Teradata’s Plan to Sell Its Marketing Business Leaves Analysts Puzzled

Late last month, following the conclusion of Teradata’s partners conference, Forrester analyst Brian Hopkins wrote a report saying that the enterprise software vendor [ESV] possessed the data and the marketing technology to help clients win and retain customers, but that it lacked the business technology vision to position itself with marketing departments. “What’s more, time is short,” Hopkins wrote, “The company has no more than two years to achieve this or it faces becoming a declining giant with little chance of recovery.”

Teradata executives were no doubt mindful of the ticking clock. During an analyst call reporting a 9% decline in third quarter earnings last week, CEO Mike Koehler announced that Teradata’s $200 million marketing applications would be sold so that the company could focus on its core data and analytics businesses. “Our marketing applications portfolio operates in a very attractive market and we’re starting the process to find the right owner,” Koehler said, adding that change was needed to “better align ourselves with the evolving marketplace and customer needs.”

Hopkins was but one of many observers flummoxed by the news. “There was no hint of this happening at all at the partners conference. It’s puzzling,” he says. “One of the large announcements there was about their recent purchase of the data management platform FLXone. Why buy the DMP if you’re going to sell the marketing applications business? The truth is that the enterprise software vendors in the data management space are struggling. Open source has been gutting the ESV business.”

Software analyst David Raab admitted in a blog that he didn’t see Teradata’s move coming, though he expressed optimism for the eventual sale of the operation. “[Teradata] marketing applications is still a $200 million business, which makes it a major player in marketing automation,” he wrote. “Even more important, Teradata is one of very few firms offering enterprise-scale marketing automation for on-premise deployment, something many big companies still prefer.”

Users of Teradata marketing applications most likely will be able to conduct business as usual—for the time being, at least. The CTO of one data management solutions provider predicts that the other big ESVs could end up following the route taken by Teradata.

“There’s no way Teradata and other [ESVs] can afford to integrate all of these applications to meet the needs of the modern marketer in the social media era. It would be like rebuilding their entire product lines from scratch,” said George Corugedo, CTO and cofounder of RedPoint Global. “Teradata is a sign of things to come for other legacy marketing software vendors. You’re going to hear more about marketing orchestration platforms and single source code. It’s inevitable.”

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