Thursday, May 13, 2010

IT's new killer app?

Yesterday, at its annual investor briefing in New York, IBM made it clear (if there was any doubt) that it sees a big future in business analytics.

Company president and CEO Sam Palmisano outlined a five-year roadmap that includes a reported $20 billion for acquisitions through 2015, to support strong expected growth in the business analytics and optimization (BAO) segment.

Since 2005, Big Blue has invested $11 billion acquiring 18 companies. The largest of these deals was IBM’s 2007 acquisition of BI and performance management powerhouse Cognos for $5 billion. At IBM’s first-quarter earnings presentation in April, Mark Loughridge, IBM’s Senior Vice President and Chief Financial Officer, said that “Cognos, which was our largest acquisition ever, posted strong double-digit growth and gained share, providing a proof point on analytics demand in the market.”

According to Loughridge, IBM's recent acquisitions have generated aggregate compound revenue growth of 16 percent.

An April IBM Market Insights report referenced in the investor presentation claims that last year, BAO represented a $140 billion market opportunity, or 18 percent of the total IT market. IBM reportedly earned $9 billion in BAO revenue in 2009, and projects growth to $16 billion in revenues in 2015.

If that isn't "killer app" territory, I don't know what is.


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