IBM To Acquire Data Mining Software Developer SPSS

IBM will acquire SPSS, a developer of sophisticated data mining and predictive analysis software, in a move that will greatly expand IBM's data analysis technology offerings.

IBM is paying $50 a share for Chicago-based SPSS, putting the value of the deal at approximately $1.2 billion. The deal is subject to SPSS shareholder approval and regulatory clearances and is expected to close later this year. IBM will announce the acquisition at a press conference later this morning.

News that IBM will buy SPSS comes the same day the company is set to unveil the IBM Smart Analytics System, a package of hardware, software, data storage technology and services that will help businesses analyze structured and unstructured data from multiple sources to forecast business trends. That package will be available starting Sept. 25 and prices will be disclosed at that date.

"This is the start of a longer-term vision of the power of analytics integrated into a single system," said Bernie Spang, marketing director for IBM data management software, in a briefing on the IBM Smart Analytics System last week. The package will include business intelligence, data mining, text analysis and data warehousing software, including products IBM acquired through its buyouts of Cognos and Ascential Software. The SPSS software is likely to become part of the package.

SPSS develops data modeling and statistical analysis software that helps businesses identify trends and predict results, such as forecasting sales of a particular product, detecting credit card fraud, and even predicting crimes. The technology can be used to analyze data in a number of industries including retail, finance, insurance, health care and telecommunications.

In a widely reported use of SPSS software, the Richmond, Va., police department was able to lower crime rates in 2004-2005 by identifying crime hot spots and assigning police to locations where crimes were likely to occur.

The SPSS deal is IBM's 27th acquisition that supports its Information on Demand strategy. As with the new Smart Analytics System, the SPSS software will bolster IBM's recently unveiled IBM Business Analytics and Optimization Services, which has some 4,000 consultants.

After the acquisition is completed, IBM will continue to support and enhance the SPSS technologies while integrating them with the rest of its IBM Information Management software portfolio, according to a press release issued Tuesday morning.

IBM has identified business analytics as one of its strategic initiatives. The market for business analytics software is expected to grow 4 percent this year to reach $25 billion, according to market-research firm IDC.

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