IBM: Betting big on analytics

International Business Machines Corp. Or IBM as it is popularly known recently announced its restructuring plans for its India BPO subsidiary Daksh. IBM wants its subsidiary’s services to become more valuable to its clients by not only handling just the transactions (ex: calls, data etc.) for its customers but distilling intelligence out of them and using the intelligence to guide the company’s overall strategy and growth. The move is seen as part of IBM’s global plans to shift its focus to the field of business analytics.

IBM is betting big time on business analytics to drive its growth over the next decade.The company has spent over $14 billion in the last four years to acquire analytics software and services companies. It took over the business intelligence software giant COGNOS for a whopping $5 billion in 2007. Since then, it has bought SPSS, one of the leading predictive data mining software company for $1.2 billion; Netezza, a big data warehouse vendor for $1.7 billion; Coremetrics, a web analytics software and services provider for an undisclosed amount; Unica an information services company for another half a billion and about 20 other analytic companies across the globe.

Industry experts believe this is not a case of a large company throwing its cash around to make a splash in the industry. Rather, this is a well thought out strategy by the IT giant that is expected to yield rich dividends in the coming years. In 2009, IBM made over $9 billion in revenue from business analytics. The company expects this number to grow to $16 billion in the next 5 years.

IBM has set up a new consulting business line for business analytics. It has set up its business analytics centre with over 4000 consultants and 200 researchers and math geeks. It is not often that a new line is created in business consulting and companies never do this lightly. That IBM has gone ahead and invested billions of dollars and hired thousands of people to do exactly this shows just how serious it is about the power of analytics driving growth in the 21^st century.