In a busy week for software acquisitions, private equity firm Thoma Bravo's $3.0 billion purchase of Qlik Technologies was one of the more significant ones. Constellation Research VP and principal analyst Doug Henschen is a close observer of Qlik and its competitors, and has been watching the acquisition with keen interest.
I had the chance to speak with Henschen this week in the wake of the deal announcement, and got his thoughts on some of the the most important implications.
CR Insights: Qlik was purchased not by a larger enterprise software vendor, but private equity firm Thoma Bravo. It's been reported that not only Bravo but Bain Capital and Permira, two other PE firms, also submitted bids.
Thoma Bravo's software investment portfolio doesn't reflect the bleeding edge of technology. It focuses on areas such as application modernization (Attachmate, Compuware), application performance management, and network performance management. What does Qlik's fate say about the state of the market for analytics software? Any reasons why Qlik wasn't scooped up by a vendor instead?
Henschen: I think this deal says more about Qlik than it does about the market in general. The analytics market is uneven, with portions that are cold and consolidating, portions that are warm and portions that are hot. I’d call Qlik warm and worth the premium that a PE firm was willing to pay to give its investors solid growth and returns.
Qlik’s technology is unique and it’s hard to see a competing vendor gaining additive synergies through acquisition and attempts to integrate. Tableau Software has been growing more quickly than Qlik in recent quarters, but all eyes are now on cloud-based offerings as the hottest category in analytics. Microsoft has been there with PowerBI, but Amazon is expected to make its QuickSight service, now in preview, generally available this year and Google just announced a preview of its Data Studio 360offering. Smaller, up-and-coming vendors in the category include Domo and Looker.
CR Insights: Qlik's platform has some important, albeit not new features, such as in-memory processing and a columnar data store for faster analytics. What other differentiators stand out for Qlik and where should their future investments be under the ownership of Thoma Bravo?
Generic “columnar” is not Qlik’s differentiator, as I wrote here. It's key differentiator is its associative QIX data-analysis engine, which keeps the entire data set and rich detail available even as you explore and focus in on selected dimensions of data. Associative exploration gives QIX advantages over data visualization alone or conventional drill-down analysis where you filter out information as you explore.
An emerging differentiator is the Qlik Data Market, built on the company’s Data Market acquisition and recently enhanced through the tuck-in Industrial CodeBox acquisition. Qlik Data Market is a cloud-based source of enrichment data, and the CodeBox deal added data-connection and data-enrichment options that will only see more use as data is increasingly born in the cloud and as digital businesses move toward blending and monetizing information through cloud data services. Data services bring context that increases the value of data and insights, so I think Thoma Bravo should keep investing in this new direction.
CR Insights: My previous question assumes Thoma Bravo won't make too many cuts at Qlik, inhibiting innovation. Should existing and prospective Qlik customers be concerned? What parts of the Qlik portfolio should Thoma Bravo be keen to preserve?
Henschen: As a customer, I’d want to see that Qlik is, at the very least, sticking to its current technology roadmap, which was very public and posted on the company website. I hope it sticks with a public road-mapping process. As for ongoing investments, Thoma Bravo should keep advancing Qlik’s fledgling Qlik Sense Cloud offering, which was late to the market in the hot new cloud category in analytics. The company should also continue to invest in the core QIK engine, which must scale up to address big data workloads. That was work in progress under Qlik that had yet to be completed.
CR Insights: Post-acquisition, what does Qlik need to do now in order to not only retain its base but increase interest from new customers?
Henschen: The weakest aspect of Qlik has been its marketing, not its technology, but I don’t see a lot of marketing dynamos in the Thoma Bravo portfolio. Icing on the cake in this deal would be clearer and more aggressive marketing, but Thoma Bravo can’t throw money at everything. Qlik customers are used to solid and steady investments in technology, and I’d want that to be the priority ahead of attempts at flashy marketing.
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