IBM's Another Cloud-Based Acquisition

In order to bolsters its cloud based business the tech giant has been making prudent acquisitions

According to the most recent news, International Business Machines Corporation has acquired a UK based privately owned company Optevia. Optevia is software as a services (SaaS) systems integrator and a specialist provider of Microsoft Dynamics CRM based solutions. The firm major focus is on UK’s public sector organizations including, but not limited to health, social enterprises, housing, central government, and emergency services. The financial amount of the acquisition remains undisclosed however it is confirmed that the US based company has become the part of Big Blue’s global business services division.

Over the past fifteen quarters, the $145 billion company has been recording slumping sales. Therefore, the tech giant has decided to part from the lower-margin businesses and to shift the focus and investment on its five “strategic imperatives,” which include, analytics, cloud, social, mobile, and security services. The decision has been taken on the last year’s 10% annual growth of the abovementioned businesses premises. Additionally, the business sales accumulated to around a third of IBM full year sales. However, the abovementioned growth couldn’t offset the colossal decline of 8.5% to around $22.06 billion.

Therefore, in order to strengthen the strategic imperatives, the New York City, New York firm has been quite frantically acquiring cloud companies such as Optevia. Since the inception of the year 2016, Big Blue brought its plans in open about the buying of Ustream –the cloud-based video streaming company, Truven Health Analytics –cloud based healthcare data provider, another cybersecurity company Esilient Systems, in addition to three digital marketing companies. Additionally, in order to bolster its Watson AI and data processing platform, IBM acquired The Weather Company in the current year.

The recent acquisition of Optevia has strengthened the tech giants hold in the CRM market. According to the industry gurus, the tech giant anticipates a $23 billion opportunity from the CRM market and it further envisions that the cloud based CRM solutions can conveniently “surpass 50% of that total.” Furthermore, the tech titan believes that the acquisition of Optevia will assist Big Blue “establish itself as a premier SaaS and digital consultant and accelerate leadership in CRM solutions.”

The purchase of Optevia which deploys Dynamics for its clients can effectively help Big Blue and Microsoft Corp. in their CRM market shares expansion against Salesforce. According to the data purported by the research company, Gartner, Salesforce massively holds 18.4% of the global CRM market while Big Blue and Microsoft respective holdings in the market is mere 3.8% and 6.2%. The acquisition is also likely to boost the global business services revenue of IBM which, last quarter, slumped down by around 10% annually. The global business services make up around 20% of the company’s top line.

Standalone, the deal with the UK based company is likely to cultivate humungous growth for the tech giant’s global business services or strategic imperatives.  

IBM is trading fairly well in the market and on Thursday the stock closed at $147.98. $117 to $176 makes up stock’s 52 weeks range.