IBM: A Dynamic Software Vendor
Updated · Nov 01, 2010
IBM has acquired more than 100 software companies in the past decade. According to this report on IT Director, the company has invested $12B in 23 analytics-related acquisitions including Cognos, Netezza, SPSS, and OpenPages in the last four.
“Today, IBM is no longer an aggressive tin-shifter nor the services company envisaged by Lou Gerstner, but a dynamic software vendor. In the last decade IBM has acquired 100+ software companies and has software revenues of c. $23Bn and 70,000 employees in its Software Group (it is almost exactly the same size as Oracle).
“So why software? The 86% margin IBM gets on software is double what they achieve elsewhere. In addition, as McKinsey points out: ‘By pushing their products through a global sales force, IBM estimates it increased their revenues by almost 50% in the first two years after each acquisition and an average of more than 10% in the next three years.’
“Analytics is the main thrust. In four years IBM has invested $12Bn in 23 analytics-related acquisitions including Cognos, Netezza, SPSS, and OpenPages. IBM’s resulting Business Analytics and Optimization (BAO) practice has 6,000 consultants and ‘enables clients to get far more value’.”