IBM buys Unica in $480M Deal

Published by John Lovett on August 13, 2010 All posts from John Lovett

So the beauty of one public company buying another is that they usually hold an analyst call to explain the rationale. Props to IBM for holding this call just two short hours after the news broke and for giving a few of us a chance to pepper them with tough questions. On this call, Craig Hayman, General Manager of IBM Business Solutions (within the IBM Software Solutions Group) and Yuchun Lee, Founder and CEO of Unica shared an insiders’ perspective on the deal. In fact, Craig even shared the code name “Amaru” which was his secret squirrel moniker for referring to the deal internally before it was done.

So here’s the scoop.

The IBM acquisition of Unica was largely driven by a recognized need for enterprises to get closer to their customers by understanding their experiences and interactions across a broad network of channels and customer touch points. They’ll accomplish this by using analytics technologies, building single view profiles of customers and delivering marketing process improvements.

Sounds a little like markety-speak doesn’t it? Well, regardless it’s still a pretty good story and one that I hope IBM is able to pull off. It’s actually similar to the one that Adobe told after the Omniture acquisition with perhaps more of an automation spin.

What does this mean for Web Analytics?

When Joe Stanhope of Forrester fame deftly asked how IBM planned to rationalize the overlap between NetInsight and the recent Coremetrics acquisition, the response was dominated by the word “synergies” which they see a lot of between these firms. Yuchun rightly went on to describe NetInsight as only one product in the Unica portfolio and that Coremetrics and Netinsight served different segments within the web analytics market. He explained that NetInsight has strength in the on premise solution market (which they do) and that their ability to leverage web analytics within an online datamart was also differentiated (while not entirely unique to the market at large, it’s true when compared to Coremetrics. NetInsight uses a relational database construct for storing and accessing clickstream data). Yuchun also pointed out that Coremetrics has strength when it comes to collecting high volume, high transaction data. This is a result of Coremetrics robust infrastructure that they’ve been building to collect and deliver this data at scale without incurring exorbitant expenses (and they were doing a damn good job of this).

All in all, the comments about the synergies concluded by stating that both tools would accelerate the benefits of deep customer insights for IBM’s clients. None the less, it will be very interesting to wait and see which features and functions emerge from a combined solution of two web analytics powerhouses.

What does this mean for IBM?

As much as I’d like to think that analytics is the epicenter of the business world, this deal is about multi-channel campaign management and marketing automation. IBM is without question on a buying spree. They snatched up SPSS, Coremetrics, DataCap, Sterling Commerce and now Unica in short order. Presumably this is all part of IBM’s strategic growth plan that earmarked a whopping $20 billion for acquisitions through 2015. But from a web analytics perspective, this acquisition didn’t occur because of the NetInsight product. Don’t get me wrong, I’m a big fan of the technology, but Unica’s campaign automation solutions and interactive marketing prowess within the marketplace surely made them a tasty morsel for IBM to gobble.

The newly acquired Unica technology will sit within the Software Group business – or more specifically – IBM Software Solutions Group. Yuchun will own the BU within the software solutions group. And this group also holds Websphere Commerce, Coremetrics, Cognos and about a bazillion other software solutions. But as we learned on the call today, Craig Hayman will work to build out frameworks and the connections between these multitude of solutions.

What does this mean for clients?

So, when I look at the big picture, my speculation is that IBM is furthering the bifurcation of the marketplace in yet another direction that separates the “haves” from the “have nots”. What I mean by this is slightly different from what Eric described in his bifurcation of analytics market as a separation of tools based on the level of experience for each user. He puts technologies like Adobe Omniture’s Discover and Coremetrics’ Explore into the exclusive camp of highly skilled analysts who are capable of performing true analysis on digital data sets. The rest of the population is left with simpler, yet still capable tools (not meant in a disparaging way) like Google Analytics that are intuitive and require little training to begin garnering insights. While I agree with Eric, a new twist in this divide can also be developing on a financial level.

