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IBM executive explains company's buying spree
- — 11 September, 2007 09:00
IBM has been on an acquisition spree, having recently snapped up DataMirror, a data management vendor in Markam, Ontario; Princeton Softech, a data archiving company in Princeton, New Jersey; and Watchfire, a Web application security provider in Waltham, Massachusetts. Computerworld US' Thomas Hoffman talked with Deborah Magid, director of software strategy at IBM's Venture Capital Group in Menlo Park, California, about the company's strategy.
How would you describe IBM's mergers-and-acquisitions (M&A) philosophy?
We use M&A as part of our software strategy. So whenever we look at the software business as a whole or a set of products; we look at what customers need, what we have or don't have, whether we should build products ourselves, build out functionality or buy something. Also, when we buy companies, we almost always buy companies we're working with so that you know what you're getting into.
How does IBM develop those relationships?
Usually through the IBM Partner program. Businesses evolve, so in cases where a partnering model may evolve, over time it may appear that it makes sense to buy the company instead of partnering with them.
In terms of software, how does IBM's acquisition strategy differ from Oracle or other competitors?
I think the key thing about our strategy is that we're looking for innovation wherever it can be found. It can be in a small company overseas or in our own labs. We've acquired tiny 10-person companies and deals north of a billion dollars. We're really bringing innovation in as part of innovation in our business.
Also, IBM has close relationships to entrepreneurs and to investors. We see a lot of young companies and innovative things ahead of the market, and we can advise our own business leaders about what [acquisitions] they might want to be interested in.
You represent IBM's software business in the venture capital group, where recent acquisitions have centered around Web application security (Watchfire), data management (Princeton Softech), data capture (DataMirror) and Web conferencing (WebDialogs). How do these acquisitions fit into IBM's product strategies?
In each case, these are capabilities that we're trying to bring into our products. The different brands are evolving over time. Take the data management business. In the past, information management in our business and others was about the database -- how you stored data and how you retrieved it. Now, it's more about how you mine data, how you analyze it, how you apply it to your business. A company like Princeton [Softech], which was purely storage-based in 2000, was moving into data governance like we were.
What are the hottest areas for IBM's software group right now?
Security has always been a hot area. That's true in the venture capital marketplace and in our own business. One of the reasons we bought Watchfire is that the security market has changed over time. A few years ago, it was all about access control and access authentication. Now, it's more about [securing] the applications and the data itself. Information management continues to be very important for customers, very innovative. There are a lot of interesting things happening with enterprise search and analytics.
What's the biggest misnomer about IBM's M&A strategy?
People come to us all the time to shop companies. I don't think this is an issue just with IBM. But people know that we're very acquisitive, we're buying a company a month on average and that we're broad-based. But we don't buy companies with which we have no prior relationship.