Informix Corp. is diving deeper into data to get around the large players swimming in its waters.
The company was struggling when Robert Finocchio came aboard as chief executive in July '97. Since then, the bottom line has improved, and the company has pushed into data warehousing and electronic commerce.
Last month, Informix said it would buy Red Brick Systems for about $35 million in stock. The deal is expected to close by year's end.
Red Brick is a pioneer in data warehousing, software that helps companies analyze trends among the data stored in their databases.
Finocchio, a former top executive at networking gear maker 3Com Corp., recently spoke with IBD about the direction in which Informix is heading.
IBD: What's happened at Informix since you've joined?
Finocchio: No. 1 is business results. We just had our fourth operating profit in a row, and we're making double-digit operating profit. The second category of progress is the rebuilding of the management team - myself, CFO, controller, treasurer, general counsel, VP of marketing, head of Europe and a whole bunch of other people. The third category is, we have a very clear sense of who we are and who we want to be. We, unlike our traditional competitors, have chosen to be very focused as opposed to being very diversified. We have no desire to be a broad-based diversified software company or . . . hardware company. We do one thing very well, and that's database products.
IBD: What is drawing Informix to data warehousing?
Finocchio: We've identified data warehousing as attractive to us for several reasons. The market is vast. Almost every customer I have ever called upon has some project under way or is considering a project involving data warehousing, data marts and decision support.
We are very well-positioned there by virtue of what we already have. We've built the largest open-systems data warehouses. With the addition of Red Brick into our product portfolio, I think we will have unmatched capability and unmatched experience in this space.
In the short term, I would expect data warehouses to be the source of much growth for our company. The market researchers think it's growing between 30% and 40% a year. Certainly that's faster than the (database) marketplace.
IBD: How much revenue do data warehousing sales bring to Informix?
Finocchio: We don't break that out. Certainly it's still a small part of our business, less than 25%. I would expect that to be a source of growth for us next year.
IBD: What role will Red Brick play in next year's bottom line?
Finocchio: We think a significant role, from many standpoints. What we get from that acquisition is, first of all, a very excellent product. The Red Brick data warehouse will be positioned as a data-mart offering inside of Informix's Decision Frontier (a new data warehouse product). The second reason is that we get some of the very best people in this industry. Red Brick helped define the data warehousing market. The third thing we get is a very impressive list of customers. I think Red Brick has between 300 and 400 customers. As best I can determine, it's a very happy and loyal installed base. The fourth thing we get is that Red Brick was particularly successful in Japan. It sold almost 100 warehouses in Japan. . . . That's a very important market position for us to build upon.
IBD: The king of databases, Oracle Corp., also is moving into data warehouses. What effect does that have on Informix?
Finocchio: We've been saying this consistently for over a year: Data warehousing is an important part of our focus and our future. We are in the process of rolling out the Informix Decision Frontier. It's coincidence that as we're rolling this out, Oracle happens to make a major warehousing announcement. We compete with Oracle almost 100% of the time. We have succeeded because in many cases we can do what Oracle cannot do, especially building large high-performance warehouses. The competitors we see frequently at the high end are (NCR Corp.'s) Teradata and IBM. Oracle is not as well-positioned at the high end of the market.
IBD: What kind of opportunity does e-commerce represent for database software?
Finocchio: Obviously, almost everybody who has a pulse in this business is saying they're in the e-commerce business. However, here's our take on it. We see a big opportunity for us . . . to bring business discipline, IT (information technology) discipline of scalability, performance, manageability and reliability to industrial-strength Web sites for larger enterprises. Today, most Web sites are built on flat file systems. They don't scale very well. We think in the future most large enterprises will build their Web sites around a relational database model and, ultimately, an object- relational database model.
IBD: The database business was flagging earlier this year. Where do you see it now?
Finocchio: Our business is still largely (database) oriented, at least 75%. The good news about (database software) is that every enterprise on earth needs it. There's no risk of saturation. Databases never shrink. I'm perhaps more bullish on the database market than other people. It was very fashionable to declare this industry dead a year ago. But I think you've seen positive numbers from Oracle, Informix and Microsoft. I think the people who were writing obituaries about this industry were premature.
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