By September this year, the acquisition machine that is IBM appeared to have run out of steam. However, its acquisition of social enterprise management vendor Curam this week is just the latest in a series of "buys" that indicates Big Blue is back in buying mode.
While the acquisition price of Irish-based Curam was not disclosed, in the case of IBM it generally means that the price is really only pocket change for IBM, and with a turnover in the last financial year of US$ 100 million, it probably didn’t cost a lot relatively.
Curam offers social software to governments and other public sector agencies, enabling better communication and collaboration between dispersed employees.
It gives bird's-eye views of benefits and services available to clients across these kinds of agencies and, according to Curam, enables companies to streamline information sharing and, in doing so, reduces the costs of these programs for the client.
Interesting, but not really exceptional, you might think. And indeed, compared with some IBM acquisitions, you’d probably be right; except for two things that we’re going to see a lot more of from IBM in 2012.
The Curam acquisition is just the latest buy in a number of different moves over the past two years designed to get its Smarter Cities initiative really on track.
The basic idea behind the strategy is the application of IT to the running of cities. It particular it foresees the use of business intelligence, data analytics including Big Data and data management in cities to make them more efficient and coordinated.
With this in mind, IBM, over the past few years, has made a number of acquisitions and launched a number of new programs to get this up and running -- the most notable recent example being the acquisition of i2 in October that applied Big Data analytics to crime prevention for city authorities.
Curam’s Social Enterprise
Curam also falls into the Smarter Ctiy initiative and follows on the establishment of IBM’s Smarter Cities Technology Center, also in Dublin, Ireland, adding what Big Blue describes as “its ability to help clients increase the social and economic potential of people and their families.”
But this is not just altruism on behalf of IBM. According to IDC’s Government Insights report, the market opportunity here in 2011 was around US$ 34 billion, and will increase to US$ 57 billion in 2014, a market that IBM is now in an admirable position to exploit.
Curam, though, was a logical step for IBM as they had been working together since 1999 around the world and on federal, state, local and provincial-level social program solutions.
IBM says that more than 90% of Curam's clients use IBM WebSphere middleware and nearly 70% of its clients use IBM hardware, making it a perfect fit into the IBM family.
IBM’s Recent Acquisitions
The second interesting point about this is that it continues an acquisition trend in IBM that rose to the surface again in the latter half of this year.
According to its own figures and statements, in the nine months to the end of September, IBM made one acquisition, of a real-estate management software company called Tririga. Then, in quick succession, we had:
- September 1, it agreed to buy risk analytics firm Algorithmics for US$ 387 million
- October 5, it announced it had completed its acquisition of i2
- October 11, it bought Platform Computing, a developer of cluster and grid management software for distributed computing environments
- October 26, it announced the acquisition of Q1 Labs
- December 8, it announced it was spending US$ 440 million on DemandTec, which it said will extend IBM’s Smarter Commerce initiative by adding cloud-based price, promotion and other merchandising and marketing analytics to help companies better define the best price points and product mix based on customer buying trends
Rometty and Acquisitions?
During that period, it also announced that, as of January 1 coming, Sam Palmisano will step down and will be replaced as CEO by Virginia Rometty, who has previously said she will continue to use the US$ 20 billion war chest set up by Palisano to continue her predecessors' buying spree.
Even if times are tough, it looks likes the M&A department in IBM is beginning to wake up again. For a new CEO, it’s always a good thing to start with something to give the penny-counters something to talk about, and a buying spree looks like a good bet at the moment.
She joins a growing number of female CEOs like Meg Whitman, who is hoping to turn HP around after a poor 18 months, and Ursula Burns in Xerox, who is expanding that company’s reach by moving firmly into the document management and business process market to complement its MFP business.
It will be good to see IBM raising the acquisition banner again; you never know where it’s going to go and what it might be looking at.
The fact that the recent acquisitions have all been relatively small for IBM suggests that it will continue its strategy of buying pieces of technology it needs rather than buying flagship companies.
But that’s looking from the outside. With IBM you never can tell.