Josh James abruptly left Omniture with no explanation and his life-blood, and the drive and innovation that made Omniture so successful seems to be lacking.

At Netezza’s ‘datawarehousing appliance’ conference both the audience and the presenters seemed to be having a jolly good time. An IBM manager articulated the attraction of Netezza to IBM. Netezza’s SVP for Strategy & Marketing presented the Netezza product technology road map providing a clear sense of direction using Netezza’s core values: speed, simplicity, smartness, and trustworthiness.

Three enthusiastic and personable Netezza customers presented why they had bought and how they use Netezza product(s). The man from BSkyB used BSkyB’s own tag line ‘believe in better’ to describe Netezza. “The more I use Netezza, the less I need integration tools” he said. There were lots of questions from the floor. The compere kept everything moving at a brisk pace and no-one had time to get bored. Everyone stayed for drinks afterwards, because they genuinely wanted to.

The bottom line for customers: smaller, high growth innovative vendors that are acquired by bigger beasts can work well if the senior management team is left intact, autonomy and continuity are maintained, and the culture remains relatively untouched. Synergistic co-existence is the desired goal—meaning customers get more of the same, but with more resource backing and global reach. For example, if Netezza can leverage the IBM customer base it might turn its 400 customers into 4,000 customers by 2015.

Paradoxically, those acquirers that try to assimilate innovative company cultures into their larger entities are taking the bigger risk. IBM’s decimation of Tivoli is the stuff of legend, but also other big players have destroyed shareholder value with an insensitive approach to acquisitions. A balanced, emotionally intelligent, approach is required rather than looking for immediate cost savings and ROI. IBM certainly seems to have taken this onboard in its approach towards Netezza and Cognos.

Customers are advised to observe behaviour rather than listen to the rhetoric when evaluating whether to stay with an acquired software vendor. If it becomes clear that a dynamic entrepreneurial culture is being consumed into a larger role-based bureaucratic culture, customers should review their sourcing options.

Gerry Brown is an analyst (BI and CRM/Digital Marketing) at Bloor Research. Gerry has 25 years of experience in the software and services industry, and has worked in senior marketing and sales management positions for Xerox, Fujitsu Services, Hyperion and MicroStrategy. He was Marketing Director at Hyperion Solutions and Head of Marketing at MicroStrategy. Gerry is also a visiting lecturer for the London School of Marketing and lectures at top academic institutions such as Imperial College and Birkbeck College. He lectures in Strategic Marketing, Analysis and Evaluation, Managing Marketing Performance, and Strategic Marketing in Practice on the Professional Postgraduate Diploma in Marketing course. Gerry is a Fellow of the Chartered Institute of Marketing (FCIM), has a DipM (the equivalent of an MA) in Marketing, and received his BA (Hons) Business Studies degree from Sheffield City University. Gerry regularly presents on behalf of Bloor Research at international business conferences, roundtable discussions, user group meetings, vendor seminars, and Webinars and Podcasts.