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July 28, 2009

IBM Buys Predictive Analytics Firm SPSS

Computer/IT services giant IBM is buying predictive analytics firm SPSS for $1.2 billion in an all cash transaction that is expected to close later this year.
 
The deal is timely and smart for both companies. Predictive analytics, which examines current and past data to help firms identify opportunities and risks about customers and prospects is hot even in this cool economy, and understandably so. Applying these solutions increases the likelihood of maximizing revenues and minimizing losses. IBM (News - Alert) says the ability to forecast future trends and spot shifts in consumer patterns or behavior even before they occur can give businesses a competitive advantage in today's economy.
 
Not surprisingly IDC (News - Alert) estimates that the worldwide market for business analytics software will swell to $25 billion this year, growing four percent over 2008. The growth means that today is an opportune time for SPSS (News - Alert) shareholders to cash out. They will through their financing of SPSS leave a legacy of enabling development of the firm’s predictive analytics solutions that well-heeled IBM can now advance to the next level, and spread to more customers worldwide.
 
IBM says the acquisition is expected to further expand its Information on Demand (IOD) software portfolio and business analytics capabilities. This includes the range of offerings available through IBM's recently-announced Business Analytics and Optimization Consulting organization and network of Analytics Solution Centers. The acquisition is also expected to strengthen IBM's Information Agenda initiative, which helps companies turn information into a strategic asset.
 
The acquisition of SPSS will add a wide array of advanced analytic capabilities to IBM's IOD software portfolio. This will enable many new industry-focused solutions including: customer acquisition and retention for financial services, patient care improvement for the healthcare industry, crime prevention for public sector and ideal locations for retailers and manufacturers. In addition, software capabilities that address all industries will include demand forecasting, employee hiring and retention, customer profitability, credit scoring, and fraud detection. All of these new offerings will help clients drive better business outcomes within their specific industries.
 
Consistent with IBM's software strategy, IBM 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, IBM intends to integrate SPSS within IBM's Information Management software portfolio and into the many industry offerings already available.
 
“With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight but true foresight,” says Ambuj Goyal, general manager, Information Management, IBM. “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.”
 
In a message to customers and business partners SPSS chair, CEO, and President Jack Noonan says that his firm and IBM view the sale as a highly complementary move from both technology and a market position perspectives. The depth and breadth of IBM's resources, its customer and market reach can only enhance SPSS’s ability to address the growing market for predictive analytics.
 
“In joining with IBM, we will advance predictive analytics as a competitive advantage for companies and organizations worldwide,” says Noonan.” We see this as a transformative event that will accelerate the adoption of predictive analytics.”
 
 

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Stefania Viscusi
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