Inside Informatica’s cloud journey

Data management pioneer Informatica returned to the public market recently as it looks to scale its business after building up its cloud pedigree over the past six years.

The company went private in 2015, relieving itself of the financial pressure to meet quarterly market expectations so that it can shore up its cloud capabilities from scratch on a completely new technology stack.

The efforts have paid off, with much of its subscription revenues now driven by the growth of its cloud portfolio. In an interview with Computer Weekly, Informatica’s chief product officer, Jitesh Ghai, talks up the company’s journey back to the public market, the role of Asia-Pacific (APAC) in its growth strategy and how it is solving cloud data management challenges.

Talk to me about Informatica’s journey to become a public company once more.

Jitesh Ghai: We’ve been in the data space for 25 years and we’ve pioneered our no-code experience for data management. And in 2015, we went private to embark on a major business transformation.

As you can imagine, over those 25 years, the world of data and analytics changed dramatically. There were data warehouses and data marts. And then there was Apache Hadoop, which was going to be open source and the world of data management and analytics was going to change.

Then Spark came and everything moved to cloud. Because it was too hard to manage petabyte scale clusters, and rack and stack all these machines, people started looking at services from various providers. We’ve been leading the innovation around all of these disruptions in data and analytics from a data management standpoint.

And what does data management to us? Well, Snowflake does analytics, Google’s BigQuery does analytics, but that analytics only happens because that data came from somewhere. For our customers, that data is being captured, connected, cleansed, mastered, protected and governed by Informatica, whether it’s on Snowflake, BigQuery, AWS, Azure or Databricks.

That’s the innovation of us building our cloud products. We recognise that the world of analytics and data management was going to be cloud-first and so we built our products on a microservices-based, API [application programming interface]-driven technology stack. We envisioned what data management needs to be with our AI [artificial intelligence] and ML [machine learning] engine and came up with the Intelligent Data Management Cloud.

We’ve also transformed from a perpetual licence maintenance model to a cloud and subscription revenue model. These were major transformations for us as we went private and would be very hard to do if we were a public company with quarterly targets.

Since we went private in 2015, our annual recurring revenue [ARR] was around $600m, out of which about $90m was subscription revenue. We’ve doubled our ARR to $1.2bn with about $700m in subscriptions and cloud is the biggest driver of this growth.

We have delivered products with a renewal rate at over 93% and have expanded our total addressable market to $44bn. We’re also very profitable and that is the transformation that has culminated with us going public once again to grow and scale and meet our customers’ digital transformation requirements.

What sorts of organisational changes were made internally along that journey?

Ghai: A cloud business is foundationally built on innovation to meet our customers’ cloud data management and analytics requirements. We built our cloud products on a completely new technology stack. We didn’t simply lift-and-shift what we had on-premise. We built it from the ground up for the requirements of cloud data management and analytics workloads.

We also established a customer success organisation alongside our customer support organisation. Meeting our customers, and how they consume cloud, is really a land-and-expand model. We had to retrain our sales organisation from selling traditional, perpetual licenses with enterprise agreements, to ensuring our customers are getting the benefits of our cloud offerings.

Of course, with that comes a finance transformation of how we recognise and report revenue. Our marketing organisation also had to rebrand the company as a cloud company. All functions of the business had to transform to meet our customers where they’re expecting us to meet them in cloud data management.

How are you bringing your partners along in that journey?

Ghai: Excellent question. We have two classes of partners. We have the hyperscalers and the best-of-breed data warehouse and data lake providers such as Databricks and Snowflake. We innovate deeply and integrate with AWS, Microsoft Azure and Google Cloud services, whether it’s Amazon Redshift, Google BigQuery, Azure Synapse or NoSQL databases.

We also have hundreds of thousands of Informatica trained developers and data engineers in global systems integrators. As we have shifted to meet our customers’ requirements, the global systems integrators have reprioritised their data engineering and data teams to jointly help our customers with digital transformation.

As we build new products, we have also established training and certification courses for our customers as well as data teams within the global systems integrators, to enable them to implement and deploy our products and help our customers realise their business outcomes.

What is the role of APAC in Informatica’s growth?

