Experts Evaluate IBM/SPSS Acquisition
July 29, 2009 - In a move to expand its focus on business analytics technology and services, IBM has entered into a definitive merger agreement to acquire SPSS Inc. for approximately $1.2 billion. The deal may prove to be a wise decision according to IDC estimates, which show that the worldwide market for business analytics software will swell to $25 billion this year, growing 4 percent over 2008.
The addition of SPSS, which had 14 percent of the predictive analytics (PA)/data mining (DM) market segment, bolsters IBM's Information on Demand (IOD) portfolio and business analytics capabilities and allows IBM to leap from 13th into second place, behind only SAS Institute Inc., reported a ComputerWorld.com article.
IBM's acquisition of SPSS puts an exclamation point on the growing importance of business intelligence and analytics in the consumer goods industry. "On first blush, SPSS seems like a good acquisition, particularly as IBM increasingly talks in terms of smarter systems and processes to leverage the massive amounts of data that are now available to companies," says Simon Ellis, practice director, Supply Chain Strategies, Manufacturing Insights, an IDC company. "SPSS has a strong portfolio of predictive analytics tools -- including data collection, statistics and modeling capabilities -- that links insights from key data (sense) to the appropriate business process (respond)."
Forrester Research Analyst James Kobielus echoes Ellis' sentiments, but first reminds us in a blog entry that IBM took its focus off the PA/DM market over the past several years as it built the business intelligence, data warehousing and other pieces of its IOD portfolio. But by acquiring SPSS, Kobielus says, "IBM has acquired a substantial PA/DM brand with a very loyal set of longtime customers who have build their customer churn, supply chain optimization and other predictive models on its best-of-breed platform."
Hans Van Delden, vice president, Booz & Company, agrees that the acquisition will serve as stepping stone for IBM as it tries to build out its analytical services business, but that doesn't mean the journey will be without obstacles. "This will put IBM in direct competition with Nielsen and IRI for analytical services. We expect that IBM will struggle to compete with these entrenched competitors who have powerful data assets and well-established relationship with the primary buyers of analytical services."
As aforementioned, an increasing demand for analytical services and solutions is apparent in the consumer goods industry as manufacturers try to establish their own capabilities. How will this acquisition directly affect them? CGT went to the source for answers:
"Through this acquisition, IBM is quickly extending its position in the consumer goods industry by enabling clients to gain new predictive analytics capabilities that deliver greater foresight with real-time information to help them gain accurate, predictive knowledge to make smarter decisions for improved business outcomes," says Richard Essigs, director, Consumer Products Industry, IBM Corporation. "For example, by using a SPSS solution, consumer good companies can increase productivity, optimize production and manufacturing processes, more effectively retain and leverage customers, and free up resources devoted to compiling information."
Consistent with its software strategy, IBM says it will continue to support and enhance SPSS technologies while allowing customers to take advantage of the broader IBM portfolio. Following the close of the acquisition, which is still subject to SPSS shareholder approval, IBM intends to integrate SPSS within its Information Management software portfolio and into the many industry offerings already available.
"How they will ultimately leverage SPSS remains to be seen, but there is no question that the leading software providers recognize the significant growth potential of advanced analytics," closes Ellis.
The addition of SPSS, which had 14 percent of the predictive analytics (PA)/data mining (DM) market segment, bolsters IBM's Information on Demand (IOD) portfolio and business analytics capabilities and allows IBM to leap from 13th into second place, behind only SAS Institute Inc., reported a ComputerWorld.com article.
IBM's acquisition of SPSS puts an exclamation point on the growing importance of business intelligence and analytics in the consumer goods industry. "On first blush, SPSS seems like a good acquisition, particularly as IBM increasingly talks in terms of smarter systems and processes to leverage the massive amounts of data that are now available to companies," says Simon Ellis, practice director, Supply Chain Strategies, Manufacturing Insights, an IDC company. "SPSS has a strong portfolio of predictive analytics tools -- including data collection, statistics and modeling capabilities -- that links insights from key data (sense) to the appropriate business process (respond)."
Forrester Research Analyst James Kobielus echoes Ellis' sentiments, but first reminds us in a blog entry that IBM took its focus off the PA/DM market over the past several years as it built the business intelligence, data warehousing and other pieces of its IOD portfolio. But by acquiring SPSS, Kobielus says, "IBM has acquired a substantial PA/DM brand with a very loyal set of longtime customers who have build their customer churn, supply chain optimization and other predictive models on its best-of-breed platform."
Hans Van Delden, vice president, Booz & Company, agrees that the acquisition will serve as stepping stone for IBM as it tries to build out its analytical services business, but that doesn't mean the journey will be without obstacles. "This will put IBM in direct competition with Nielsen and IRI for analytical services. We expect that IBM will struggle to compete with these entrenched competitors who have powerful data assets and well-established relationship with the primary buyers of analytical services."
As aforementioned, an increasing demand for analytical services and solutions is apparent in the consumer goods industry as manufacturers try to establish their own capabilities. How will this acquisition directly affect them? CGT went to the source for answers:
"Through this acquisition, IBM is quickly extending its position in the consumer goods industry by enabling clients to gain new predictive analytics capabilities that deliver greater foresight with real-time information to help them gain accurate, predictive knowledge to make smarter decisions for improved business outcomes," says Richard Essigs, director, Consumer Products Industry, IBM Corporation. "For example, by using a SPSS solution, consumer good companies can increase productivity, optimize production and manufacturing processes, more effectively retain and leverage customers, and free up resources devoted to compiling information."
Consistent with its software strategy, IBM says it will continue to support and enhance SPSS technologies while allowing customers to take advantage of the broader IBM portfolio. Following the close of the acquisition, which is still subject to SPSS shareholder approval, IBM intends to integrate SPSS within its Information Management software portfolio and into the many industry offerings already available.
"How they will ultimately leverage SPSS remains to be seen, but there is no question that the leading software providers recognize the significant growth potential of advanced analytics," closes Ellis.