In its second-largest acquisition, Amazon buys the company for $970 million.
With three e-commerce vendors under its wing, IBM sharpens its retail focus.
With its pending acquisition of Unica Corp. following its purchases of Sterling Commerce and Coremetrics, IBM is out to provide a comprehensive online marketing and order management system integrated with its WebSphere Commerce e-commerce platform, the executive in charge said this week.
“Every one of these companies has dramatic value as a stand-alone,” says Craig Hayman, general manager of IBM’s Industry Solutions Group, which oversees the acquired companies and the integration of their technology with WebSphere Commerce. “When they’re run in concert, there will be a dramatic improvement in their overall capabilities for marketing professionals.”
As retailers capture orders through WebSphere Commerce and process them through Sterling Commerce, for example, integrated analytics from Coremetrics—providing data on things like conversion rates and inventory levels—will help to drive more effective marketing campaigns through the Unica online marketing platform. At least that’s the goal, following the expected close later this year of the Unica deal and the integration work in making the multiple systems work together, Hayman says.
Industry experts say IBM appears to be addressing an important need in the retail industry, where the growth in the number of online channels for connecting with consumers is producing an abundance of data that merchants need help in putting to use. “The goal of IBM is to create a comprehensive enterprise marketing management solution for retailers and others and become the marketing system of record,” says Paula Rosenblum, managing partner of research and advisory firm RSR Research LLC. A marketing system of record maintains in a single data repository all the cross-channel shopping behavior and inventory information that marketing professionals need to support and manage targeted marketing campaigns.
“Until now, retail has been a very merchandising-driven business,” Rosenblum says. “But because of the influx of customer information as a byproduct mostly of the web channel, marketing has become very important, and a marketing system of record helps marketers understand what customers’ needs and wants are.”
As marketing efforts expand to mobile as well as web and off-line channels, this data becomes even more important, adds Brian Walker, e-commerce technology principal analyst with Forrester Research Inc. “Targeted, contextual, optimized marketing is becoming more critical as businesses look to reach customers across mobile, web and offline,” he says. “IBM has an opportunity with these acquisitions to drive a very compelling capability across these needs.”
Greg Girard, an analyst with research and advisory firm IDC Retail Insights, notes that IBM’s WebSphere Commerce technology is well-suited to serve as the center platform for its expanded suite of marketing technology applications, all of which were designed in a web-enabled environment that supports cross-application data integration. “That’s what WebSphere Commerce was built to do,” he says.
Girard adds that IBM’s acquisitions of Coremetrics and Unica will particularly go well with its earlier acquisitions of SPSS, a provider of predictive analytics, and business intelligence provider Cognos. Among the new capabilities this suite of applications will provide is the ability to use semantic recognition technology to monitor, capture and analyze consumer mentions of brands and products in social networks, then combine that data with information about how consumers are shopping online and in stores to run marketing campaigns targeted to the interests of segments of consumers. “It’s all very cutting edge,” Girard says.
Rosenblum says that IBM is likely to target its new integrated offerings at mid-market as well as larger retailers, where chief marketing officers are gaining more influence in directing corporate technology and strategy projects. “Pretty much everyone needs a marketing system of record now,” she says. “There’s far more data to be analyzed than ever before. A central repository makes all the sense in the world.”
By integrating the back-end order management capabilities of Sterling Commerce, which support the management of orders after they’re captured on a web site to ensure their fulfillment, IBM is also serving a growing need among retailers to manage order management across multiple selling channels and multiple distribution centers.
“As businesses increasingly look to enable multichannel and distributed fulfillment models, distributed order management and e-commerce solutions become very critical capabilities, closely linked,” Walker says.
Still, IBM must prove that can effectively integrate technology across its WebSphere, Sterling, Coremetrics and Unica platforms. “Integration of IBM’s commerce solution with Sterling, Unica, and Coremetrics will take time, and it may also be a challenge to build a combined offering that is greater than the sum of its parts,” Walker says. “Clients should expect little change in the near term as IBM works to integrate the solutions and build combined offerings.”
Hayman says IBM’s commitment to its new retail industry focus is long term. IBM has already allocated about $2 billion to the acquisitions of Coremetrics, Sterling and Unica, and it has said it expects to spend a total of $20 billion over the next few years on acquisitions throughout all of the markets it serves.
Although Hayman says it’s too soon to say if any more of those funds will go toward acquisitions that support the retail industry, he says IBM will continue to improve how it serves retailers with technology and services. “We’re very committed to this space,” Hayman says. “We’re looking to learn what retailers need and plan to continue to invest in this market.”