Teradata Customers Express Terror As Field-based Hardware Support Outsourced To IBM On Both Sides Of The Pond

Teradata is outsourcing field-based support on both sides of the pond to IBM, much to the alarm of some customers who fear a loss of knowledge in keeping its trusted on-prem systems up and running.

The global data warehouse stalwart made its name with tightly integrated software and hardware systems sold as analytics "appliances", but in the last two years has shifted focus to its cloud platform following fierce competition from so-called cloud-native rivals including Snowflake, AWS, Microsoft, and Google.

In the UK alone, companies including Sainsbury's, Lloyds Bank, Iceland, Barclays, Unilever, Vodafone, and other big brands still rely on Teradata's on-prem systems for business decision-making as cloud-based systems are yet to meet their performance requirements, sources told The Register.

Support for Teradata's American hardware customers was transferred to IBM's mainframe hardware support teams on 1 July. Multiple sources told us Teradata's customer service field support team, which has shrunk in recent years, were mostly given their marching orders.

A relatively small bunch were retained after some customers complained, said one insider, but even they are now expected to leave the organisation at the end of this month.

"This is the entire on-premises estate for Teradata," said a senior source close to the company.

This includes machine upgrade and machine migration, as well as software support, such as upgrades or specific patches. "Now Teradata has decided to sell the problem to IBM," added one of the insiders.

It seems the deal may be multi-territory as The Register has seen documents indicating IBM is answering tickets on behalf of Teradata in Europe.

Teradata's systems are highly engineered and while replacing a power supply or a disk drive should be a simple process, if something more serious fails "it can be catastrophic," our source said.

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Observers fear a haemorrhage of the knowledge required to keep the unique Teradata systems up and running. "It's like you've got a team that looks after space rockets and a team that looks after Formula One cars. They're both ruinously complicated, but there is no crossover at all," one source said.

In a statement to The Register, the $1.8bn turnover [PDF] company said: "These agreements are always confidential, so all we can say in response to your questions is: Teradata has always been a customer-centric organization and that perspective is a key consideration for all business decisions.

"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."

Teradata declined the opportunity to deny hardware support was being transferred to IBM. Big Blue itself responded to us by saying we needed to ask Teradata for comment.

Teradata has been caught between conflicting demands of investors impatient to see it execute a cloud-first strategy, and customers uncertain about how highly optimised concurrent queries will work in the cloud. Cloud-native warehouses get around the concurrency problem by spinning up new warehouse instances, but that can leave users dealing with the cost of unplanned demand on cloud services.

Speaking to The Register earlier this year, Teradata CEO Steve McMillan argued the company's heritage in on-prem systems offers users the ability to optimise workloads in the cloud for cost.

But many customers are keen to keep on-prem systems up and running for the time being, one source told us, as they weigh up their options for moving to the cloud with Teradata or another cloud system.

A person who asked to remain anonymous pointed out that while systems architects were trying to convince businesses to make the shift to the cloud, users of Teradata systems – business analysts who use data to inform important company decisions – were less keen. Moving to the cloud would be a "massive disruption."

"If you don't give them something that's at least as good – with a low disruption – to make the transition, then just forget it," our source said.

While many companies were making public announcements declaring their adoption of cloud-native data warehouse systems, they were keeping on-prem systems such as Teradata up and running for the time being.

As for the outsourcing agreement, the contract will likely reside within IBM Global Services, the part of the organisation that is being spun out into a separately listed public entity known as Kyndryl.

Late last week, IBM confirmed the country managers who will run Kyndryl when it launches later this year. The business will be based around six units: cloud, applications, data and AI; security and resiliency; core enterprise and zCloud; network and edge; and digital workplace. ®