Just as everyone was grabbing their hats and coats, and running out the door for the Labor Day weekend, IBM announced its second acquisition in as many days. This time it was Canadian-based Algorithmics for the relatively paltry sum of US$ 387 million, and again it is in the analytics space.
While the acquisition of i2 was for Big Data analytics, this time it’s for risk assessment and regulatory compliance in the financial vertical, and from an IT perspective in the GRC space.
As might be expected, it expands IBM’s portfolio of products in the area of financial risk assessment across a range of financial risk domains, and, significantly, IBM cites the acquisition of OpenPages last year as fitting nicely with this particular buy.
Like many of its acquisitions, it was preceded by research into the market space and, after identifying holes, or needs, in that space, was followed by a “buy."
In this case, the research was published in its IBM Institute of Business Value survey of 1,900 global CFOs last year, and drew the conclusion that at least half of the companies interviewed did not have financial management that was effective in the areas of strategy, information integration, risk and opportunity management.
The acquisition of Algorithmics aims to address that problem by offering enterprises the ability to measure and assess operational risk associated with lending processes, market and credit risk exposures.
With Algorithmics, IBM aims to offer companies the ability to reduce the number of independent silos and offer a better enterprise-wide view of risks across all their business operations.
It is increasingly important to deliver integrated solutions that provide a deep understanding of risk and enable effective decision support at the same time as meeting rapidly evolving regulatory requirements," said Rob Ashe, IBM GM of Business Analytics said of the deal.
Like the i2 acquisition, Algorithmics also brings a huge number of established clients, and it poses the question as to whether IBM is going after market buys now rather than technology buys.
This one brings 350 major clients, including 25 of the top 30 banks, such as global companies like the Allianz Group, HSBC, Societe General and BluCrest.
It also enhances its position in the GRC space, having been included in Gartner Magic Quadrant for GRC earlier in the year through OpenPages.
In that report, a number of specific trends in the GRC space were identified in the area of finance where companies were are looking for better corporate governance and compliance, with many of those looking to consolidate all their GRC functions onto one platform.
Companies are looking at this through the perspective of one standard such as Sarbanes-Oxley (SOX) compliance, or across regulations applied to specific industries.
Algorithmics will also help here once the deal is closed. The acquisition is subject to the usual conditions, which means it should be finalized soon after which the 900 Algorithmics employees join IBM's Software Group.