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February 2, 2021

He Couldn’t Beat Teradata. Now He’s Its CEO

When Steve McMillan worked in IBM Global Services, he oversaw the outsourcing of nearly every major piece of a large global financial services firm’s IT stack with Big Blue products. But there was one component that he couldn’t get the company to leave: its Teradata data warehouse. Now that he’s Teradata’s president and CEO, McMillan is looking to leverage that legacy to expand its analytics business in the cloud.

McMillan, who took the president and CEO seat at Teradata (NYSE: TDC) in June, pointed to that one failure to replace the Teradata installation as evidence of the company’s lasting technological strength.

“I tried every single day to take Teradata out and replace it with IBM solutions, and I couldn’t, and I think the reason for that was because the customer really understood the value that they got from their data technology every single day,” McMillan tells Datanami. “And, God bless, them, they knew that IBM couldn’t deliver the same level of performance, scale, capabilities, analytics, and insight, to really do what they needed to do.”

While IBM is still a sizable threat to Teradata (it’s even bringing back its Netezza brand), its biggest competitor right now is Snowflake (NYSE: SNOW), which has considerable momentum in the cloud. Snowflake may have a market capitalization that is over 25 times bigger than Teradata’s at the moment, but Teradata enjoys a few technological advantages over its younger competitor, says McMillan, who wants Teradata to be more vocal in telling people about it.

“I’m going to say a couple things that will surprise some people,” he says. “I think our 40-year heritage in helping organizations get the best out of their data [gives us] a set of experiences and a set of capabilities and a set of technology advances that Snowflake are going to have to take a long time to catch up with us.

“Look, if you want to set up a simple data mart with a little bit of DSS [decision support systems], Snowflake is going to work fine for you,” McMillan continues. “For companies that want to operate at enterprise scale–and I haven’t met a small company that doesn’t want to be a big company–and they want to operate at scale in a really cost-effective way, Teradata is a better choice than Snowflake.”

Steve McMillan is the CEO and president of Teradata

Plotting a Turnaround

McMillan replaces Victor Lund, who returned for a second stint in the CEO chair after an 12-month period in which Oliver Ratzesberger held the position. Ratzesberger left the company in late 2019 following disappointing financial results. Now it’s up to McMillan to complete the turnaround for the storied data warehousing firm.

McMillan, whose residence in Connecticut belies a Scottish accent, is bullish on the company’s potential to compete on a technological basis. He points to work that Teradata has done to embed workload management and AI capabilities into its SQL query engine. The same goes for time-series analysis and other types of analytical capabilities that originated with its Aster Data acquisition, which occurred 10 years ago from next month.

“We have differentiation that we think is four or five years ahead where Snowflake are in terms of things like workload management and data governance and some of the core, deep SQL engine capabilities that we have in our product that just aren’t replicated inside Snowflake,” McMillan says. “There’s really advanced analytics capabilities that the likes of Snowflake and some of the cloud native providers don’t have in their SQL engines that we’ve got built right in.”

McMillan acknowledges that Teradata has a reputation as being an expensive choice, and one that perhaps is best suited for an on-prem world. But the San Diego, California-based company has changed its model, both in terms of the cost that people pay and where the technology runs.

For instance, Teradata has adopted a cloud-first strategy, because that is where many of its clients want to run. The company was spending 30% of its R&D money on the cloud and 70% for on-prem. But the company has switched that around, and now 70% of its R&D spending is targeted to the cloud and 30% is targeted to on-prem, McMillan says.

Competition in the Clouds

The data warehousing battle will be won or lost in the cloud. The increased spending in cloud R&D will be welcome news for customers considering leaving Teradata for one of its cloudy competitors, or those looking to come back into the fold, McMillan says.

Competition for cloud data warehousing is heading up (vectorfusionart/Shutterstock)

“When we see customers making that transition, making that migration to cloud, they’ve not been able to get the same level of performance and scale, either from the native cloud providers or the likes of Snowflake, in terms of just operating at that level of scale and consistency,” McMillan says. “So it’s really interesting as we double down on the [cloud] message and we’ve taken it back to customers who may have moved off Teradata and tried these cloud providers, we’re seeing those workloads start to come back to Teradata in the cloud.”

Teradata is still focused on enterprise analytics, and as such, its target client base consists of the 10,000 biggest organizations in the world. It doesn’t cater to mid-size businesses, or mom and pop shops. Just the same, the company has taken input from the market, and adjusted pricing for its Vantage offering to be more customer-friendly–not to mention more competitive in a lucrative yet cutthroat market.

“When you’re buying Teradata in the cloud, we completely change our pricing and billing model to consumption-based pricing. You only pay for what you’re using,” McMillan says. “We are just as cost effective and cost competitive as the native cloud providers and Snowflake. Not only that, but because we come from the world where cost control, data governance, security are incredibly important, we deliver all of that in the cloud for customers, so we think we have a tremendous differentiation based on our heritage and based on how we deploy our technology in the cloud.”

Teradata is betting on its multi-cloud strategy to bolster sales of its cloud offering (the company will announce financial results later this week, so we’ll have a chance to see how it’s doing in this regard). Companies don’t want to be locked-in to any single public cloud, and Teradata’s ability to run on AWS, Microsoft Azure, and Google Cloud will benefit customers, McMillan says.

The Road Ahead

The company is also pushing forward with a technology roadmap that is more open than the company would have adopted years ago. That means letting customers run some things outside of the Teradata environment, and storing data in object stores, whether in the cloud or on prem, instead of its proprietary database.

Teradata’s stock is trading near a 52-week high

“The Teradata that your uncle knew wanted to get all the data into the Teradata system, spin it on a hard disk,” McMillan says. “We’re thinking about it a lot more now in terms of how do we open up the platform and how do we get all the things–our SQL engine, our analytic capabilities, the leading edge technologies that allow us to really benefit our customers–how do we open that up to let them access data that’s outside of those Teradata environments?”

This year, the company’s roadmap will be bolstered with support for object stores in on-prem environments. It’s also going to enable customers to utilize cloud services for things like ETL, BI, and reporting, which will further open up the Teradata environment.

“It’s really thinking about how do we take Teradata Vantage forward and think about it more as a platform than a constrained ecosystem,” McMillan says. “I think we are well positioned to dominate in the cloud.  We need to get that message out there. We need to get our customers seeing what we can do.”

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Editor’s note: This article has been corrected. Teradata targets the 10,000 largest organizations in the world, not the 2,000 largest. Datanami regrets the error.