Toronto-based Clarity Systems Ltd. has been acquired by IBM Corp., in a move that will allow Big Blue to fill a financial governance gap in its business analytics portfolio.
The acquisition, which was made official on Thursday, means IBM will bolster its analytics software line, including the company’s flagship Clarity FSR software aimed at automating the way enterprises collect and prepare electronic financial filings.
Clarity staff will continue to work out of the company’s existing Toronto offices and the firm will change its name to “Clarity: An IBM Company.”
IBM did not disclose the financial terms of the agreement.
Delbert Krause, a director of product marketing covering finance performance management for IBM, said that recent requirements from the Securities and Exchange Commission will soon force every company publicly traded in the U.S. to report their financial statements using XBRL. This format is used in the Clarity product line.
Historically, Krause said, the process of financial reporting has largely been a manual one for finance and IT departments.
“In my experience, most companies were handling it with Word, Excel and e-mail,” he said. “Also, it’s a sufficiently complex problem that it would be difficult to build an internal, makeshift solution.”
Clarity has about 600 customers across the world including British Airways plc, Young & Co. Brewery plc, and WSFS Financial Corp.
Mark Nashman, president and CTO at Clarity, said existing customers will have “nothing to worry about” in wake of the deal, as he expects product updates and support to continue in the same way they did before the acquisition.
“No customer will be left behind,” he said.
As for the deal itself, Nashman said IBM’s massive distribution network will give Clarity’s product tremendous reach at a time when many organizations are looking for better automated financial governance tools.
For IBM, the motivation behind the deal was to secure an “end-to-end” solution to tackle the growing need for financial governance reporting. “We felt this was a great opportunity for us to acquire a market leader and one of the first solutions of its kind to do this,” said Krouse.
Nashman said that companies that have invested in ERP systems and financial consolidation systems are still looking to automate that “last mile” in the financial reporting process. “Statutory and regulatory reports are done manually across most companies worldwide,” he said.
In addition to the Clarity acquisition, IBM also announced on Thursday the completion of its purchase of risk and compliance software firm OpenPages.