It’s funny that no one in the federal or Ontario government objected to IBM’s purchase of Cognos lastyear. Although Cognos wasn’t going through bankruptcy proceedings likeNortel, you could argue the loss of business intelligence softwaredeveloped here to a U.S. multinational is as tragic as the loss of LTE technologydeveloped here to a Swedish multinational. Both Ericsson and IBM havedevelopment centres here, not it’s not like they’re completely foreigninterlopers. Maybe people just don’t understand or underestimate thevalue of analytics. IBM certainly didn’t underestimate the value ofCognos, just as it recognized the value of SPSS.
Big Blue announced a deal today to buy SPSS for US1.2 billion,take its product line and integrate it with its Information On Demandportfolio. The acquisition was announced in conjunction with a launchof IBM “Smart” Systems, which also bring the company further into thebusiness applications space. It shouldn’t have been a surprise that IBMwould continue investing in BI. Cognos was a great company with somegreat products, but it was much more focused on traditional analytics,which provides deeper understanding of historical trends. SPSS takes IBM into predictive analytics, the Rolls Royce of BI applications.
While SAS is the longtime leader in predictive analytics, it isn’tnecessarily threatened by IBM’s acquisition. There are two kinds ofcompanies – those that want an all-in-one-package of the sort IBM canprovide, and those that choose providers based on their track recordand experience on specific areas. SAS has been in this game for a longtime and it will take a great deal for IBM to prove it has the samedepth of understanding and list of customer success stories. Thecompanies that require predictive analytics are an elite group, butbeing associated with them brings considerable credibility to a vendoramong the rest of their customer base. Buying SPSS, among other things,adds to IBM’s cachet among existing and potential services customers.And if you want middleware, a database and systems management to runthe infrastructure that handles the processes which predictiveanalytics scrutinizes, then you’re a perfect Big Blue customer.
SAP, which bought Business Objects,can still grow a respectable BI business if it proves to customers thatanalytics is easily accomplished through its combined platform, andwithout having to resort to NetWeaver. HP is beginning to grow its BIcapabilities through NeoView, and Oracle bought Hyperion,but SAS CEO Jim Goodnight isn’t losing any sleep over those firms,either. Oracle could leapfrog IBM by buying SAS – it’s the only companywith the balls to do it – but I can’t imagine it happening, given thestark differences in corporate culture and the due diligence associatedwith acquiring the world’s largest privately-held software firm.
What the SPSS deal really means is that, through IBM, predictiveanalytics will go mainstream. This is the technology that gets to theheart of why things happen, and why they don’t. It focuses on howdecisions get made, human behaviour patterns and other normallyincomprehensible variables. It’s sexy because it’s less abouttechnology than it is about knowledge, at least in theory. If IBM cansuccessfully put it into practice in a very public way, maybe more ITdepartments will recognize analytics as their competitive edge.