IBM is bolstering its on-demand analytics solutions by acquiring Chicago-based SPSS for $1.2 billion in cash. The Armonk, N.Y.-based hardware and services provider intends to integrate SPSS within IBM's Information Management software portfolio and into a wide array of solutions already available.

Speaking at a press briefing, Ambuj Goyal, GM of IBM’s Information Management business, sought to allay fears in the SPSS customer base, noting IBM would continue to support and enhance SPSS predictive analytic technologies while enabling customers to take advantage of the broader IBM portfolio.

“Notice that everything we do is on open standards, we are not about rip and replace,” Goyal said. “We understand that customers have invested in other infrastructure and we respect that.”

Nonetheless, the acquisition builds upon earlier moves by IBM to augment its Information on Demand software portfolio, which it launched in 2005. In November 2007, IBM paid $4.9 billion to acquire Ottawa-based business intelligence and performance management software provider Cognos. Goyal said the acquisition of SPSS, which specializes in data mining and analysis software, will round out efforts to enable IBM customers to use information as a strategic asset. “One of the key pieces that missing in our portfolio was predictive analytics,” Goyal said.

Goyal noted the move also dovetails with IBM’s recent launch of 4,000-person strong Business Analytics and Optimization Consulting division, which was formed to help companies confront the complex challenges presented by the exponential growth of structured and unstructured data.

“We expect this to speed the adoption of predictive analytics,” added Jack Noonan, president and CEO of SPSS.

Jeff Goldberg, a senior analyst with Boston-based financial research and consulting firm Celent, says the acquisition fits a trend of major software vendors such as IBM, SAP and Oracle acquiring firms that specialize in predictive, actionable intelligence.

“These acquisitions have shifted the value pitched to customers from the ability to better mine data to a more complex, services-based ability to act upon reports and, subsequently, alter the course of the business,” he says. “This message allows a company like IBM to sell both software systems as well as high-value, ongoing professional services."

The acquisition, expected to close in the second half of 2009, is subject to SPSS shareholder approval, applicable regulatory clearances and other customary closing conditions.

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