Software Acquisitions-Fortifying IBM's Middleware Platform - Since 2001, IBM has consistently pursued a strategy to grow and diversify its software portfolio organizally, through innovation, and with targeted acquisitions
Last week’s announcement of our agreement to buy Ascential Software Corp. for $1.1 billion marks our 21st acquisition in the middleware space in just the last four years.
Track record of aquisitions
IBM acquires companies for two primary reasons.
1) To get a jump-start into emerging markets.
2) To fill gaps in our existing technology, round out key aspects of our portfolio and quickly move into new markets to further differentiate ourselves from the competition.
One way IBM positions itself for long-term and sustainable growth is by linking acquisitions to the high-value, innovation segments of our industry. This means opportunistically pursuing rapid shifts in the marketplace and targeting acquisitions that generate completely new revenue streams.
In 2004, five out of IBM's six acquisitions of software companies were sourced through venture capitalists in our partnership network, extending our efforts in key growth areas such as business intelligence, business performance management and business integration. As a result, IBM's business partnerships have broadened, including an increasing number of independent software vendors (ISVs) who have adopted our offerings and built applications based on our middleware.
In addition to focusing on high-value business, IBM makes a concerted effort to acquire companies with whom we have a strong history or partnership, to ensure a faster, successful integration. The industry has seen many failed attempts to bring two companies together. One reason we're successful is because we find companies with whom we already have existing marketing, sales and development agreements, similar cultures and joint customers.
One sign of a successful acquisition is when a company grows at a faster rate after it was acquired; another is when the new technology being purchased gets swiftly integrated into the existing IBM product set. IBM’s powerful presence in enterprise markets, the vast global reach of our business partner network, and access to the largest software sales force on the planet helps spreads the benefit of new products to more customers at an accelerated rate.
IBM spends six months to a year planning the integration of a target company into IBM. Our success is the result of a structured and disciplined approach, with clear strategic objectives, detailed implementation plans and a focus on creating and capturing value.
Aquisitions done right