IBM acquisition of Varicent – How does it impact the SPM landscape?
We were barely getting used to calling ‘Merced’ by its new name – ‘NICE’, when this news hit the wire – IBM buys Varicent!
This is the second major acquisition in the SPM arena in the last four months. M&A activities are a good indication of industry maturity. So is the SPM arena already maturing? And how does this acquisition impact Varicent’s customers and its competition? The news comes as a surprise, and the title of the press release is puzzling in itself. It reads “IBM buys Varicent to boost business analytics”. We think of Varicent as an SPM company, don’t we? And yet, IBM bought it for its Data Analytics, as though it discovered a hidden gem under the layers of SPM application that customers love! It is more likely that the author picked a name better understood by the masses(vs ‘SPM’), or maybe, it is indicative of the future roadmap – leveraging SPM data in an analytical fashion to improve overall sales performance.
The press release goes on to state ‘..the software will be folded into IBM’s Smarter Analytics line of software packages’. In the recent past, IBM has mostly acquired companies that offered IT Management or Infrastructure Technologies, whose products are were leveraged across a range of industries and functions. Click here, for a list of IBM acquisitions. I cannot think of any major application vendors acquired by IBM in the recent past. With the purchase of Varicent, Big Blue has stepped beyond its chosen path. If IBM plans to stick around and become a significant player in the SPM landscape, then it is a big reinforcement to the value proposition of SPM solutions. Quoting Chris Caberra, Xactly CEO, ‘We say welcome, IBM’.
All indicators point in the direction that Varicent would continue to operate as an independent entity, under the IBM brand, just like Netezza or Algorithmics. Both are thriving after getting acquired by IBM, and successfully serving small and large enterprise customers alike. I expect to see ‘Varicent, an IBM company’ in all their future messaging, and Varicent continuing to operate as an SPM player for years to come. With IBM getting into the SPM ring, we’ll have not one, but two niche SPM packages backed by the strength of publicly listed companies – Callidus and Varicent(not counting Oracle as a niche SPM player). Decision makers on the customers side, concerned about Varicent’s sustaining power, can now take comfort in dealing with IBM.
If IBM plays it cards as expected, folks at Callidus are likely to see serious challenges in more of their sales cycles. But in the short run, as it happens with every M&A, prospects and customers might get jittery, and competition(read Callidus and Xactly) will look to take advantage of the opportunity to lure away customers.
As for Varicent’s current users, it should be life as usual. I don’t envision IBM changing or discontinuing the SPM product line in the foreseeable future. The pricing may go up just to be in sync with IBM branding, but customers wouldn’t mind paying a premium for IBM’s brand value. In fact, IBM acquisition should help customers in three significant ways:
1. Global Reach – IBM with its global footprint is better equipped to serve Varicent’s global customer base.
2. Data Analytics – This is a no brainer. IBM will integrate its portfolio of big-data technologies to further enhance Varicent’s analytical capabilities.
3. Cloud Capabilities- IBM has acquired several cloud technology companies in the recent past – Cast Iron Systems, Green Hat and DemanTec etc. to name a few. With some innovative re-engineering, IBM has the opportunity to leverage these technologies, and significantly enhance the SaaS offering of Varicent. We can expect to see much more solid SaaS capabilities in future versions of Varicent.
Welcome, Varicent, an IBM company.
About the Author
Maneesh Gupta is the Managing Partner at Spectrum Technologies. Spectrum is a silicon valley firm providing niche services in the area of Sales Performance Management Systems since 2007.
Maneesh can be reached at firstname.lastname@example.org
To learn more about Spectrum please visit – www.spectrumbiztech.com