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Teradata Builds an Ecosystem, Which Means Profits for Partners

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As the company continues to do more with unstructured data, investors can expect to see the list of partners growing.

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The term "ecosystem" is often misused in the business pages. Just about anytime two vendors or two functions are described as working together, it's labeled an ecosystem. Words like "function" or "system" apparently are not sexy enough, so the tech industry has begun borrowing from environmentalists.

But in the case of Teradata (NYSE:TDC), the data warehouse company headquartered in Dayton, Ohio, the term actually fits. Teradata, a global leader in data warehousing and big data analytics, counts among its customers Wal-Mart (NYSE:WMT), Apple (NASDAQ:AAPL), and eBay (NASDAQ:EBAY), whose Teradata data warehouse holds more than 20 petabytes of information. Teradata says that nine of the top 10 global commercial and savings banks, all of the top 10 global telecommunications companies, and the five top global airlines are users. To serve those clients, the company depends on partners that collaborate with the firm to run functions that users need. So when Teradata builds out its ecosystem, that means greater growth for its many key connections as well.

In an interview during Teradata's 2013 PARTNERS conference in Dallas this week, Stephen Brobst, Chief Technology Officer, said that Teradata focuses on its core competencies in data warehousing, and partners with other technology vendors for features like reporting, data integration, and visualization. Typically the company will have three or four lead partners in each area, he said. "Then you have best of breed. It is our belief that no one vendor can do everything in a best-of-breed way," he said.

So for data integration, Teradata relies on Informatica (NASDAQ:INFA); Torrent and DataStage which have been acquired by IBM (NYSE:IBM); and Ab Initio, a small private company.

For business intelligence tools, it partners with MicroStrategy (NASDAQ:MSTR), IBM's Cognos, SAP (NYSE:SAP) Business Objects, and OBIEE by Oracle (NYSE:ORCL). "The OBIEE guys would say their best case studies are with Teradata, if their database guys aren't in the room," Brobst added. They like working with Teradata because they get better results than they do with Oracle's database, he explained.

For data mining, Teradata's core partners are SAP, with its recently acquired KXEN, IBM's SPSS and privately held SAS. In visualization and discovery, the lead players are Tableau (NYSE:DATA), QlikTech (NASDAQ:QLIK), and Tibco's (NASDAQ:TBX) Spotfire.

"We have deep integration with three or four providers in each of these areas," Brobst added. "We certify with a million, but the partners with real engineering and deep integration is more limited. We explicitly do not build technology in these areas."

The array of partners continues to grow. Dot Hill Systems (NASDAQ:HILL), for example, has announced that it has signed an original equipment manufacturing (OEM) agreement with Teradata which will incorporate the Dot Hill AssuredSAN 4000 Series midrange storage systems into certain Teradata warehousing and big data analytics appliances.

Investors can expect to see an expanding list of partners as Teradata does more and more with unstructured big data.

Many call centers, for example, record every conversation and store the records for only one purpose: dispute resolution. Now companies are working with technology to convert the recordings to text and even analyze voices for sentiment and fraud detection. Social media, voice, text, and machine-to-machine interactions will bring new technology solutions, probably many from companies that aren't known yet.

"The data warehouse industry grew up on data that comes in record-oriented format," Brobst said. "Now we are looking for value in all this other data we have been leaving on the floor."
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