The consolidation of the master data management (MDM) market continued this week with the acquisition of Data Foundations by Software AG. Software AG was founded as far back as 1969 in Germany, and made its name with its Natural 4GL and Adabas database (launched in 1971). In the 1980s and 1990s it gained a lot of traction in the financial services sector, and has been an innovative company, producing the XML-based Tamino in 1999. They have since concentrated on application integration via their acquisition of WebMethods in 2007, and business process management, partly through the tool ARIS (acquired via buying IDS Scheer in 2009). ARIS will be the process design-time element in their new approach and will be integrated with Data Foundations. Software AG had 2009 revenues of USD 1.2 billion with healthy growth of 11%, with their global HQ in Germany and US HQ in Virginia.

Data Foundations has been a dark horse in the MDM space, privately held and not spending much money on marketing, but developing strong technology and gaining some solid customer references. Indeed, in our Q2 2010 MDM Landscape update, Data Foundations was ranked highest in MDM technology, and its customers were the happiest of all the MDM vendors in our customer survey. It has been known in the market for some time that Software AG has been looking around for an MDM solution to acquire. All the Data Foundations staff (ten in US, 30 in India) will move across into Software AG, and will be integrated into the acquiring company; the Data Foundations offices in New Jersey and development centre in Kochi in India will remain.

Software AG has strength in business process management, so master data management, with its heavy emphasis on engaging with business processes, was a clear gap in their portfolio. It made a lot of sense to acquire a technology rather than building one from scratch, and Data Foundations was one of the remaining pure-play MDM technologies, with Siperian being purchased by Informatica and Initiate by IBM earlier this year. Data Foundations will be able to benefit from the big-company sales channels and credibility of Software AG, while Software AG will gain a strong, well architected technology to fill out their data management portfolio. Hence this seems like a win-win situation for both companies. This purchase, in conjunction with the other MDM acquisitions earlier in 2010, also further confirms MDM as a mainstream technology.