by: Mike Waas
How Teradata has Become the Linchpin in the Cloud Wars
Bluntly put, cloud vendors must go after Teradata. It’s nothing personal. It’s business. Teradata has some of the finest people working for it and broken ground on some great technology long ago. But its own success will be the reason for its undoing. Teradata maneuvered itself into a position that makes it impossible for cloud vendors to spare it.
This isn’t just the typical rhetoric of one-upmanship the database industry is so accustomed to. It’s not the classic “my database is faster than yours”. This is a new kind of war. Remember the Hadoop debacle where cloud wiped out a technology as a by-product of a natural technological evolution? This time, cloud vendors are actively pursuing a vendor for business reasons (see here or here). Let me explain.
Teradata Owns the World’s Most Valuable Data
By virtue of its technological prowess in the late 90’s, Teradata has built a bastion of data processing. Simply put, Teradata holds the world’s most valuable data. And rarely has a superlative been so accurate a description. Unlike data lakes, and operational data stores, Teradata holds curated, highly refined data. The data Teradata sits on is essentially the ground truth of the global economy. It is as good as it gets.
For cloud vendors this is a boon. Capturing any enterprise’s most valuable data is naturally a big deal. But it goes way beyond that. Cloud vendors offer an ever-increasing number of downstream applications whose value will shoot up drastically if only they can get deployed on data that really matters.
Going forward, this data is even more critical. It is pure gold for emerging application areas like AI and ML. These technologies are increasingly maturing beyond their current roles of just dredging data lakes. Hence, cloud vendors are desperately seeking this data to fuel their vision and power their clouds. The only way for cloud vendors to free the data is to remove Teradata from the equation.
Teradata Owns the World’s Single Most Valuable Enterprise Workload
Much less intuitive than its role for holding the data is the drag that Teradata has. Consider this: all corners of the enterprise are connecting to the data warehouse. This goes much farther than just the classic functions of ETL, BI and reporting. The relevance and purity of the data has every analyst within the company tapping into the Teradata system. And it’s not only high-profile applications. A legion of spreadsheets run embedded Teradata queries. Shadow IT organizations peddle access to Teradata and downstream data marts. This makes the Teradata system in every enterprise the single largest hub for applications. From ETL to reporting, from analytics to BI, real-time and otherwise—everybody connects to Teradata.
For cloud vendors, Teradata itself represents about $2bn in potential cloud consumption in the form of cloud data warehousing subscriptions. That’s not bad for single workload scenario. However, the application ecosystem connecting to Teradata translates into a whopping $20bn in potential cloud consumption. The only way for cloud vendors to tap this additional $20bn market is, again, to remove Teradata from the equation.
Teradata Created a “Winner takes all” Situation for Cloud Vendors
The core business functions of any enterprise follow the data. Today, they are tied down in the data center, connected to the Teradata system. Once the data warehouse moves to a specific cloud, the various departments leveraging the data warehouse today will move their application footprint to the same cloud. This has already created a highly competitive situation between cloud vendors. They realized that whoever manages to take out an enterprise’s Teradata system will land the enterprise in their cloud. Anybody who calls Teradata a niche market has not understood the relevance of that technology for the global cloud wars.
Suddenly, Teradata has become the linchpin for cloud adoption among the Fortune 500/Global 2000 enterprises. In other words, whichever cloud vendor unseats Teradata in an account gets the logo. Conversely, whoever loses out on replacing Teradata can kiss this customer good-bye for years to come. This cements Teradata’s position as the linchpin in the cloud wars, and the next couple of years are going to be critical in this fight for the enterprise. The only way for cloud vendors to win over new large enterprise customers is, again, to remove Teradata from the equation.
Cloud Vendors Must Go After Teradata in Order to Succeed
Today, Teradata is in a unique position. It manages the world’s most valuable data and controls much of the data processing in the global economy. Ironically, it failed to monetize this position. Teradata doesn’t own the application stack; they just hold the data. Their take is less than 10% of the enterprise spending that can be attributed to the vendor lock-in Teradata holds.
Granted, it took cloud vendors the better part of 10 years to build competing technology that is good enough to truly compete with Teradata. But now’s the time. 2019 turned out to be the year of the cloud data warehouse.
As far as we can tell from our experience, all major cloud vendors are gearing up for taking market share from Teradata; and not just opportunistically but with surgical precision. Taking down Teradata is core to their business strategy. Teradata may very well become roadkill on the way to the cloud. But remember: It’s nothing personal. It’s business.
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