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Move will enable firms to concentrate on core businesses.

In a move to allow each company to concentrate on its core capabilities, Dayton, Ohio-based NCR will spin off its Teradata data-warehousing division, creating two separate, publicly traded companies.

According to Kathleen Khirallah, research director at TowerGroup (Needham, Mass.), both companies' financial performance has been strong, positioning them to remain stable competitors in their respective spaces. "The market is strong and the timing was terrific," she says. "Teradata is a very attractive asset to be spinning off."

Bob Fair, VP, business strategy, with Teradata, says that since late 1999, Teradata essentially had been operating as a separate entity from NCR. "We had some shared services with NCR, such as e-mail," he says. "But Teradata had its own engineering team; research and development team; and marketing, consulting and field organizations. It was really a question of when would be the right time to spin off Teradata, not why NCR would want to do this. Management saw it had two strong brands and it was time to unleash both." In fact, Teradata was an independent company prior to its acquisition by NCR in 1991.

The move to officially separate the companies, however, likely will be relatively transparent for the firms' financial services customers, both Fair and Khirallah agree. "If you're a customer, you won't see much change because both companies today go to market separately," Fair explains. "Teradata's account team and portfolio won't change. We often partner with NCR business units, and we expect that to continue. Banks will be buying from two different companies going forward. But there will be no sacrifice in the customer experience."

"If you're an organization using Teradata for data warehousing and NCR for your ATMs, this split will give you yet another vendor to deal with," says TowerGroup's Khirallah, noting that that will likely be the greatest change banks will see. "Even though this move goes against the greater [vendor-consolidation] trend that CIOs would rather see, they know both organizations well -- they're trusted providers."

Two Vendors Are Better Than One

On its own, Teradata's Fair says, Teradata will be able to concentrate more on its own interests, as will NCR. "When you're part of something bigger, the management team has discussions at the corporate level where you have to make compromise decisions over shared issues," he says. "Now each management team can focus on issues specific to their own markets. This will make us faster and more agile."

Teradata will continue to follow a strategic plan that it put in place more than three years ago, relates Fair. "We will continue to expand our market coverage with consulting and technology depth," he says. "We'll build out our solutions portfolio, ... [and] we're also investing to continue to extend our lead in enterprise data warehousing and active data warehousing [to enable real-time decisioning]."

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