Suresh Vittal And Joe Stanhope Consider The News Of IBM Acquiring Unica

I’m pleased to join forces this afternoon with my colleague and Customer Intelligence Practice Leader Suresh Vittal for a joint blog post on the very interesting IBM announcement this morning that it will buy Unica for US$480 million (greater than 100% premium on its previous day close). Suresh has covered Unica for many years in the enterprise marketing space, and I cover them from the Web analytics and online marketing suite perspectives. So besides a striking outcome for Unica’s shareholders, this deal impacts many marketers and customer intelligence professionals. After all, Unica is the preeminent provider of campaign management software and a leading provider of marketing operations, Web analytics, and interaction management solutions.

So let’s walk through some of the implications of this deal:

  1. Any time a technology giant like IBM makes a move in the marketing technology landscape, it is good news for the providers and the overall market. The multiple IBM is paying for Unica is also encouraging. Why? Follow-up deals, renewed interest from mainstream media that generates broader awareness, and follow-up investments that spur innovation all make this acquisition good news for Unica’s competitors and the adjacent categories. But what is the impact of this acquisition on marketers and customer intelligence professionals, and does this signal a broader trend of marketing automation going the way of CRM?
  2. Let’s make one thing clear from the outset – this acquisition is about Unica’s marketing automation and operations solutions not necessarily about the Web analytics products. But there is a clear and significant overlap between the Coremetrics and Unica NetInsight product lines and no amount of marketing speak by IBM and Unica executives takes away from this fact.  Clever product positioning and go-to-market strategies may drive some degree of clarity on the topic, but in the long term this will cause friction as IBM expends resources to develop, support, sell, and market overlapping solutions. Current and prospective Coremetrics and Unica NetInsight users need to carefully monitor this situation.  We can't help but wonder: With Unica in play, why would IBM have acquired Coremetrics?
  3. This is IBM’s eighth marketing and data related deal since 2008 – Cognos, iLog, Lombardi, Initiate, SPSS, Sterling Software, Coremetrics, and now Unica. Whew! Right off the bat, several functional redundancies in targeting, BI, interaction management, Web analytics, and optimization become obvious. So marketers and CI professionals should ask Unica and IBM:
    • What does the acquisition mean for the future of Unica’s product road map?
    • What is IBM’s enterprise marketing software strategy?
    • Given the redundancies in capabilities, which capability wins?
  4. The acquisition of Unica absolutely reinforces IBM’s assertion that it is committing to marketing solutions and the CMO.  It’s great to see that IBM’s efforts in the marketing space aren’t an empty tagline.  But we’ve seen many companies attempt to enter the marketing space, and it is harder than it looks.  IBM has traditionally been very IT centric, and turning on a dime to focus on marketing will be challenging and requires a long-term mindset. IBM will share its product road maps and go-to-market strategies after the transaction closes, and then we’ll see where the rubber will hit the road.
  5. As with Coremetrics and many other IBM acquisitions, Unica is a small fish in a very large pond.  A $96 billion, 400,000 employee pond. IBM is a huge company.  Can Unica’s products alongside IBM’s efforts in the enterprise marketing space ramp up fast enough and to the level needed to hit the requisite growth targets for a company this size to warrant long-term interest and investment?  A corollary to this is what measures will IBM take to ensure successful mindshare and adoption with its global sales, channels, and services divisions to drive the marketing business forward?  

This transaction was only announced today, and as you can see we have some answers, and even more questions outstanding.  The synergies between IBM and Unica are exciting and make a lot of sense, but challenges to successful execution remain.   We’ll get more information after the transaction closes, per standard operating procedure for a deal of this nature. What are your impressions, and how do you think this will play out in the long term?

Comments

IBM's acquisition of Unica is a good thing for clients

I agree with most of the points you make in this blog, although I have a slightly different perspective. I think it will take some time for IBM to clearly define their vision. I do hope this acquisition was actually done to fill a gap in capabilities that they identified as a result of a well defined vision and strategy in this space. The additional excitement in this space bodes well for all players, because it will raise visibility in the marketplace and within client companies. As you state, IBM's relationships are with IT, so this does run the risk of marginalizing marketing buyers, who are the true users of this software. On the other hand, marketing, customer service and support are converging in many organizations particularly in digital channels, so this may not altogether be a bad thing if it accelerates that convergence, which benefits end customers.

Naras Eechambadi,
SVP/GM, Quaero - a CSG Solution
www.quaero.com

It is an interesting

It is an interesting development and perhaps fits with IBM's global strategy to get into the Marketing Automation space. As you have observed the synergies are obvious and make sense. However, Unica has always been perceived as the Marketer friendly, yet an IT solution. It will be interesting to see how much of the 'Marketing' will remain in this pursuit.

The Interactive Marketing and Customer Engagement space is even more interesting today with additions of customer footprints from Social Media etc. One expected Unica as leaders to come up with products and solutions therefore, which integrated these developments. So, in the wake of the acquisition by IBM, if 'Marketing' is indeed lost, it opens up a tremendous opportunity for the other, hitherto yet independent competitors, to quickly up the ante, and challenge the leaders.

Joe, I think all of these

Joe,

I think all of these assessments are spot on. The one that strikes me the most however is the emerging emphasis on delivering solutions. Selling to a CMO is quiet different that a CTO. Certailny there are buying centers in both, but their needs, language, and objectives are quite different. Any thoughts as to how they cross chasm?

Reviewing the other comments, it appears this is a similar thought. How does a group of traditional technologists make the shift in story telling? Is an agency acquisition the next purchase? Now they've got all the pieces bring in the folks who know how to sell to the CMO?

Who will support a renewed interest in marketing automation

I agree with all the points Joe makes regarding the reasoning for IBM moving with great rapidity into the marketing automation space and believe it will have a positive impact on the overall market, helping MSP's like Neolane, Eloqua and even Omniture. However what I find missing from the discussion is the age old problem of technology vendors and system integrators, they simply don't stick around or have the marketing acumen to provide the strategic, process and organizational support needed by companies when they invest in new marketing technolgy. The CRM world has seen this for a couple of decades and the analytics vendors are right behind them. For a renewed interest in marketing automation to take hold we will need to see more consulting companies with real marketing expertise, not just technology backgrounds to help CMOs actually see the benefits that go along with the proper investment, deployment and optimization of marketing technology.