IBM, which already had partnered with SPSS, is taking a significant step into the burgeoning predictive analytics space with the proposed purchase of the company. There has been a race on by the likes of IBM, Oracle, SAP and SAS to build up their data analytics capabilities-both through acquisitions and in-house development-and IBM buying SPSS would put it in the forefront of the increasingly competitive space, according to analysts.
IBM's proposed $1.2 billion acquisition
is the most significant piece in the puzzle-at least since the
Cognos purchase in 2007-in the vendor's push to give customers the tools they
need to not only collect data but also to use it to their business advantage.
It also puts software rivals such as Oracle, SAP
and SAS Institute on notice that IBM is
pulling together a substantial package of solutions in this area, and probably
is a precursor to a host of similar acquisitions by other vendors, according to
"We anticipate that this will serve as a precedent for comparable software
deals over the coming quarters," Jereme LeBlanc, principal of TM Capital, said
in a report July 28, just after IBM made its
IBM announced its intent to buy its
longtime partner, which offers predictive analytics software and data mining
tools, at an event in its Hawthorne, N.Y.,
offices in which it rolled out its Smart Analytics System designed for deep
It's part of IBM's larger IOD
(Information on Demand) initiative, which entails giving businesses the tools they
need to access, analyze and act on data in order to gain a competitive edge
Big Blue has bought a number of software companies over the past couple of
years that fit into the IOD strategy-including Princeton Softech, DataMirror
and Language Analysis Systems-but its 2007 acquisition of BI (business
was the most significant of the earlier purchases. SPSS
is the next key addition.
"Today's main focus is how IBM's $6
billion worth of R&D is coming together to deliver analytics to our
clients," Ambuj Goyal, general manger of IBM
Information Management software, said at then IBM
event. "We continue to do this through both organic means and through
acquisitions. SPSS is one such acquisition.
... Their products are all in the predictive analytics space. We OEM'd some of
their technology as part of Cognos, and now we have it in-house."
The acquisition will set up IBM as a key
competitor to Oracle, SAP and SAS in the
predictive analytics space. Both Oracle, with its 2007 purchase
, and SAP, which bought
the same year, have tightly integrated BI capabilities
into their offerings. In addition, Oracle offers predictive analytics capabilities
thanks to its purchase of Sigma Dynamics in 2006. Also, SAS has been the top
maker of predictive analytics and data mining tools.
However, all that said, IBM's proposed
move with SPSS puts it at the forefront of
this burgeoning space, according to analysts.
"We view the move as highly strategic for IBM
and believe that there was a -scarcity premium' place on the business," LeBlanc
said, pointing out that SAS and SPSS
dominated the high end of the predictive analysis space, with a host of smaller
companies offering specialized approaches. "As such, we view this move as a
shot across the bow of SAS as IBM continues
to leverage the Cognos acquisition to steal market share within the broader
[BI] and corporate performance sector."
The Cognos purchase established IBM as a
leader in the traditional BI space, he said. With SPSS,
IBM will be able to offer a full solution
that LeBlanc said "will enviably position the company in this sector for the
Forrester Research analyst James Kobielus agreed.
"For IBM's competitive standing in the
data management market, this acquisition represents one of the last missing
pieces of its [IOD] portfolio," Kobielus said in a blog post.