SPSS Acquisition Will Fortify IBM's BI Business

by Sonal Desai    Jul 30, 2009

IBM early this week announced plans to acquire SAS competitor SPSS Inc. for about $1.2 billion as part of a broader foray into the market for business analytics software.
One area that is seeing IT investment in these tough markets is BI, as companies want to identify methods to reduce costs and new wins. Also, in the outsourcing space the business analytics space is one that is witnessing strong revenue spend from sectors such as pharma, consumer goods, automobiles, hospitality and manufacturing. SPSS is a strong brand in the user segments and its acquisition fortifies the BI practice.

In fact, both Cognos and SPSS would become part of IBM s information management division, and would help IBM to pursue multiple price-points to compete in predictive analytics or intelligence space, said T.R. Madan Mohan, managing partner at Browne and Mohan.

Cognos and SPSS had a complementary software partnership in 2007. Cognos with performance solutions and SPSS with predictive analytics complement each other well for companies to predict and perform rather than knee-jerk sense and respond. Statistical models from SPSS can be now pushed into Cognos 8 for enterprise customers to understand and plan performance parameters effectively.
But one should not forget that SAS, the major competitor in BI space, enjoys a significant market share in retail and pharma segments.  IBM would try to focus on the verticals that are more under its wrap in infrastructure management space such as telecom, government, universities for early adoption.

Some of its customers are PUMA, Gallup, LLyods, Credit Suisse, GUS, Sofmap, Bankwest, Robobank, Alliance & Leicester, New York University, BT, ISI, IITD, IGIDR, Adventis, HDFC (India).

For CIOs who have entered into enterprise agreements with IBM for infrastructure and information management services, savings in license revenue may happen because of bundling. CMOs/CFOs/CEOs who have been trained to use SPSS in their business schools early in their career would welcome this, as they could extend their statistical models easily now to Cognos.

And Ambuj Bajaj, general manager (information management) at IBM, endorsed the view. He said, 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.

In an unrelated development, IBM also acquired Ounce Labs. Ounce Labs is a major player in application security and its acquisition helps IBM to offer better security management services to its clients, especially in managed services as some of the customers may be using legacy solutions where the source code security could be high. Identification of security code threats and porting/development would add revenues to IBM service kitty.