The restructuring will see Mike Koehler, senior vice-president of Dayton, Ohio-based NCR’s Teradata division, take over as president of Teradata, while NCR will continue to be lead by Bill Nuti. The separation process will take about six to nine months, executives said in a teleconference call.
Teradata, whose customers include the Royal Bank of Canada and Hudson’s Bay Co., specializes in data warehousing, which collects information on company activity that be can used to make better business decisions. Traditional data warehousing tends to be based on historical information, but Teradata has spent the last few years focusing on “active data warehousing,” which uses monitoring software to alert users as transactions are taking place. In other words, if something out of the ordinary occurred with a customer order, a user could act on it right away rather than do a post-mortem afterwards.
Nuti contrasted the self-service ATMs and kiosks which are NCR’s focus with what Teradata has been doing in the business intelligence arena.
“NCR and Teradata are each major and attractive business but they operate in different markets,” he said. “(As separate companies) they will have the ability to more effectively pursue their specific growth and R&D agenda with much greater management focus, investing in their in own company without having to balance that with the investment needs of the other (company).”
Ray Wang, an enterprise software analyst with Forrester Research in Cambridge, Mass., said it made sense for NCR and Teradata to home in on their core competantcies.
“Teradata has always been about the hard core data warehousing, analytic areas,” he said. “This allows both companies to focus in terms of what they’re both good at.”
Teradata last year earned US$1.5 billion in revenue and had an operating income US$309 million in 2005, Nuti said. He characterized the data warehousing market as an US$18-billion opportunity as spending shifts more towards centralized DW architectures. “We also expect other trends in the data warehousing market to benefit the company,” he said. These include increased data volumes and the addition of new data elements such as real-time or near-real-time location and text-basd analystics, “which continue to add to scale and complexity requirements in current systems.”
Once it has been formally spun off, Teradata will be focused on expanding its direct market coverage with increased industry and technical consulting, Nuti said. It will also continue investing in support services, applications and partners, and increasing its investments in active data warehousing and advanced development.
Wang said he did not expect the deal to trigger significant changes at Teradata.
“It’s a pretty large company – in and of itself, one of the largest business in this space,” he said. “Mike and his team, they’ve been running it as if it were its own organization.”
Besides the improved market focus, Nuti said the separation of the two companies would also allow them to develop employee incentive programs more aligned with each one’s objectives.