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July 29, 2009

IBM Sees BI Future Through SPSS Acquisition

IBM has been investing in business intelligence (BI) solutions the last few years, and it's still going strong: IBM announced it plans to acquire SPSS Inc. in an all cash transaction at a price of $50 per share that--if approved--will bring the price tag to $1.2 billion.

IBM's primary interest in SPSS appears to be the company's expertise in predictive analytics, an area of BI that focuses on analyzing historical and current data to predict future outcomes and trends.

"With this acquisition, we are extending our capabilities around a new level of analytics that not only provides clients with greater insight--but true foresight," notes Ambuj Goyal, IBM's general manager of Information Management. "Predictive analytics can help clients move beyond the 'sense and respond' mode, which can leave blind spots for strategic information in today's fast paced environment--to 'predict and act' for improved business outcomes."

For IBM i-focused organizations, SPSS offers its ShowCase Suite, an end-to-end BI solution.

IBM's Information on Demand

IBM says this acquisition is expected to further expand IBM's Information on Demand (IOD) software portfolio and business analytics capabilities, including the range of offerings available through IBM's recently-announced Business Analytics and Optimization Consulting organization and network of Analytics Solution Centers. The acquisition is also expected to strengthen IBM's Information Agenda initiative, which is aimed at helping companies turn information into strategic assets.

As companies attempt to control costs and use resources more wisely, IDC estimates that the worldwide market for business analytics software will grow to $25 billion this year, up 4 percent over 2008.

IBM says the acquisition of SPSS will add a wide array of advanced analytic capabilities to IBM's IOD software portfolio enabling many new industry-focused solutions including: customer acquisition and retention for financial services, patient care improvement for the healthcare industry, crime prevention for public sector and ideal store location for retailers and manufacturers. In addition, software capabilities that address all industries will include demand forecasting, employee hiring and retention, customer profitability, credit scoring, and fraud detection.

Predictive Analytics in Crime-Fighting Action

As an example of predictive analytics in action, IBM is touting the recognition of patterns based on the analysis of the thousands of incident reports, crime tips, and other data that police departments receive every day, is critical to fighting crime and protecting the public. Police services often use predictive analytics to identify and predict patterns of criminal behavior to help forecast which minor crimes are most likely to escalate into violence. By investigating dispatch data, the police can also create models that pinpoint crime "hot spots," so they can place tactical units where they anticipate crime is most likely to occur.

The Richmond, VA police department provided the results of this kind of predictive analysis to detectives and saw a 20-30 percent decrease in violent crime and homicides in a 12-month period. SPSS has an interesting NBC video segment on its web site describing the results.

IBM says it will continue to support and enhance SPSS technologies while allowing customers to take advantage of the broader IBM portfolio. Following the close of the acquisition, IBM intends to integrate SPSS within IBM's Information Management software portfolio and into the many industry offerings already available.

The acquisition is subject to SPSS shareholder approval, applicable regulatory clearances and other customary closing conditions. It is expected to close later in the second half of 2009.

--Chris Maxcer, news and Database/SQL editor

Posted by cmaxcer on July 29, 2009 at 10:47 AM | Comments (2)