A Closer Look at IBM’s Recent Massachusetts Acquisitions—Some Trends and Analysis

Yesterday, IBM announced it is acquiring Waltham, MA-based OpenPages, a corporate governance, risk, and compliance software company. That’s an interesting story in itself, but it’s also part of a prominent business trend that has major impact on the New England software and computing ecosystem.

OpenPages is IBM’s 17th acquisition of a company based in Massachusetts (or with substantial operations in the state) since 2003. That was around the time when IBM chief executive Sam Palmisano began executing the company’s strategy of growth through acquisitions. To give some perspective, Big Blue (NYSE: IBM) says it has spent $22 billion on a total of about 100 company acquisitions worldwide since 2003—around 60 of them in software. And 17 of those were in the Bay State (see full list below).

Eyeballing the list, it seems safe to say that IBM has spent in the neighborhood of $10 billion on acquisitions in Massachusetts over the past seven-plus years. Not surprisingly, the most prevalent sector has been data storage software (5 out of 17 deals), followed by software development (3), governance, risk, and compliance (3), analytics (3), security (2), and social/communications software (2). (There is some overlap between these areas; some companies fall under more than one category.) In some cases, IBM has entered a market almost entirely by way of acquisitions—which happened, for example, in Web application security through its purchases of Watchfire and Ounce Labs.

For more on the reasons behind IBM’s activity in the state, the firm’s broader acquisition and integration strategy, and the impact of these deals on its growth and business, stay tuned for another story soon. (You can also take a look at our prior analysis of IBM’s acquisition strategy here and here, as well as a map of IBM’s operations in the state here.)

Meantime, here’s the list of 17 Massachusetts companies acquired by IBM since 2003. It includes the year and size of each deal (a question mark means the amount was reported in the media but is speculative and unconfirmed), plus a brief description of each company’s focus. The great majority of the companies had headquarters in Massachusetts; Cognos was based in Ottawa, Canada, but had substantial operations in the Boston area.

Rational Software (2003, $2.1 billion)
Modular architecture and iterative development tools for software engineering

Ascential Software (2005, $1.1 billion)
Data integration software for building data warehouses

DataPower (2005)
Network devices and software for processing XML messages

iPhrase Systems (2005)
Software for sales and customer support, and content management for e-commerce

Bowstreet (2005)
Application development tools and Web-based services

MRO Software (2006, $740 million)
Asset and service management software to help companies buy and maintain equipment and facilities

Watchfire (2007)
Web application security and compliance testing software

WebDialogs (2007)
Software for online meetings and communications, conferencing, and collaboration

AptSoft (2008)
Business event processing software to find trends and connections in market events

Cognos (2008, $4.9 billion)
Software for business intelligence, performance management, workforce analytics, and business event management

Diligent (2008)
Data storage and deduplication software

FilesX (2008)
Data storage and protection software

Ounce Labs (2009)
Security and compliance tools for software development

Guardium (2009, $225 million?)
Software for database monitoring and protection, regulatory compliance, and business analytics

Storwize (2010, $140 million?)
Data storage and compression software

Unica (2010, $480 million)
Marketing and Web analytics software

OpenPages (2010)
Compliance, governance, and risk management software

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