Businessmodel of Teradata

Customer Segments

Teradata has a mass market business model, with no significant differentiation between customer segments. It markets its offerings to technology and business buyers at organizations of all sizes across a wide range of industries, including energy, banking/financial services, healthcare, communications, manufacturing, retail, travel and transportation, and utilities. In 2015, the company’s top ten customers were responsible for 14% of its overall revenues.

Value Proposition

Teradata offers two primary value propositions: convenience and brand/status.

The company offers convenience by making it easier for customers to carry out data management. Its solution collects data from numerous sources, which saves users time and also facilitates robust analysis. It also removes data silos to foster more informed decision-making. Moreover, it integrates omni-channel marketing communications for consistent, streamlined messaging.

The company has built a strong brand over time. It was one of the first providers of database management systems, making it well-established. It has over 100 technology partners and 2,600 clients in 77 countries. Its customers include the following:

• 11 of the top 20 healthcare companies
• 13 of the top 20 manufacturing companies
• 14 of the top 20 travel/transportation companies
• 15 of the top 20 global retailers
• 18 of the top 20 global commercial and savings banks
• 19 of the top 20 telecommunications companies
• All of the top six airlines Specific clients include eBay, Ford Motor Co., 3M, Philips, PayPal, Cisco, Warner Home Video, Xcel Energy, Continental Airlines, Volvo, and Comcast. Finally, Teradata has received many honors. These include recognition as a leader in the big data solutions space (Forrester Research); as a member of the prominent Dow Jones Sustainability North America Index; and as a leader in Gartner’s 2015 Data Warehouse and Data Management Solutions for Analytics Magic Quadrant.

Channels

Teradata’s main channel is its direct sales team, through which it acquires most customers. That said, in select situations it sells its products/services through third-party channels such as distributors and resellers. The company promotes its offerings through its website, social media, webinars, direct marketing, and attendance at conferences, forums, summits, and trade shows.

Customer Relationships

Teradata’s customer relationship is primarily of a self-service nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website includes a “Resources” section with an extensive and varied selection of customer aids. These include analyst reports, articles, best practice guides, brochures, case studies, datasheets, demos, eBooks, executive briefs, infographics, podcasts, studies, videos, webcasts, and white papers.

Despite this orientation, Teradata’s customer relationship also includes a strong personal assistance component. The company offers phone and e-mail support. It also provides the following training options:

Teradata Education Network – Customers can learn how to better use the company’s products and services through this program. Formats include classroom instruction, web-based training, and recorded and live webcasts.

Teradata Certified Professional Program (TCPP) – Customers can take instruction to gain expertise in use of the system so they can become certified in various company roles, such as sales and training. Instruction is provided by subject matter experts, exam development partners, and the Teradata education team.

Key Activities

Teradata’s business model entails producing software and maintaining the SaaS version of its platform. The company sources hardware components from various suppliers and utilizes Flextronics International for the assembly and configuration of the components.

Key Partners

Teradata maintains the following strategic partnerships:

Alliance Partners – The company collaborates with independent software vendors (ISVs) to develop applications and tools that incorporate Teradata technology. Partners include many top firms in the big data, data acquisition, business intelligence, and marketing applications sectors.

Systems Integrators – The company works with a range of systems integrators and consultants that are involved in the implementation and integration of Teradata data platforms and analytic/marketing applications for their joint clients. The arrangement facilitates an exchange of knowledge and allows the partners to become better versed in the use of the technology. Specific partners include Deloitte, Accenture, IBM Global Business Services, Cognizant Technology Solutions, Wipro Limited, and Capgemini.

Key Resources

Teradata’s main resource is its proprietary software platform, used by 2,600 clients. Its most important human resources are its research and development staff members, who engage in continuous improvement of its products and services and are spread out in numerous facilities globally. The company also depends heavily on its sales/marketing, customer support, and training staff. Lastly, Teradata places a high priority on its intellectual property, and owns 700 patents in the U.S. as well as 48 patents in foreign locations.

Cost Structure

Teradata has a value-driven structure, aiming to provide a premium proposition through frequent offering enhancements and personal service. Its biggest cost driver is sales/marketing expenses, a fixed cost. Other major drivers are in the areas of research and development and administration, also fixed costs.

Revenue Streams

Teradata has two main revenue streams:

Product Revenues – Revenue generated from the sales of its analytic data solutions (including hardware and software) and its marketing applications.

Service Revenues – Revenue generated from support and business consulting services that enable customers to generate more value from the use of their products.