Sterling Commerce Buy Helps IBM Add Action to Analysis

Ann All

IBM has been on an acquisition tear since Sam Palmisano became its CEO in 2002, as this Network World article points out. Big Blue spent some $14 billion to purchase 70 companies in that time frame. Thirty-three deals were inked from 2007 to 2009, with the bulk of them focused on buying companies that specialized in analyzing information. Two prominent examples: SPS, for which IBM paid $1.2 billion last year, and Cognos, purchased for $5 billion in 2007.

 

Software that analyzes information helps companies make better decisions. The next step is carrying out those decisions, preferably in a way that's as automated (and thus cost-effective) as possible. That's what makes IBM's pending $1.4 billion acquisition of Sterling Commerce a smart buy, writes Ovum analyst Tony Baer in an OnStrategies Perspectives blog post.

 

Sterling Commerce, with its background in electronic data interchange, specializes in making it easy for trading partners to conduct transactions with each other, with software that encompasses B2B/EDI integration, invoicing, payments, order fulfillment, and multi-channel sales. The buy enhances IBM's position in the supply chain management market and creates plenty of opportunities to sell additional IBM software and services. Baer lays some of them out in this paragraph from his post:

 

... There are obvious opportunities for WebSphere Business Modeler's Dynamic Process Edition, WebSphere Lombardi Edition's modeling, and/or Ilog's business rules. For instance, a game changing event such as Apple's iPad entering or creating a new market for tablet could provide the impetus for changes to products catalogs, pricing, promotions, and so on; a BPM or business rules model could facilitate such changes as an orchestration layer that acts in conjunction with some of the Sterling multi-channel and order fulfillment suites. Other examples include master data management, which can be critical when managing sale of families of like products through the channel; and of course Cognos/BI, which can be used for evaluating the profitability or growth potential of B2B relationships.

 

The opportunity is a pretty big one, based on a statistic offered by Craig Hayman, general manager of IBM's Websphere software business, in a New York Times interview. IBM believes online transactions between suppliers and partners will triple by 2013. While other analysts, including Baer, speculate that the Sterling purchase could put IBM in a position to go head-to-head against Microsoft, Oracle and SAP in the ERP market, the New York Times article says there is "no indication" this will happen. It seems more likely that IBM sees the Sterling buy as a way to boost its services business.



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May 26, 2010 8:47 AM Makesha Koestel Makesha Koestel  says:

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