Teradata is making big changes following the release of disappointing first-quarter results, with the biggest being the removal of CEO Michael Koehler, who has been replaced with longtime company board member Victor Lund.
The database vendor actually posted a $22 million loss for the quarter ended March 30, compared to $46 million in net income in the same quarter last year. Revenue fell 6 percent to $545 million.
"Teradata is grappling with the disruptive change wrought by the combination of open source platforms like Hadoop and cloud computing," says Constellation Research VP and principal analyst Doug Henschen.
Lund acknowledged missteps in a conference call, with a notable one being the $525 million acquisition of Aprimo in 2010. At the time, Teradata said it planned to combine Aprimo's capabilities with its data warehouse and analytics platforms, but the strategy apparently never proved successful. Teradata recently reached an agreement to sell off Aprimo to a private equity firm for the fire-sale price of $90 million.
There are a couple of possible reasons for Teradata's failed foray into marketing applications. For one, the company's sales force has traditionally dealt with IT departments, and could have had difficulty getting the ears of CMOs with capital budgets to spend.
Secondly, Teradata was going up against marketing suites from the likes of Salesforce and Oracle, both of which have extensive relationships across the C-suite, as well as large business application installed bases to cross-sell their marketing products against.
Teradata Braces for Change
On the conference call, Lund said Teradata needs to move more quickly as a company.
It's not that everything needs fixing at Teradata. "In my view there have been good moves at Teradata in recent years, like the ThinkBig acquisition and, thus far, their hands-off approach, leaving that company’s leadership in place to lead big data consulting," Henschen says.
Still, "customers I’ve talked to who are using Teradata’s cloud offerings are mostly happy with those services, but Teradata needs to accelerate its move into the cloud," he adds. "For example, Teradata Database on AWS didn’t become available until earlier this year, and for now it’s still limited to single-node use. In hindsight, the disruptive success of Amazon Redshift in 2013 and other cloud signals should have sparked a more aggressive response from Teradata."
That being said, there's little cause for customers with sizable investments in Teradata to panic. "Teradata customers can trust that the popularity of the Teradata database and the scale of the customer base will ensure the software’s survival and continued development over the long term," Henschen says. "What’s more, the divestiture of the marketing business and change in leadership will surely bring more aggressive development of cloud services. Declining hardware sales will undoubtedly continue to be a financial drag on Teradata, but the company has no choice but to adapt to the buying and deployment preferences of its customers."
The full-scale, software-only version of Teradata's database for public and private clouds is planned for release in the first quarter of 2017. That timetable doesn't give Lund's successor a great deal of time to devise and execute a go-to-market strategy. In other words, Teradata is making big changes, but the pressure is certainly still on.
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