Buying Mercator Will Extend Ascential Software's Reach

Archived Published: 05 August 2003 ID: G00116672

Analyst(s): | |

  Free preview of Gartner research


By purchasing Mercator Software, Ascential will benefit from synergy between both vendors' integration technology. Mercator's customers should look for detailed product plans from Ascential by early 4Q03.

News Analysis


On 4 August 2003, Ascential Software, a prominent data integration technology vendor, announced its intent to acquire Mercator, an application integration specialist, for $106 million in cash. Ascential expects to complete the transaction in 3Q03.


The shakeout under way in the application integration middleware market has hurt Mercator. Its sale to Ascential removes another pure-play vendor from the market and addresses concerns regarding Mercator's declining financial viability. Since 2000, Mercator has dropped from the fifth-largest application integration vendor to the eighth-largest, with 3.3 percent of the worldwide market for integration broker suites (based on new license revenue). Mercator's 2Q03 license revenue declined 44 percent compared to 2Q02, and its total revenue dropped 18.4 percent, compared to 2Q02.

The purchase of Mercator comports with the strategy Ascential has followed since 2001, which has included growing through acquisition and broadening its data integration capabilities. The vendor has aligned its plans in response to growing demand for data integration functions in areas other than data warehousing, and the convergence of the extraction, transfer and loading (ETL) and application integration markets. Ascential made a reasonable choice when it selected Mercator, which has strong data transformation capabilities and a data-oriented approach to integration. Ascential can also tap Mercator's experience in IBM-oriented environments to enhance its own reseller relationship with IBM and build on Mercator's experience in vertical markets such as healthcare pay providers.

Ascential faces several significant challenges in delivering value from this acquisition. It must:

  • Halt the declining revenue from Mercator's product line.

  • Deliver the road map for how the products will be integrated.

  • Resolve the overlap in transformation functions from each company, which is the core of their technologies, as well other ancillary redundancies (for example, overlapping adapters for SAP R/3).

  • Grasp the issues of business-to-business integration, the U.S. Health Insurance Portability and Accountability Act and financial straight-through processing. Ascential needs this understanding to sell Mercator products to audiences other than the data warehouse project teams it knows well. Retaining the Mercator sales force will be key.

Recommendation: Ascential has publicly stated that it will continue selling and supporting the Mercator product line in the immediate future, but it may not retain all Mercator products in the long term (0.6 probability). Plans for the Mercator Process Integrator — sold under an original equipment manufacturing agreement with Versata — could change because the product's features go beyond the scope of Ascential's target market. Ascential and Mercator customers should look for detailed product plans from Ascential by early 4Q03.

Analytical Sources: Ted Friedman, Roy Schulte and Joanne Correia, Gartner Research

Recommended Reading and Related Research

(You may need to sign in or be a Gartner client to access all of this content.)

© 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

Why Gartner

Gartner delivers the technology-related insight you need to make the right decisions, every day.

Find out more

Call +1 800 213 4848 or contact us

to become a Gartner client.