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IBM buys Coremetrics for web analytics

Opens school of predictive analytics

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IBM has added another arrow to its data analytics quiver with the acquisition of Coremetrics, a specialist in the area of web analytics relating to product marketing.

Whether we like to admit it or not, marketing campaigns – consisting of display advertising, Webcasts, and other branding efforts as well as the cross-selling that goes on inside ecommerce sites – are the commercial backbone of the internet. Everyone wants to get more sales for their marketing dollar, and chewing through all the Web data relating to marketing campaigns is one way to make it more efficient. Or at least that is what the 2,100 customers using Coremetrics' cloud-based service (everything has to be cloudy, you know) believe.

Coremetrics customers include Bank of America, Holiday Inn, Petco, 1-800 Flowers, Office Depot, Victoria's Secret, and Virgin Atlantic Airways, and the company's Web analytics services are used by retail, financial services, media and publishing, travel and hospitality, and educational institutions.

Coremetrics was founded in 1999 and currently has 230 employees. The company's products and people will be joining IBM's business analytics and optimization army, which has over 5,000 consultants in the Global Services behemoth and untold other employees affiliated with the $11bn in acquisitions Big Blue has done in the data analytics and business optimization areas in the past five years (that's 18 different deals, if you have not been keeping track).

The most notable acquisitions were Cognos in November 2007 for $5bn and SPSS last July for $1.2bn. IBM has woven its InfoSphere Warehouse data warehouse and these analytical tools into something it calls the Smart Analytics System, which debuted on the same day IBM ate SPSS and which were enhanced to run across mainframes, Power Systems, and x64 boxes in April.

IBM expects the Coremetrics deal to close before the end of the third quarter, and the Coremetrics Continuous Optimization Platform and the Analytics 2010 suite will continued to be enhanced, according to Big Blue. These products are offered as a service, not as a perpetual software license product, and it will be interesting to see if IBM offers both SaaS and licensed versions of the Coremetrics tools.

IBM and Coremetrics had already partnered to provide special versions of the analytics tools for Big Blue's WebSphere Commerce and WebSphere Portal middleware, which automatically tags Web pages for future analysis. The company had created specialized versions of its tools aimed at the financial services, retail, scholarly publishing, and travel industries.

The financial details of the Coremetrics deal were not disclosed. Coremetrics had five different venture capital backers – 3i, Accel Partners, FTV Capital, Highland Capital Partners, and W Capital Partners – and last secured funding in April 2008, just as the global economy was heading for the Great Recession. That was a $60m bag of Series E cash.

At the time, Coremetrics had just over 1,000 customers. The company raised $113m in its early years, which was written off during the dot-com bust, and was recapitalized in another five rounds in recent years by to the tune of $111m. According to a report in the Wall Street Journal, Coremetrics was thinking about doing an initial public offering – finally – when it got the call from Big Blue.

In a separate but related announcement, IBM has teamed up with DePaul University in Chicago to establish a center for data mining and predictive analytics at the school. DePaul's College of Computing and Digital Media has 3,000 students and offers traditional compsci degrees as well as ones in digital cinema, computer games development, and animation and interactive media. With IBM's help, DePaul is also now going to offer a masters of science degree in predictive analytics. ®

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