IBM’s Acquisition of Predictive Analytics Vendor SPSS to Improve its BPM Offerings

| Jul 31, 2009 | Application Infrastructure | Competitive Update

| Analyst: Michael Meehan

Current Perspective: Positive
Vendor Importance: Moderate
Market Impact: Low

Event Summary

July 28, 2009 – IBM and SPSS have announced the two companies have entered into a definitive merger agreement for IBM to acquire SPSS in an all cash transaction at a price of approximately $1.2 billion. This deal is expected to expand IBM's Information on Demand software portfolio and business analytics capabilities, including the offerings available through IBM's recently-announced Business Analytics and Optimization Consulting organization and network of Analytics Solution Centers.

Analytical Summary

• Current Perspective: Positive on IBM’s proposed $1.2 billion acquisition of data analytics vendor SPSS. While the move most immediately impacts the IBM Information Management division it also provides some long-term benefits to IBM’s application infrastructure business, most notably with its vertical market solutions and business process management (BPM) suite.

• Vendor Importance: Moderate to IBM’s application infrastructure business, because many of the most compelling benefits of the deal will require substantial technological integration, and collaboration between different product divisions.

• Market Impact: Low to the application infrastructure market, because IBM likely will take a year after the deal closes to build out a compelling joint data management-application infrastructure story. Competitors will have time to plot their own strategies in this area and prepare a response for when IBM begins to put its marketing might behind something akin to analytics-driven BPM.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Application Infrastructure | More information

Recommended Competitor Actions

• Oracle should do a better job of delineating the benefits its 2007 Hyperion business intelligence acquisition can bring to its BPM portfolio. IBM, which bought Cognos in the same time frame, is now in a position to merge its data management and application infrastructure stories in new and exciting ways and Oracle needs to better emphasize its existing abilities in that area.

• Progress Apama and TIBCO should look to SPSS technology as a fertile partnership opportunity for their complex event processing products. While IBM competes against both companies, the information management side of the house stands to benefit from strong partners in the CEP arena.

• SAP, which is both a complementary technology and channel partner of SPSS, should investigate ways of leveraging SPSS in application infrastructure solutions involving NetWeaver. Since users most likely will have IBM infrastructure in place as well, SPSS will be able to supply analytics to a broad heterogeneous installation.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Application Infrastructure | More information

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