IBM to Buy Analytics Software Maker SPSS for $1.2 Billion

In an expansion of its Information on Demand initiative, IBM is looking to buy longtime partner SPSS, which makes predictive analytics software, for $1.2 billion. The move will expand IBM's ability to offer customers solutions they can use to mine data and turn that information into a strategic business asset. SPSS officials called the two companies complementary and said the breadth of IBM's portfolio, resources and customer base will be an advantage for SPSS customers and employees.

IBM is looking to add greater predictive analysis capabilities to its Information on Demand software through the $1.2 billion acquisition of longtime partner SPSS.

IBM and SPSS made the announcement July 28. Officials with both companies say they expect the deal to close later this year, pending the approval of SPSS shareholders and federal regulators.

The acquisition will bolster IBM's ability to offer customers solutions that enable them to more deeply analyze information, according to IBM officials. For example, Internet retailers can take a look at customer browsing trends to determine which products are generating the greatest amount of interest.

Other examples include police departments being better able to allocate crime-fighting resources, retailers able to better personalize their approach to customers or to determine where to place a new store, health care providers better able to improve patient care, and financial services firms more easily acquiring and retaining clients.

IBM has plans for its Maximo software offerings.

"With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight, but true insight," Ambuj Goyal, general manager of information management at IBM, said in a statement. "Predictive analytics can help clients move beyond the -sense and respond' mode, which can leave blind spots for strategic information in today's fast-paced environment, to -predict and act' for improved business outcomes."

Research firm IDC sees a healthy future for business analytic software, predicting that companies will spend $25 billion on such solutions this year, a 4 percent jump over 2008. A key driver is businesses' desire to control costs and use their resources more wisely, according to IBM.

The move is in line with other software acquisitions IBM has made recently as it looks to build out its software offerings that give businesses a better grip on the massive amounts of information they collect. For example, IBM in 2007 bought Cognos to bolster its business intelligence capabilities.

In a brief conference call with financial analysts and reporters, Jack Noonan, chairman, president and CEO of SPSS, said he sees the acquisition of his company by IBM as a "highly complementary move."

Noonan pointed to the breadth of IBM's resources and its massive customer base as a key advantage for SPSS' customers and employees.

"This is a transformative event," he said.

Noonan declined to offer many details about the acquisition, though he did say that IBM officials approached SPSS about the deal. He also didn't foresee any antitrust issues arising from the deal, pointing out that rivals like SAS are "substantially larger" than SPSS.

One analyst questioned why IBM came to SPSS with the offer now, given the long-standing relationship between the two companies and IBM's perceived slowness in pursuing predictive analytic capabilities.

Noonan said predictive analytics has been a focus of IBM's, and that "because of the previous relationship, they know us well, and I think their thinking [on predictive analytics] is well ahead of the industry."

IBM officials said the acquisition not only will expand its Information on Demand software portfolio, but also will bolster the offerings in its recently announced Business Analytics and Optimization Consulting group and collection of Analytics Solution Centers.

IBM also has what officials call their Information Agenda initiative, in which IBM is working with customers to be able to turn information into a strategic asset.

IBM will integrate SPSS into its Information Management software offerings. Officials also said that predictive analytics will be a key component of its drive to bring intelligence into infrastructure systems.