This is certainly shaping up to be an interesting year for IBM, with its acquisitions of Cast Iron Systems in early May and last week's acquisition of Sterling Commerce-and it looks like it's not over yet. IBM recently confirmed it intends to spend nearly $20 billion for takeovers during the next five years.
That's no small number, obviously, but to give you some comparison, IBM has spent $14 billion on 70 acquisitions in the past eight years, as Network World reports.
Looks like Bob Evans, TechWeb's senior vice president and content director, was right when he predicted a tech spending spree. At least, he was right about IBM.
The Sterling acquisition cost IBM a nice $1.4 billion in cash, more than the $1.2 billion IBM spent on SPSS, an analytics company, last year. But then again, as Destination CRM points out, B2B integration software is a $5 billion market that's annually growing 10 percent.
Last month's acquisitions were both in the integration, with Cast Iron focused on data integration and cloud integration and Sterling is best known for providing business-to-business and EDI integration. Both companies will fall under the domain of IBM's WebSphere middleware division.
Both deals also received plenty of media attention, largely because they represent expansion into new terrains or directions-most notably, into the cloud. Cast Iron offers IBM a SaaS business model, with three options for pursing SaaS data integration-an appliance, on-premise software and integration-as-a-service.
Sterling offers IBM a bit more than integration technology. As IT Business Edge's Ann All points out, it also could boost IBM's position in the supply chain management market and bring in new work for its service business. But Sterling also offers IBM a significant opportunity both on-premise and in the cloud, according to an CanadianManufacturing.com analysis, titled, appropriately enough, "Why you care about IBM's acquisition of Sterling Commerce":
The acquisition should boost IBM's ability to create intelligent and dynamic business-to-business networks by simplifying and automating the way its clients connect and communicate both on-premise or through cloud computing. ... By acquiring Sterling Commerce technology and its large trading partner network, IBM is aiming for new cross-channel selling opportunities. This could also result in novel services and new products, because Sterling's technology plays well with IBM's industry-focused software, adding capabilities to IBM's legacy framework.
Earlier this year, IBM acquired MDM player Initiate, although the official word is that deal was more about the health care and government verticals than the underlying technology.
Only IBM's acquisition of Intelliden, which sells intelligent network automation software, is outside of data integration.
My point is: It's not completely crazy to speculate that IBM might expand further into integration space.
Reviews of the Sterling/IBM deal and Cast Iron acquisition have been largely positive, although Gartner Research Vice President Benoit Lheureux did question whether Sterling in particular might create too much overlap in IBM's already burgeoning integration middleware portfolio. Certainly, you can see why the senior vice president of strategy and marketing at Cast Iron, Simon Peel, referred to IBM as the "quintessential integration company."
I'm curious as to see which direction IBM will take all of this. Oracle is clearly interested in being the "one stack to rule them all." Is this what IBM plans, too? Or is IBM more focused on providing services and integration? Perhaps it's a third option - offering complete, integrated stacks, but in vertical markets?
GigaOm's Derrick Harris seems to think most of the big vendors, IBM included, want to offer integrated stacks, a strategy he seems to doubt will take hold with customers:
...it doesn't look like customers are buying into the promise of having just one throat to choke. ... Vendors with multiple components will continue to push them as packages, but buying trends show customers buying what they want from whom they want, and they have more choices than ever.
(You can read a good portion of Harris' comments, although the full post is through a free trial or to subscribers.)