IBM’s SPSS Buy Threatens Oracle, SAP And SAS

IBM’s proposed $1.2 billion acquisition of SPSS is the vendor’s most significant move towards giving customers tools to collect and use data, since it bought Cognos in 2007.

It puts software rivals such as Oracle, SAP and SAS Institute on notice that IBM is pulling together a substantial package of solutions in this area, and probably is a precursor to a host of similar acqusitions by other vendors, according to analysts.

“We anticipate that this will serve as a precedent for comparable software deals over the coming quarters,” Jereme LeBlanc, principal of TM Capital, said on 28th July, just after IBM made its announcement.

Deep analysis in IBM’s Information On Demand

IBM announced its intent to buy its longtime partner, which offers predictive analytics software and data mining tools, at an event in New York, where it rolled out its Smart Analytics System designed for deep analytic workloads.

It’s part of IBM’s larger IOD (Information on Demand) initiative, which entails giving businesses tools to access, analyze and act on data in order to gain a competitive edge over rivals.

Big Blue has bought a number of software companies over the past couple of years that fit into the IOD strategy — including Princeton Softech, DataMirror and Language Analysis Systems — but its 2007 acquistion of BI (business intelligence) software maker Cognos was the most significant of the the earlier purchases.

SPSS is the next key addition. “Today’s main focus is how IBM’s $6 billion worth of R&D is coming together to deliver analytics to our clients,” Ambuj Goyal, general manger of IBM Information Management software, said at the IBM event. “We continue to do this through both organic means and through acquisitions. SPSS is one such acquisition. … Their products are all in the predictive analytics space. We OEM’d some of their technology as part of Cognos, and now we have it in-house.”

The acquisition will set up IBM as a key competitor to Oracle, SAP and SAS in predictive analytics. Both Oracle — with its 2007 purchase of Hyperion — and SAP, which bought Business Objects the same year, have tightly integrated BI capabilities into their offerings. In addition, Oracle also offers predictive analytics capabilites thanks to its purchase of Sigma Dynamics in 2006. Also, SAS has been the top maker of predictive analytics and data mining tools.

However, all that said, IBM’s proposed move with SPSS puts it at the forefront of this burgeoning space, according to analysts.

“We view the move as highly strategic for IBM and believe that there was a ‘scarcity premium’ place on the business,” LeBlanc said, pointing out that SAS and SPSS dominated the high end of the predictive analysis space, with a host of smaller companies offering specialized approaches. “As such, we view this move as a shot across the bow of SAS as IBM continues to leverage the Cognos acquisition to steal market share within the broader [BI] and Corporate Peformance sector.”