Saturday, May 13, 2017

Teradata Doubles Down

In its turnaround strategy, #Teradata (NYSE:TDC) is making a sensible move to focus on the high-end customers who are at the core of its addressable market. But its services-heavy revenue mix prompts questions as to whether it is turning into a consulting company. Teradata has long benefitted and suffered from its status as first mover when it comes to high-end data warehousing. Among the first to implement massively parallel processing, and with a SQL engine that can handle highly complex queries and appliances tailored for those workloads, #Teradata has long been the gold standard in data warehousing. In recent years, the company has seen challenges from #Oracle (NYSE:ORCL), whose #Exadata engineered system has targeted similar scenarios with a more multi-purpose platform that also handles transaction processing. But Teradata is getting more squeezed from #Hadoop, which applies open source technology and the economics of commodity infrastructure to solving Teradata-scale problems, and the cloud, which offers an inexpensive and relatively quick onramp to deploying data marts. Not surprisingly, Teradata has been under siege in recent years, having revenue declines, a run through several CEOs, and retrenchment after several ill-fated acquisitions. Teradata's turnaround starts with identifying its addressable market. It will focus on the elite 500 organizations that have the most demanding analytic requirements. That's a switch from its previous focus on the Global 5000. At first blush, that sounds like an awfully narrow market for a publicly-traded entity. But there are several reasons why this is a very sane move. First of all, most organizations can be readily satisfied by the #Amazons, #Microsofts, and #Snowflakes of the world. Teradata's advantages go beyond the ability to query terabytes of data, as you can perform that with any SQL-on- #Hadoop BI tool. Instead, the secret is #Teradata's SQL engine and query optimization that supports advanced features such as complex table joins, common table expressions (that are useful for highly recursive queries), triggers, and so on. For most enterprises, those capabilities are overkill. By directing its energy to the top 500 enterprises, Teradata can take the luxury of going deep. Selling a Teradata box has always required a long sales cycle, and this way, the company can direct its resources accordingly. Many of these are existing Teradata accounts where there are likely to be numerous pockets of non-Teradata users who could benefit from leveraging the data management and analytics capabilities of the mother ship. But that begs the question of Teradata's dependence and increased emphasis on services. Unlike its main platform rivals (e.g., Oracle (ORCL), Microsoft (NASDAQ:MSFT), or any of the cloud providers), professional services have always exceeded product revenues. But in the past year, that curve has ramped up sharply as services accounted for nearly two thirds of revenues.

https://seekingalpha.com/article/4072564-teradata-doubles

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