IBM's Fevered Shopping Spree: 12 Buys To Put The Company Ahead

IBM's Desireable Dozen

Here we are, nearly two-thirds of the way through 2010 and IBM is averaging better than 1.5 acquisitions a month. In May CEO Sam Palmisano told investors that IBM would spend about $20 billion on acquisitions during the next five years -- beating the $20 billion the company has spent on acquisitions since Palmisano became CEO in 2002.

Most of the 12 companies IBM has bought this year are software vendors that develop tools for managing and analyzing data, to e-commerce applications, to security and network management software. But IBM also acquired a finance company and a company that provides services to government agencies.

Here’s a look at IBM’s acquisitions in 2010 -- so far -- and what they bring to the company and its channel partners.

Unica

IBM's latest acquisition deal, with a $480 million price tag, will bring a set of interactive marketing, brand management and Web analytics applications to IBM's product portfolio. Unica's software will help businesses analyze and predict their customers' preferences and better target their marketing campaigns, according to the company.

IBM executives once said they would focus on infrastructure software and not compete in the application space with software vendors such as Microsoft, Oracle and SAP. While the lion's share of IBM's software products are infrastructure software, development tools and middleware, the vendor has moved up the "software stack" in recent years through acquisitions like business intelligence software vendor Cognos in 2008 and content management application vendor Datacap (see next slide).

IBM announced the purchase of Waltham, Mass.-based Unica on Aug. 13 and expects to complete the deal by year's end.

Datacap

On Aug. 10 IBM shelled out an undisclosed sum to purchase Datacap, a Tarrytown, N.Y.-based developer of software for capturing and managing unstructured data such as documents and forms. The application lets businesses and organizations digitize paper documents including tax returns, medical claims, invoices and shipping documents.

About 80 percent of all new data being generated by businesses today is in the form of unstructured data, industry pundits say, everything from documents, to e-mails to PowerPoint presentations. That spurs demand for the kind of software that Datacap develops to manage all that data and make sure it conforms with a plethora of regulations, from HIPAA to Sarbanes-Oxley.

Storwize

IBM acquired Storwize, a developer of real-time data compression technology, on July 29. IBM bought the privately held company, based in Marlborough, Mass., for an undisclosed sum.

Most data compression tools are used to compress secondary or backup data. But with businesses generating huge volumes of data every day, the need to compress transactional data on-the-fly is growing. Storwize's Random Access Compression Engine technology compresses primary data -- such as files, databases and virtualization images -- in real-time without affecting performance.

Demand for enterprise storage is growing more than 43 percent a year, according to market researcher IDC.

BigFix

IBM completed its acquisition of security management software developer BigFix on July 20, adding compliance and security management capabilities to its security technology lineup.

With BigFix, IBM and its channel partners can offer customers a single point of control for managing a range of systems,including lifecycle, vulnerability assessment, energy efficiency, configuration management and security compliance tasks.

IBM announced its acquisition plans for the Emeryville, Calif.-based BigFix on July 1 for an undisclosed sum.

Coremetrics

IBM announced June 15 its plans to acquire Coremetrics, a developer of Web analytics and integrated marketing applications. That should dovetail nicely with its more recent Unica acquisition. Coremetrics' on-demand tools are used by businesses to analyze traffic on their Web sites and tailor offers to individual customers.

Along with integrating Coremetrics with its WebSphere Commerce and WebSphere Portal products, it also could be linked to the Sterling Commerce multi-channel fulfillment applications IBM is in the process of buying.

IBM closed the Coremetrics acquisition on Aug. 2. The company did not reveal how much it spent to buy the privately held company, which is based in San Mateo, Calif.

Sterling Commerce

IBM's biggest deal this year, announced May 24, is its pending $1.4-billion acquisition of Sterling Commerce. IBM is buying the Dublin, Ohio-based developer of supply chain and business-to-business collaboration software from AT&T, its current owner. IBM hasn't completed the acquisition yet -- it's expected to wrap it up by the end of the year.

Sterling's software helps businesses work with customers, suppliers and other cross-channel business partners, building and managing networks of partners through both on-premise and on-demand applications. IBM already offers its WebSphere Commerce software and the Sterling applications will provide an additional layer of functionality on top of that.

Cast Iron Systems

Complementary to the Sterling acquisition is IBM's buyout on May 3 of Cast Iron Systems, a developer of cloud integration software and services that help businesses link Software-as-a-Service software, such as Salesforce CRM applications, with on-premise applications such as an ERP system.

The difficult chore of connecting on-demand applications with on-premise systems is widely seen as one of the biggest hurdles to broader adoption of cloud computing. The addition of Cast Iron means that IBM can offer a broader range of software and services to customers moving into cloud computing – especially those adopting a cloud model.

IBM didn't disclose how much it paid for Mountain View, Calif.-based Cast Iron.

Intelliden

IBM's Feb. acquisition of Menlo Park, Calif.-based Intelliden on Feb. 16 provided a boost to IBM's lineup of network management tools. IBM did not disclose what it paid for the company.

Intelliden's software is used to automate the configuration of manually managed network devices such as hubs, routers and switches. Such capabilities are needed to prevent network failures -- IBM quoted analyst estimates that 60 percent of all network outages are caused by manual configuration errors.

Intelliden's technology is being integrated into IBM's Tivoli systems and network management software. Because the Intelliden tools can be used to deliver asset management services and manage service-level agreements, IBM said the deal strengthens its service management portfolio.

Initiate Systems

IBM expanded its reach in the health care IT market when it disclosed a deal on Feb. 3 to acquire Initiate Systems, a privately held developer of data integrity software for the health care industry. It did not disclose the financial details of the acquisition, which it completed on March 1.

Chicago-based Initiate's software helps speed up the exchange of electronic medical records by allowing multiple organizations, including health-care providers, insurers, and government agencies, to share data such as patient records and clinical test results.

The acquisition will help IBM and its channel partners profit from federal stimulus spending on health-care IT and efforts to boost adoption of electronic medical record systems.

National Interest Security Company

IBM announced on Jan. 20 that it would buy privately held NISC, a supplier of advanced analytics and IT systems for the public sector, for an undisclosed sum. IBM completed the deal on March 2.

With Fairfax, Va.-based NISC, IBM expanded its technology service offerings to federal government agencies in the areas of defense, health care, energy, logistics, infrastructure management and security. NISC has been incorporated into IBM's Global Business Services business unit.

Lombardi Software

IBM expanded into the market for business process management (BPM) applications and services with the acquisition of Lombardi, based in Austin, Tex. IBM announced the acquisition for an undisclosed amount on Dec. 16 and closed the deal Jan. 26.

BPM tools support such processes as product planning, supply chain execution, insurance claims processing, human resource management, procurement and IT services. Companies are increasingly adopting BPM software as they try to improve their business processes and become more efficient in a tough economy.

The acquisition will strengthen IBM's hand in the rapidly expanding market for BPM software, which market researcher IDC projects will grow 15 percent a year during the next four years from $1.7 billion in 2009 to $3.0 billion in 2013.

Wilshire Credit

IBM strengthened its position in the market for mortgage business process services when it bought the core operating assets of Wilshire Credt from Bank of America on March 1. The deal was announced on Oct. 5. The cost of the acquisition was not disclosed.