Pitney Bowes / MapInfo / Group 1: The Art of the Deal

By Joe Francica

I attended MapInfo's MapWorld conference last week in Seattle (May 8-10). Naturally much of the talk centered on Pitney Bowes' acquisition of MapInfo. In buying MapInfo and merging its technology with Group 1 Software, Pitney Bowes is staking its claim in the marketing services business. Pitney Bowes (PBI) has the dominant brand in the postal metering business and while this is a shrinking market in the age of Internet communication, the direct marketing business is expanding. PBI's acquisition of MapInfo, its largest purchase ever, will link MapInfo's marketing analysis tools with Group 1's address validation and data cleansing technology to create a location-based solutions entity. Combine the "geo" side with PBI's existing marketing groups like Imagitas and PBI's strategy effectively connects the dots between market analysis, target marketing, site selection and lifestyle triggers (like a change of address) and psychographic profiling.

What was the reasoning behind the deal? Mark Cattini, MapInfo's CEO, elaborated on the company's market position and why it made sense to accept PBI's offer. "We had many inquiries ... we had to respond," said Cattini. MapInfo's strong market position in location intelligent solutions for businesses was somewhat hampered by a lack of size or "heft." It's one thing to secure deals with individual real estate departments of retailers where license sales of MapInfo Pro may be in the $100K range. It is quite another level of effort to present an enterprise vision for competitive market intelligence and business analytics to multinational corporations. MapInfo's challenge has been, and will continue to be, to build a solid business case for why location technology cuts across a company's information systems to yield potentially unique knowledge. MapInfo's new parent company brings more credibility to larger sales opportunities. "Instead of going it alone, we are now partnered with a $6 billion company," said Cattini.

Group 1 presents itself as a provider of business geographic tools through its geocoding solutions, and shows customers the benefits of geographically enabling their data. However, without an analytical and visualization tool it was impossible to show the true effectiveness of spatial information. MapInfo filled the gap. Group 1 also offers information on how to geotarget messages. For example, when a credit card holder receives a statement, it might include messages or relevant coupons related to buying patterns during that month to encourage "like" purchases in the future.

PBI has a cash cow that's losing weight. The postal metering business now represents a smaller portion of the total annual revenue and the company is looking for ways to expand into areas that make sense paired with direct marketing. "At Pitney Bowes we have long understood the importance of location in connecting the right information with the right recipient. Increasingly, businesses and governments alike are using location-based information to enhance their reach, performance and decision making capabilities," said Michael J. Critelli, chairman and CEO of Pitney Bowes. Imagitas, noted above, for example, is a marketing services company that specializes in matching customer life events and marketing information that are most relevant to the individual at the time.

At this time, MapInfo sits within PBI's Document Messaging and Technologies division. PBI's Group 1 division will report to MapInfo's chief operating officer, Mike Hickey, bringing MapInfo's software development expertise to PBI's operations. Cattini, now free from dealing with the investment community, will be charged with managing this new synergy with PBI's other business units.

What might this mean for MapInfo partners or product development? It's too early to tell, and Cattini restated the fact that MapInfo partners comprise 40% of company revenue. Further, product plans remain unchanged. When asked if PBI has plans to go after any of the business intelligence software players, he dismissed the strategy because that technology sector is in transition and he doesn't see that as being where PBI's interest lies. If, however, the synergy between PBI and its other divisions materializes, as executives from all parties envision, then PBI looks to be a very strong player, one that could stifle the position of a VNU/Claritas while leaping past a company like SRC. Cattini sees additional marketing services expertise being added to MapInfo through acquisition, thus continuing to build on the company's strategy of securing domain expertise in key vertical market sectors.

My Take
Location technology is slowly building its base of recognition among the broader IT community. MapInfo has been shouting out the praises of "location intelligence" for the last few years. The terminology is gaining traction (we use the term for our conference) but more importantly businesses are beginning to assimilate location technology with other enterprise solutions.

I spoke with one insurance market sales representative from MapInfo who confirmed that his potential customer's IT department gets involved early in the discussions and may even hold sway over the final decision. With PBI joining location intelligence players like Oracle and Microsoft, which just announced support of spatial data types in the next release of SQL Server (due in 2008), location technology has several powerful voices. Through a series of acquisitions, the GIS and mapping technology players are assimilating into vertical niches. MapInfo is now part of the broader marketing services sector; Intergraph continues to position itself as a player in the critical infrastructure and response market; Smallworld, acquired a few years ago by GE, was relegated to the utility sector and may be replaced by a more robust solution built on top of Oracle Spatial. Autodesk focuses on geospatial solutions for the visualization, engineering and design markets.

This is recognition that the business models of the traditional GIS companies may be evolving. More and more, location intelligence solutions will become embedded with enterprise software to solve specific industry challenges. The marketplace has certainly indicated that's the way to be successful. It is likely that specialization will continue, as certain location technology applications will have to be customized to meet the demands of an industry's value chain. GIS companies may end up being pushed to serve in one industry or another in order to survive.

Published Friday, May 18th, 2007

Written by Joe Francica

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