As we know, Google Analytics is free and enterprise analytics can quickly run into six – even seven – digit figures in a hurry. My thoughts on this financial divide and IBM’s perpetuation of it stem from Sam Palmisano’s scoff at the notion of consumer technologies dominating the enterprise. Clearly the IBM acquisition moves dictate that a set of tools designed for the professional marketer will be vastly different from the solutions accessible to consumers on the street. Thus, I see this as yet another wedge in the bifurcated divide between large enterprises, the ones that typically purchase software from the likes of IBM, Oracle, and SAS, and small and mid-sized companies who are forced to use a different toolset primarily because of price.

So at first blush, if you’re a big enterprise this all sounds pretty good. IBM and Unica join forces, which isn’t too much of a stretch as there’s also some history here…IBM is a Unica customer using campaign management, marketing resource management and other services to bring about a “marketing transformation” within their own organization (at least that’s how Craig Hayman put it). And Unica has also been OEM’ing IBM solutions for some time. The acquisition extends the growth trajectory that Unica was already on and helps to bring together IBM’s end-to-end story that they call “Blue Washing” (Err…hope that code word was okay for public consumption).

But, the acquisition also acts as a good milestone for IBM who is assembling all the key ingredients for a leading enterprise solution – Sterling Commerce is connecting to the back end – Coremetrics offers deep insights into customer behavior and segments – and now Unica delivers a marketing management solution. It’s hard to argue that they’re not connecting a very compelling story for marketing professionals.

Yet, if you’re a mid-sized business or even a small organization…the IBM “Blueness” may have just distanced itself even further into the stratosphere.

Categorized under Web Analytics Tools

  • http://borasky-research.net M. Edward (Ed) Borasky

    Well … small-medium businesses still have plenty of options. There’s Google, of course, but also Facebook, Salesforce.com, SugarCRM and even Microsoft.

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  • Greg Timpany

    Look at what it is doing to prices. One used to be able to get into a modest-SPSS bundle for $4k to $5k. Now that is going through the roof.

    Since I have used Unica, Cognos and SPSS throughout my career I feel as if I should now go to work for IBM and become one of the masses.

  • http://www.brainrider.com Scott Armstrong, BrainRider

    Great analysis and insight!

    But I see the bifurcation as a trifurcation.

    1. Large organizations, with large, multi-touch, data sets and big budgets. Able to do predictive modeling but hard to steer.

    (they move like giant battleships, with awesome power but it takes time to get them into the market)

    2. Small organizations, with small data sets, doing light-weight customer touch-point tracking using SaaS tools like SalesForce, ParDot, and CMS. Listening hard to the inputs they do get. Not able to do predictive modeling but they are hearing what their customers want, even if they do not have all the data, and are then nimbly moving there quickly.

    (think of them as helicopters, highly manoeuvrable over short distances, able to land and pick up passengers/customers at will).

    3. Organizations not doing any analytics. Go ahead and think of them as have-nots.

    (or swimmers thrown around by the waves and catching what swims right to them).

    Check out our blog post (inspired by yours) on speed vs analytical perfection and the lessons from IBM’s buying spree and John Boyd’s ODDA loop for B2B companies doing marketing automation.

    http://blog.brainrider.com/2010/09/accelerating-your-b2b-pipeline-best-practice-lessons-from-john-boyds-ooda-loop/

    Cheers and thanks for sharing your post

    Scott Armstrong, BrainRider
    “sharing what we know is what we do”

  • http://john.webanalyticsdemystified.com John

    @Greg ~ If prices are prohibitive, the alternative is turning to Google Analytics which is not really a very bad option. If you do choose to work for IBM let us know what it’s like on the inside ;-)

    @Scott ~ Battleships, helicopters and swimmers!?! Interesting indeed. However, building on my last comment to Greg, I believe that there is no reason whatsoever to go blind on analytics today. Perhaps GA cannot fuel your automated marketing *yet* but it can reveal a wealth of information about your customers and your business.

    So for those swimmers, grab a life ring and get going!

    Thanks for the comments guys!

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