Ghai: APAC is a very strategic high-growth region for Informatica. We have prioritised the countries that we are investing in to enable digital transformation in the region, particularly in Australia and New Zealand [ANZ], Japan and Singapore. From Singapore, we’re also seeing growing demand for cloud analytics, data governance and privacy in customer experience transformation in ASEAN.

We have also invested in building dedicated cloud instances in the region to meet data residency and data sovereignty requirements. We just launched one built on Azure cloud in Singapore to meet the requirements of Singapore as well as the surrounding ASEAN countries.

Are there any plans to partner with other cloud providers in APAC such as Alibaba and Tencent which have been growing their footprint in the region?

Ghai: We’re focused on the Global 2000 companies and what we see as cloud requirements from them is predominantly AWS, Azure and Google Cloud. These are large global insurers and consumer packaged goods, healthcare and life sciences organisations that have operations in APAC, Europe and North America.

We’re independent, neutral and if our customers demand us to be implemented on those clouds to support those services natively, we will. While that demand [Tencent and Alibaba Cloud] we see is specifically for China, we continue to meet where our customer demands are – for which we are seeing an immense amount of demand from the Global 2000 we serve in Japan, ASEAN and ANZ at the moment.

Informatica has a very broad portfolio. Is there any gap that you're looking to plug at the moment or is there anything that can be done better?

Ghai: We hold ourselves at an extremely high bar which is evidenced by how IDC and Gartner rate our capabilities. We’ve spent $1bn in R&D since 2015 to build the industry’s only Intelligent Data Management Cloud, because we’re singularly focused on the extremely difficult problem of data management, from data integration in the cloud and application integration to data quality, data governance and master data management.

We have the unique position of being the best at what we do, having the most complete breadth and depth in data management to meet modern analytics requirements. The future is very bright. The innovation has not stopped and continues to accelerate. Our customers continue to accelerate their digital transformation. So not only are we supporting our customers with new workloads, in APAC in particular, we’re seeing the leapfrogging effect as a result of Covid-19.

What we saw in Europe and North America over the past several years was what I call digital modernisation, where customers were ending their datacentre leases and moving their full application and database stack into IaaS [infrastructure as a service].

With Covid-19, we’ve seen an acceleration from modernisation to true transformation, where customers are retooling their application and analytics stack to PaaS [platform as a service]. What we’re enabling our customers to do is to rapidly modernise from on-premise to cloud-native analytic stacks and applications with intelligent conversion utilities, so that they can accomplish in months what would take them years.

Global companies are bounded by local data sovereignty requirements wherever they operate. What is Informatica doing to help them get a better sense of the data they have across their business in different parts of the world without compromising those requirements?

Ghai: That’s an excellent question. We have 5,000 customers around the world and we’re processing 22 trillion transactions a month in our cloud, and that’s doubling every six to nine months. To your question around data sovereignty, we provide data governance and data discovery capabilities, so that frontline agents have accurate customer data to personalise the customer experience and improve sales and decision-making. All of this is possible because we help customers build what we call a metadata system of record. Metadata is data that describes data and system of record being the authoritative sources of metadata.

What is metadata to us? It’s about where and what type of data you have in your organisation. How is that data moving through your enterprise? How is it moving from one location to another in what we call lineage? What’s sensitive and needs to be protected? Those are the facts. It’s on this foundation that we're driving data cataloguing and data governance capabilities to ensure data privacy and compliance with privacy regulations.

Now that Informatica has gone public, what’s next for the company moving forward?

Ghai: What’s particularly exciting for us is data volumes continue to grow and accelerate growth. The data heterogeneity, data variety and complexity of data types continues to grow and expand. Amid all of this, the need for organisations to be data-led is the heart of digital transformation.

And when you put these things together, the opportunity is for Informatica to empower our customers, accelerate their digital transformation and help them realise the resiliency, business continuity and agility benefits of the cloud.

Celcom Malaysia, for example, is leveraging our data quality capabilities to deliver business critical insights and ensure faster regulatory compliance and reporting. We’re also enabling organisations to perform petabyte scale analytics and build trusted data science models. All of that is driving customer experience, supply chain and finance transformation.