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July 9, 2021

Teradata: We’ve Outsourced Some Hardware Support for Years

Teradata has outsourced technical support for its on-prem data warehouses to IBM, according to a report in The Register today. Teradata neither confirmed nor denied the report, but told Datanami that it has outsourced “elements” of hardware support for years.

According to a story that appeared today in The Register, Teradata transferred tech support responsibilities for companies in the United States to IBM on July 1. What’s more, the data warehouse giant laid off most of its field support team, according to the story, which also stated that support for Teradata customers in Europe has also moved to IBM.

A Teradata spokesperson declined to answer specific questions about the support arrangement, and whether it has partnered with IBM to handle tech support issues for its analytics appliances.

“We are always looking to provide the best experience for Teradata’s customers,” the spokesperson said. “Our cloud-first support organization has–for years–outsourced elements of our hardware support business to reliable third-party companies. We don’t disclose their names or details of the agreements, but they are a normal part of how we ensure Teradata customers are well supported as they use data and analytics to positively impact their businesses.”

According to the story in El Reg, Teradata customers are up-in-arms over what they view as a loss of the technical expertise necessary to maintain the on-prem devices. While Teradata today is taking a cloud-first approach to compete with the big public cloud providers and Snowflake, the San Diego, California-based company still has a large number of customers running custom Teradata hardware on premise.

Teradata denies that there is a brain-drain at the company, and affirms that it has plenty of technical expertise in-house to support on-prem customers.

“Even when we outsource elements of the hardware support to reliable third parties, Teradata maintains the overall relationship with the customer and I can confirm that we continue to have hardware support expertise within the company for our on-premises customers,” the spokesperson said. “This is part of our commitment to customer success, which includes supporting our customers’ data environments, whether in the cloud or on-premises.”

Teradata has pivoted heavily to the cloud, which is where its new CEO, Steve McMillan, sees the data warehouse war being won or lost. In an interview with Datanami earlier this year, McMillan touted how the company now spends 70% of its R&D budget on the cloud and 30% for on-prem. Previously, the number were the other way around, he said.

“I think we are well positioned to dominate in the cloud,” McMillan said. “We need to get that message out there. We need to get our customers seeing what we can do.”

Wall Street has definitely been receptive to that message, and to Teradata’s financial results. For the first quarter ended March 31, Teradata (NYSE: TDC) had a $79 million increase (or 176%) in annual recuring revenue (ARR) for public cloud compared to the same quarter in 2020. However, the comparison is complicated by the fact that the company realigned its ARR and recurring revenue disclosures.

McMillan was hired just over a year ago to lead Teradata, which has been struggling to find traction as cloud-only players like Snowflake grew quickly. McMillan previously spent 19 years at IBM Global Services, starting in consulting and support and finishing as a vice president in the $19-billion organization, which IBM is spinning out as its own independent company called Kyndryl. Big Blue is retaining the $8-billion Global Technology Services and the $17-billion Global Business Services as units alongside its systems and software businesses.

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