Everything in the right place?

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Having been invited to attend a briefing by IBM into the outcome of their recent spate of acquisitions to form the foundation of their Business Analytics and Optimization organisation I was more than just interested as an analyst. I was at Tandem when they merged with Compaq, and then we merged with Digital, and finally we all got rolled into HP. During that whole period I was left dazed and confused and saw value being eroded rather than enhanced, so I was fascinated to hear about how IBM had got on.

To start with, the trail of acquisitions has not just been about gaining scale, they have clearly selected the products carefully and there is a clear master plan underpinning what they have been doing. The Business Analytics and Optimization practice is one of the cornerstones of the growth plans for IBM; this is not just a bit part play, this is one of their flagship areas of focus, and they have a very coherent story to tell surrounding it.

To give an idea of the scale of what has been going on, the list of acquisitions is impressive. IBM acquired Cognos, one of the leading Business Intelligence suites; they acquired SPSS for their predictive analytics and data mining capabilities; they acquired Netezza, one of the leading appliances for building massive data warehouses at affordable price performance points; they have acquired Unica, one of the leading Marketing automation suites; and Coremetrics for web analytics and digital marketing optimization. This is an impressive list and provides them with coverage that puts them in the forefront of capability. Indeed, the only company that can match this spread and depth of capability at the software level is SAS, and the others such as Oracle, Microsoft and SAP, whilst offering similar breadth of capability, do not have the clarity of vision that is evident with IBM at present.

All of the elements have their own story to tell about how they bring value, and together there is clear evidence of value add from the synergy of the total package, but the most telling element was to hear from the Professional Services side how these underpinning technical and consulting capabilities are being brought together to enable clients to transform their business practices by applying greater intelligence to their operations and thereby reduce costs, increase markets, satisfy customers and prove that, in a world where things are being increasingly commoditised, in order to compete it is essential to be as smart as possible, to ensure that business is flexible and responsive.

It appears that the likes of IBM and Oracle have now worked out how to make a success of mergers and acquisitions and come out with far more than the sum of the parts. IBM have traditionally been a major player in the analytics and business intelligence space, but now they are even stronger and offer a very compelling solution. I believe that SAS, at the software level, are the only provider to match this capability. The other members of the Big 4 will need to work very hard to catch up.