IBM Beefs Up Analytics Play with Coremetrics Buy

IBM has signed a definitive agreement to acquire Coremetrics, a Web analytics software provider. Financial terms of the deal were not disclosed.

IBM announced that it has signed a definitive agreement to acquire Coremetrics, a Web analytics software provider. Financial terms of the deal were not disclosed.

The acquisition of Coremetrics will mark the third acquisition IBM has made in its application middleware group since May of this year. Since then IBM has acquired Cast Iron Systems, Sterling Commerce and now Coremetrics. Coremetrics, a privately held company based in San Mateo, Calif., will expand IBM's business analytics capabilities by enabling organizations to use a cloud-based delivery model to gain real-time insight into consumer interactions internally and through social media networks to develop faster, more targeted marketing campaigns.

In a press conference about the news, Craig Hayman, general manager of IBM WebSphere, said Coremetrics will land in IBM's WebSphere business unit under his leadership. He said the Coremetrics technology will expand IBM's already significant business analytics capability and bring in new Web analytics capabilities that will appeal to a different set of customers as well as existing IBM customers.

Joe Davis, CEO of Coremetrics, said he welcomes the opportunity to join IBM and leverage its global presence and broad penetration in the analytics space. "We're looking forward to being able to take the great technology we built and move it into IBM and grow it even faster than we could before," he said. "We'll be growing this globally and into verticals we haven't been able to reach before."

Hayman said organizations are increasingly looking for ways to optimize their marketing processes and gain deeper insights into client demands in order to drive brand loyalty by executing more personalized customer interactions. Companies are faced with an increasingly complex set of digital outlets to interact with customers, ranging from Websites and mobile applications to e-mail and social media sites. Businesses must continuously focus on enhancing the customer brand experience and respond quickly to marketplace changes to differentiate themselves.

Moreover, Hayman said results from IBM's 2010 CEO Study showed that 88 percent of CEOs will focus on getting closer to their customers in next five years, 82 percent of CEOs want to better understand customer needs and 85 percent of CEOs require more visibility into their businesses.

These are things that Coremetrics' technology can help customers with, Hayman said. "Companies are trying to get higher levels of brand loyalty," and Coremetrics enables them to tap cloud-based analytics and social media networks with direct links to marketing campaigns, he added.

Relevant business information is being generated every second on the Web, Hayman said. Today, 70 percent of a consumer's first interaction with a product or service takes place online. Through Coremetrics, IBM is gaining the ability to help businesses rapidly gain intelligence into social networks and online media sources through a cloud-based delivery model and incorporate this insight into their business processes to create smarter, more effective marketing campaigns.

Today, Coremetrics delivers Web analytics capabilities to more than 2,100 global brands across a wide range of industries, including retail, financial services, media and publishing, travel and hospitality, and education. Customers include Bank of America, Holiday Inn, PETCO, 1-800 Flowers, Office Depot, Victoria's Secret, Virgin Atlantic Airways and Seton Hall University.

Coremetrics' offerings enable more effective marketing campaigns that can provide real-time intelligence on what consumers are saying about products and services being offered to them, and allow clients to make fact-based, accurate decisions on marketing expenditures. As a result, marketing teams can gain deeper insight about their consumers and present personalized recommendations, promotions and other sales incentives across a variety of channels where the consumers interact with their brand. These channels span traditional outlets such as storefronts and catalogs and newer outlets including all forms of e-commerce and social media.

"With this acquisition, we are extending our capabilities to give clients greater insight about customer behavior and sentiment about products and services, and give true foresight into their future buying patterns," Hayman said in a statement. "Marketing departments can benefit from these capabilities very quickly because we are delivering this in a Software-as-a-Service model. The combination of IBM and Coremetrics will maximize marketing expenditures and also make the buying experience more convenient, personal and interactive for consumers."

Coremetrics' offerings are a new addition to IBM's business analytics portfolio. By acquiring Coremetrics, IBM will be able to deliver new business analytics solutions, with the Web analytics capabilities clients need to help measure the effectiveness of their marketing campaigns and understand the shopping habits, likes and dislikes of their customers. In addition, Coremetrics software complements IBM's existing software and services portfolio of offerings from WebSphere, information management, and business analytics and optimization. Upon closing, the company will become part of IBM's application and integration middleware portfolio, which provides the backbone of transaction processing on the Web and powers many of the world's leading retail sites. Through Coremetrics, IBM is gaining the ability to help businesses empower their marketing professionals to automate and optimize their marketing processes to create the greatest possible return on their marketing expenditures.

"Marketers increasingly need the ability to see across their organizations and the agility to make split-second decisions based on real-time data," Davis said in a statement. "The combination of Coremetrics and IBM will deliver deeper business insights to address the real challenges and opportunities all companies face in an increasingly digital world."

Consistent with IBM's software strategy, IBM will continue to support and enhance Coremetrics' technologies and clients while allowing them to take advantage of the broader IBM portfolio. Coremetrics' approximately 230 employees will be integrated into IBM. The deal is expected to close in the third quarter of 2010, subject to regulatory approvals and the satisfaction of other customary closing conditions.

IBM's acquisition of Coremetrics extends the company's analytics strategy, which includes a range of offerings available through IBM's Business Analytics and Optimization Consulting organization that includes a team of 5,000 consultants and a network of analytics solution centers, and is backed by an overall investment of more than $11 billion in acquisitions in the last five years.

The IBM Software Group has acquired more than 55 companies since 2003.