Teradata today announced it plans to sell its Marketing Applications business. I’ll drop the usual analyst pose of omniscience to admit I didn’t see this coming. It’s only three weeks since Teradata expanded its marketing suite by buying a new Data Management Platform – a move I felt made great sense. They also briefed me at that time on a slew of updates to their other marketing products, demonstrating continued forward movement. There was no clue of a pending sale, although I strongly suspect the people briefing me had no idea it was coming.
According to financial statements within the Teradata announcement, Marketing Applications revenue was down about 9% this year, which is surprising in a generally strong martech market but in line with the rest of Teradata’s business. Teradata told me separately that their marketing cloud business grew 22% year-on-year this quarter, suggesting that the decline came in the older, on-premise products and/or related services. As you may know, Teradata’s marketing applications business was a mashup of the original Teradata marketing products, developed over the past 20 years and largely on-premise, and the Aprimo cloud-based systems acquired for $525 million in 2010. The Aprimo group was dominant in the years immediately following the acquisition but control shifted back to the older Teradata team more recently. One bit of evidence: the Aprimo brand was dropped in 2013.
So what happens now? Well, Marketing Applications is still a $200 million business, which makes it a major player in B2C marketing automation . (Point of reference: Salesforce.com reported $505 million revenue for its B2C marketing cloud in 2015.) 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. IBM and SAS are really the only other major competitors here, although Oracle and SAP are also contenders. I don’t know how much of Teradata’s revenue comes from its on-premise products or how many new licenses it has sold recently; based on the information presented above, the business may be shrinking. But there’s definitely still a big market for on-premise solutions and Teradata’s offerings remain hghly competitive.
This suggests that someone will purchase the Teradata systems and continue to sell them. At least, I hope so if only for the selfish reason that many of my own consulting clients either use them or would consider buying them. The question is who the buyer might be: the big enterprise software companies already have their own systems, even if some are not really tailored to enterprise scale, on-premise B2C clients. It’s conceivable that a private equity firm will purchase the systems and run them more or less independently or combine them with other products – look at HGGC’s recent combination of StrongView and Selligent (in the mid-market) or Zeta Interactive’s purchase of eBay’s CRM systems. One idea I find fascinating is that Marketo could buy them, providing it with true enterprise scale B2C technology and nearly doubling its revenue. You heard it here first.