what ERP [enterprise resource planning] or CRM [customer relationship management] have done for us. These are the things that are going to help people make the killer decisions in business.
X: How did the IBM-Netezza acquisition come about? What’s the deeper history there?
JB: We partnered with IBM for a very long time. Netezza is a data warehouse appliance, a high-performance repository for large volumes of structured and unstructured data. It allows very high-speed access to query that data. It’s an integrated system of hardware and software.
In the world of business analytics, the ecosystem is how you get the data into [the appliance]. A Netezza demo without the ecosystem around it is just a black screen and you’re issuing queries. What really makes it come to life is the application that sits on top of it—either a business intelligence or analytics application (like MicroStrategy, Business Objects, Hyperion, SPSS, or Cognos). We’ve always had these partnerships that surround the company. Where does IBM fit? IBM fits all over; as they acquired Ascential, Cognos, and SPSS, we partnered with them over the years.
About three years ago, we made a decision on our platform that was quite important. Our product and its core benefits are derived from purpose-built hardware/software for data analytics and business use cases. We did that in the early days through developing massively parallel database software, and integrating that very deeply with proprietary hardware. We built this platform because at the time, we knew the general-purpose computing platforms were too hot, too expensive, too slow, to create a very high-performance platform. We also knew that at some point in the general-purpose computing platform, the benefits would exceed the liabilities. That point came about three years ago. So we made a very conscious decision to migrate the platform. We did a detailed review of the market, and chose IBM as our blade [server hardware] partner. We integrated the blade with a database accelerator card of our own—the one remaining piece of proprietary hardware that’s in the platform. We also worked closely on the storage subsystem behind it. We package all that with software.
It really deepened the partnership with IBM. IBM’s strategy around analytics, it starts from this “smarter planet” mantra that is appropriate for Super Bowl and prime-time TV ads, and it goes very, very deep with an extensive array of technologies and services across hardware and software that can deliver on this promise—all the data modeling, all the ETL [data warehouse tools], all the database technology, now the appliance technology with Netezza, the business intelligence technology, the business analytics technology, specific vertical applications for CRM like Unica. We always felt like IBM was a great partner. Of all the mega-vendors, they’re the ones who get it. They’re the ones who understand and are really betting a lot on this opportunity in analytics.
X: Talk a little more about the timing of the deal and the cultural fit between the companies. Why get acquired if Netezza was doing well?
JB: The timing was very good for both of us. The GM who sponsored the deal was Arvind Krishna. We had a lot of conversations about the opportunity and the vision of what could be. IBM is a high-integrity, honest, call-it-as-they-see-it company. Netezza has always been high-integrity, sort of familial, very focused on doing what’s right for the customer. We want to be a company that’s easy to do business with. That cultural fit was there as well. From Netezza’s standpoint, we had done very well. We did $190 million-plus in revenue last year, and analysts were saying $250 million-plus this year (it’ll be more than that).
Growth was there and doing really well, but as we looked forward, what are the inhibitors? Our business was 80 percent North America. IBM, their business is primarily international—they have a tremendous investment in the fastest growing economies in the world. They have all the distribution infrastructure, support infrastructure, all the market and brand presence. We’re now taking Netezza and, over time, will be introducing this technology and product to over 150 new companies.
Netezza was public, and we were managing to two things: EPS [earnings per share] growth and revenue growth. As you’re managing those, your ability to invest is constrained. You can’t satisfy everybody. We were doing well, growing at 30 to 40 percent a year. But IBM can do this really differently. And Netezza still exists—it is a business unit inside IBM, our customers still deal with us—but we’ve leveraged this massive asset to take and distribute this on a truly global basis. The question was always, what’s holding you back, why aren’t you growing faster? It’s access. It’s presence in markets where we are not. Well, we just fixed that problem. Now we’ve got IBM on our side, and we’ve got presence in markets we never dreamed of getting into.
We were 500 people when they acquired us. We’re over 600 now, and we’ll be over
