Teradata: Rich Niche

By Baselinemag  |  Posted 2005-07-08 Email Print this article Print

Teradata customers drop big bucks for what they believe is the only system that can tackle truly massive databases.

Teradata's customers can come off as a bit snooty. And why not? They're driving what they believe is the Rolls-Royce of databases—and if you have to ask how much it costs, well, you probably can't afford it.

For some, though, Teradata has the only system that can do the job. Five years ago, wireless carrier T-Mobile USA, which was VoiceStream at the time, developed a "mini data warehouse" on Microsoft SQL Server. Terri Kowalchuk, director of business intelligence, says users wanted to analyze more data—and SQL Server couldn't handle the load. T-Mobile tried to move to an Oracle data warehouse but found some queries took 5 hours or more to run.

T-Mobile went live with Teradata in June 2004, and the 5-hour queries came down to less than 1 minute, Kowalchuk says. The system includes 28 servers and 15 trillion bytes of storage; T-Mobile would not disclose what it cost, but according to industry estimates the price tag would have topped $15 million. "It is pretty expensive, but we were failing on our other choices," Kowalchuk says. "There wasn't anything else out there that could handle the amount of data we had, and how fast we needed to process it."

For Union Pacific Railroad, Teradata's system gives 4,000 employees "free reign to do what they want to do," says Rick Royers, the company's manager of financial process improvement. "We don't have to go back and see if the query is under performance limits."

Plus, Teradata's system only seems expensive until you factor in the cost to maintain the system and its built-in high-availability features, says Joe Pignatello, senior director of enterprise data services at Cingular Wireless. He explains that the system requires less maintenance than others; for example, the Teradata system automatically calibrates itself to handle any query at optimal speed so an administrator doesn't have to do it by hand. "When you start adding in software, hardware and administrators to manage non-Teradata systems," he says, "it starts looking pretty comparable."

And the company has been around the block, says Stan Farmer, director of taxation and collection with the Missouri Department of Revenue. The agency is rolling out a $12.5 million Teradata data warehouse to find individuals or businesses that owe back taxes. Teradata "may not have been the lowest cost, but they've done this work in several states and for private companies," Farmer says. "Having a proven product always helps."

Data warehousing

1700 S. Patterson Blvd.
Dayton, OH 45479
(937) 445-5993

TICKER: Division of NCR (NYSE: NCR)

Michael Koehler
Senior VP
Tapped to run Teradata in March 2003 after heading its sales and support group. Joined NCR in 1975, serving in various sales and marketing roles.

Stephen Brobst
Joined Teradata in 1999 when it bought Strategic Technologies & Systems, a large-scale database consulting firm he founded.

Teradata Warehouse 8.0 can harness 512 servers to work together and process up to 1 quadrillion pieces of data. The software can run on generic Windows servers but most customers opt for NCR's proprietary Unix-based systems.
Reference Checks

Warner Home Video
Thomas Tileston
Exec. Dir., Data Management
Project: Video distributor uses Teradata to analyze retailer sales data and forecast how many copies of a given title should be shipped to stores.

Union Pacific Railroad
Rick Royers
Mgr., Financial Process Improvement
Project: Railroad runs an 8-trillion-byte, 12-server Teradata warehouse accessed by 4,000 users.

T-Mobile USA
Terri Kowalchuk
Dir., Business Intelligence
Project: Wireless service provider based in Bellevue, Wash., operates a 28-server Teradata system to analyze call detail records and other operational data.

American Eagle Outfitters
Michael McBride
Data Architect
Project: Clothing retailer, which operates 850 stores in North America, runs a three-server Teradata system with 1.5 terabytes to analyze sales.

Missouri Dept. of Revenue
Stan Farmer
Dir., Taxation and Collection
Project: Agency this year started using Teradata to analyze tax returns from 2001 to 2003 to identify uncollected taxes.

Carlson Hotels Worldwide
Jeff Heine
Dir., Customer Strategy
Project: Operator of 895 hotels uses a Teradata data warehouse to consolidate 15 million guest profiles and help develop promotions aimed at its highest-value customers.

Executives listed here are all users of Teradata's products. Their willingness to talk has been confirmed by Baseline.

Teradata operating results*

2004 2003 2002
Total revenue B $1.36B $1.21B $1.23
Product revenue M $728M $624M $668
Professional services revenue $341M $325M $334M
Support services revenue $292M $264M $224M
Operating income $223M $145M $112M
Operating margin 16.4% 12.0% 9.1%
Total assets $609M $569M $531M

* Fiscal year ends Dec. 31

Other Key Customers
Retail: Office Depot, Victoria's Secret Direct, Wal-Mart Stores
Financial: Bank of America, Charles Schwab, Nationwide Insurance, Royal Bank of Canada, Wells Fargo & Co.
Government: U.S. Postal Service
Manufacturing: Boeing, Coca-Cola Enterprises, Ford Motor Co.
Transportation: Continental Airlines, Delta Air Lines, FedEx
Food and Hospitality: Applebee's International, Harrah's Entertainment

1979 Teradata founded
1984 Ships first product
1991 AT&T buys NCR, which then buys Teradata
1997 AT&T spins off NCR
2003 Michael Koehler appointed head of Teradata

Sources: NCR Regulatory filings; Teradata reports; Baseline research


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