Late last month, IBM announced that it was acquiring SPSS in a $1.2 billion cash deal. While I won't get into the specifics here other than to say that analytics appears to be heating up again as a sector -- in fact, it might be one of the only bright spots besides Spend Management in the enterprise applications arena at the moment -- the news could quite possibly portend many more deals for IBM as Big Blue goes bargain hunting. And it would make sense that some might be in the Spend Management arena. Let's examine why.
For one, IBM has a healthy and growing consulting and outsourcing practice in the procurement and operations world. But this practice -- especially the outsourcing one -- is still constrained by marketplace growth rules given the relative slow growth of the industry. Might it make sense at the right price to do a material tuck-in deal like an ICG Commerce which would not only add a significant customer list, but expert bandwidth, scale and technology understanding? You bet it would. If the price is right. The problem is that ICG Commerce is still small by traditional IBM standards. And this would require a deal such as this to be more strategic than financial.
What's more likely -- and potentially interesting -- is for IBM to get more serious about P2P software. After all, this is an organization that has proven it has an appetite for selling and delivering a combination of software and services. Which would make an applications-focused deal a distinct possibility. In this regard I've always said, to financial analysts who've asked, that there's a potential strong fit between much of Ariba's business and IBM's -- including software and services. It's just too bad that Gene Richter would not be around to run such an effort today (or act as its honorary Chairman).
Other software companies with enough of a strategic fit and revenue to interest IBM might include Emptoris and Zycus. And BravoSolution, which gets a material portion of its revenue from services, also has a strong supply management platform (especially in the areas of sourcing, spend analysis and supplier performance) and could also be on the list. From a services perspective, the possibilities are endless, but I suspect any potential acquisitions would need to be large enough to get the attention of the IBM corporate development team. And did anyone say services procurement? Perhaps IBM will decide to build software capabilities in this area by acquiring a Fieldglass. Or perhaps they'll decide on a complete solution path by leveraging the assets of an IQNavigator. As Bruce Richardson, quoting Ken Sharma, likes to say: "All things are possible."
What are your thoughts? Can you see IBM becoming an even greater player in this sector through targeted acquisitions?