IBM Dives Deeper into BI
IBM has increased its strategic move into Business Intelligence in a $1.2 Billion purchase of analytics firm SPSS, Inc. The move is designed to augment the company’s 2008 acquisition of Cognos, which established IBM as a leader in the corporate performance management business.
Details of the acquisition can be found here.
The acquisition of SPSS will enable IBM to deepen its competitive abilities in the strategic services business, where it competes head-to-head with SAP and Oracle. Both SAP (with its acquisition of Business Objects) and Oracle (Hyperion) have moved to improve their analytics offerings as part of their enterprise-scale data management solutions.
For IBM, however, the acquisition of Cognos and SPSS are in line with the strategic objective of enhancing its ability to provide strategic consulting services. The recent economic conditions have created an opportunity to use analytics solutions to improve profitability and efficiency, and IBM sees both of these as critical to companies in a recession.
According to the Wall Street Journal, the most recent financial results for IBM seem to bear this out — with the company making major inroads into analytics-based services business in health care, government and other strategic sectors. The value proposition for IBM is that it can use its analytics technology to assist customers in managing their operations. The SPSS software, for example, is used by the Atlanta Police to assist it in determining which parolees with re-offend. This kind of work is central to IBM’s “services-first” strategy:
Using proprietary software and data from from motion and temperature sensors, IBM tells railroads how to make trains run on time and utilities how to cut electricity use. Projects in the energy sector, transportation, water and health care are part of what it calls “smarter planet” projects.
“We look for the consulting arm to lead our entry to the client,” driving sales of other products, says IBM Chief Financial Officer Mark Loughridge.
The consulting work falls under IBM’s Global Business Services unit, which grew 9% last year to $19.6 billion, or about a fifth of IBM’s revenue of $103 billion.
The following graphic underscores the importance of services now at IBM:
It is clear that Cognos and SPSS fit squarely into IBM’s future — making it clear that even in a recession, investing in analytics is a smart move for all companies!
