Editor’s note: Matthew Casey is an analyst at Technology Business Research.
HAMPTON, N.H. – The Now Factory’s specialized analytics portfolio will spearhead broader solutions revenue outside of analytics for IBM.
With IBM’s BI/analytics business at a TBR estimated $5.5 billion annual run rate, the October 1 acquisition of communications service provider (CSP) analytics vendor, The Now Factory, will help accelerate IBM’s analytics revenue in early 2014 by providing industry specific analytic capabilities for customers in the CSP space.
In addition to analytics revenue growth, the greater implication of The Now Factory acquisition will be the pull-through revenue that IBM’s business generates through industry specific solutions packaged around The Now Factory’s specialized offerings. Adoption of solutions across other initiatives such as MobileFirst will be a natural by-product of The Now Factory buy and will help drive overall top-line growth for IBM. With the focus on driving top-line revenue growth to achieve 2015 profitability goals, vertical-specific acquisitions such as The Now Factory remain crucial to further penetrating markets and extending the presence of IBM’s vertically-centered solutions.
With The Now Factory, IBM now contains CSP-specific analytic capabilities, including subscriber usage analytics, customer experience monitoring, and network management functionality. Combined with existing solutions within MobileFirst, including mobile application management and endpoint management solutions,
IBM can leverage The Now Factory to land and expand within the CSP space, driving cross-portfolio growth beyond analytics.
The Now Factory buy also will deliver top-line growth by aligning IBM’s portfolio to current CSP pain points.
Mirroring IBM’s approach of leveraging industry-specific capabilities to drive growth of key corporate initiatives, analytics functionality provided by The Now Factory will help IBM Software map existing branded portfolios, such as MobileFirst, to address customer pain points within the CSP space. Currently, communications revenue comprises roughly 9% of IBM corporate revenue on an annual basis, delivering a reported $9.6 billion in annual revenue during 2012. With the addition of The Now Factory, IBM can now leverage new analytics solutions to further engage and drive top-line revenue in the space by expanding customer relationships through new solutions engagements.
The CSP space is a market that is currently in a state of flux, with service providers grappling with pressure and challenges brought on by increased data usage, complexity associated with device management, and growth of personalized applications and devices. From the service provider perspective, delivering constant service uptime and positive end-user experience is the highest priority; with a variety of service provider options for customers, the inability to provide a positive customer experience can make or break the business for a CSP.
As demonstrated by TBR’s 2014 SourceIT Telecom and Service Provider report, the top drivers for investment by service providers include competition, customer demand for service delivery and increased shift from voice to data consumption. Trends including declining revenue from SMS businesses, customer churn and increased complexity of managing networks as a result of smartphone adoption are putting strain on CSPs to maintain their business models.
With these factors in mind, network providers (such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks), as well as IT and software vendors including HP and IBM are increasingly investing in analytics solutions to alleviate the pressure felt by CSPs and position them to better address customer demand. Providing actionable insight around customer data consumption on devices, a key value proposition delivered by The Now Factory, enables CSPs to better position and service customers, ensuring positive end-user experiences and more importantly enabling customer retention.
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