Arik Hesseldahl

Recent Posts by Arik Hesseldahl

IBM Adds Canada’s Varicent to Its Analytics Lineup

IBM just announced another acquisition that’s intended to fill out its steadily growing portfolio of analytics software companies. The company it is buying is called Varicent. Based in Toronto, Varicent specializes in using the power of computing to analyze and understand sales performance and compensation.

Varicent makes software that’s intended to automatically collect and analyze sales data not only from a company’s finance and sales operations, but also from its human resources and IT departments. The point — and if this doesn’t describe an IBM-like view of the world I don’t know what does — is to gain efficiencies, discover unknown trends and, as always, boost sales.

In more practical terms, it means, according to a note from Brian Marshall at ISI out this morning, that Varicent’s software makes it easier for companies to “optimize compensation, streamline territory assignments, manage quotas, analyze sales activities and prepare for audits.”

Founded in 2003, it had raised $35 million in venture capital from FTV Capital, RBC Venture Partners and Edgestone Capital. It has 180 customers including Hertz, Manpower, Office Depot and Starwood.

Marshall goes on to argue that IBM is the company best positioned to capitalize on the expected $10 billion business in analytics. Varicent would be its sixth recent deal in the space: Others include Algorithmics, Clarity Systems, OpenPages, Cognos and SPSS.

And while terms haven’t been disclosed, IBM, Marshall says, has indicated that the return on its software acquisitions has been better than it has been in several years. It also looks like Big Blue’s dealmaking it on a serious upswing: After spending about $6 billion on acquisitions in 2010 it cut back to only $2 billion in 2011. Marshall argues that IBM is going to be busy buying companies: “We expect continued activity this year and see IBM as among the best in large-cap technology at building high-value capabilities through acquisition.”

IBM shares fell by $1.09, or about a half percentage point, to $204.23 by 10 am ET. The shares are up almost 12 percent this year, and earlier this month hit a lifetime high of $210.69.


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