IBM Acquires Initiate Systems: Five Key Takeaways

This morning, IBM announced that it was acquiring Initiate Systems, a leading provider in the customer data integration (CDI) and enterprise master patient index (EMPI) markets. For full coverage of the news, including potential implications for procurement and supplier management solutions, check out Spend Matters previous coverage of the announcement from earlier today. In the column, I tried to distill what CDI technology does by noting "Initiate's technology enables users (e.g., analysts, doctors, sales reps) to gain a unified perspective of a customer, patient, or entity across multiple fragmented data sources, in real time." I also explained how this is applicable to procurement and supplier management. But in a rush to get this story out, I neglected to prioritize a few key takeaways that are worth noting:

1) IBM will now be the clear, dominant player in the CDI/EMPI market, especially in the areas of healthcare and law enforcement / intelligence. This should position IBM well for both public and private sector investment regardless of the overall recovery. Don't ignore either the healthcare or intelligence angles of the deal, not to mention IBM's ability to accelerate Initiate's current penetration (e.g., FBI N-DEx) in the beltway. Big Blue's feet on the street could prove invaluable here.

2) The announcement should put pressure on Oracle to ratchet up its own capabilities and offerings in this area, leveraging both existing assets and potentially investing in new ones. Look for Oracle to counter, responding to IBM in the coming quarters with announcements and news of their own.

3) The deal leaves SAP as an odd-man-out in the area of CDI/EMPI without a first tier solution (SAP MDM is not even a substitute for the assets that IBM and Oracle own).

4) There is a very limited understanding among process experts and consultants in areas such as procurement, supply chain, HR and sales force enablement when it comes to the power of CDI-like capabilities to replace existing data integration, mapping and information presentation approaches. Look for 2010 to mark a year of greater awareness about the power of these approaches to solving functional business problems outside of the healthcare, law enforcement and intelligence markets.

5) The procurement/supply chain implications of CDI and Initiate Systems are very real, yet no large vendors have released products in this area yet. Spend Matters analysis suggests that we will see CDI-like applications come to market in 2010 that will ultimately revolutionize how we access supplier information from multiple data sources, inside and outside the enterprise. We would encourage IBM to explore the possibilities of the Initiate technology asset in this area.

Jason Busch

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