ACO Update: A Third Horse Enters the Race

A few months ago, we noted that the release of regulations for ACOs would trigger an ACO services race across the healthcare landscape, where market participants would be sprinting to create service offerings that would help hospitals and physician practices become compliant with the CMS ACO regulations for sharing financial risk and the rewards.  So where do things stand six months later?

Just like earlier this year, the “Big Two” – Optum and Aetna – seem to be squarely in the lead of creating a turnkey ACO solution.  And in the last few weeks, we’ve seen a couple items of note from these two.  The first was an interview with Charles Kennedy, CEO of Aetna’s ACO division on HISTalk.  In the interview, Kennedy talks about how Aetna is pursuing the ACO opportunity via three go-to-market offerings:

• Clinical integration (basically an HIE via Medicity)
• A population-based approach with chronic disease management tools that typically rolls out to hospital employees as a way of deploying a light version of an ACO
• A full, private-label health plan, where a delivery system has their own health plan “powered by Aetna”

Last week, Optum announced that it has brought together its own ACO division with more than 700 people (!) focused on enabling “Sustainable Health Communities,” which is Optum’s version of the ACO concept.  Optum’s press release calls out its own five-part strategy:

• Patient and population health management
• Informatics, analytics, and technology
• Clinical integration, network development, and physician change management
• Payment model, contracting, and actuarial expertise
• Operating expertise

Interestingly, the press release also mentions that Optum is also bringing solutions to market targeted at commercial health plans and government payers – the other side of the ACO/shared risk/bundled payment equation.

The big question we have been trying to figure out here at TripleTree is who is going to follow “the Big Two” and their industry-leading ACO partnership announcements (specifically: Optum with Tuscon Medical Center and Aetna with Carilion Clinic)?  Where are the other healthcare companies that are going to pursue this mammoth opportunity?  Wellpoint’s acquisition of CareMore, McKesson’s acquisition of Portico, and Harris Corporation’s acquisition of Carefx certainly point to their interest in this market, as does Premier’s burgeoning alliance with IBM – but we have yet to see any of these or other players signal their interest in developing a broader set of provider-focused bundled payment service offerings.

This past week we think have finally seen another company unequivocally throwing its hat in the ring:  The Advisory Board Company announced the creation of a new company called Evolent Health, in partnership with the UPMC Health Plan.  Evolent intends to provide a platform for population and health plan management to leading health systems as they develop their value-based care strategies.  This follows ABCO’s earlier acquisitions of Crimson, Concuity, and Cielo MedSolutions – all earlier signals that the company was pursuing the hospital analytics, contracting, and registry marketplaces in a big way.

It makes perfect sense for The Advisory Board to do this – with nearly unparalled access to hospital c-suites across the country, it was only a matter of time before they launched a solution to address the many, many requests they must be getting to help with hospitals’ new risk-sharing strategies.  We see this as a welcome development in this space, and hope to see other HCIT players, undoubtedly facing their own questions from their healthcare clients, enter the fray as well.  Where are you, Accenture, Microsoft, and Elsevier?

Let us know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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Competition Spurs Consolidation and Innovation for Government Contractors Interested in Healthcare

A lot can happen in two months as evidenced that amid global economic chaos, merger and acquisition activity in the government contractor space has been among the most active sectors.

Concerns for long-term growth amid budget wrangling is driving government defense and IT contractors to recognize that while their core market could shrink, growth can be found in areas like healthcare IT and cyber security. The likes of Lockheed Martin and General Dynamics are paving the way.

• Lockheed Martin’s acquisition of QTC, the largest provider of outsourced medical evaluation services to the U.S. government and the U.S. Department of Veterans Affairs (VA), was announced in August. QTC delivers Lockheed a highly strategic relationship with the VA while provides services that are highly complementary with Lockheed’s growth plans into new verticals and creates an IT-enabled platform in healthcare and the VA for Lockheed to leverage its government and IT expertise upon.
• General Dynamic’s purchase of Vangent, a major provider of healthcare IT systems and solutions to the federal government, military, and commercial healthcare markets, was announced in August. While not a strategically new area for GD, the acquisition significantly expands its presence in healthcare IT and highlights the growing importance of the sector for GD. Combined with the $225 million acquisition of ViPS in 2008, GD’s double-down play on government healthcare IT firmly establishes it as one of the leading players in the space.
• SAIC’s acquisition of Vitalize Consulting Solutions, a market-leading provider of clinical, business and information technology services for commercial healthcare organizations, closed in August. Already leader in the government space, SAIC seized the opportunity to expand into the commercial healthcare provider market and leverage its information and data analytics expertise, while simultaneously capitalizing on the macro trend of the convergence of commercial and Federal healthcare markets.

The Lockheed Martin and General Dynamics deals highlight the growing competition and pressure from shareholders to acquire independent “crown jewel” companies within the government contracting space crucial for driving strategic transformation and growth. These prime assets can sell at significantly higher multiples than their peers because of their scale, depth of relationships, and scarcity.

We also expect to see M&A activity driven by “golden ticket” companies, best represented by the General Dynamic’s acquisition of Network Connectivity Solutions, a DoD enterprise services and cloud computing provider. Driving the transaction for GD was access to the DoD’s $12.2 billion multibillion dollar IT systems contract. The VA announced the winners of its $12 billion IT systems contract last month – the groups left off the list of awardees is long, including General Dynamics, Lockheed Martin, IBM, Northrop Grumman, CSC, Dell, and L-3. Given the competitive dynamic and relative scarcity of multi-billion dollar contracts, we expect acquisition activity to fall among the nine independent awardees as well.

Behind the headline deals, other recent acquisitions in this space included:

• Boeing’s purchase of Solutions Made Simple, a federal information services provider
• GTSI acquired federal IT consulting firm InSysCo
• The merger and rebranding of correctional healthcare companies Valitas Health Services and America Service Group as Corizon
• Ayelet Investments LLC bought Conmed Healthcare Management, a provider of correctional healthcare services to county and municipal detention centers
• CACI bought federal cyber security and enterprise IT solutions provider Paradigm Holdings
• Sotera Defense Solutions acquired Software Process Technologies, a cyber software company, five months after being acquired by private equity firm Ares Management for $315 million
• Moelis Capital Partners acquired CyberCore Technologies, a provider of IT services to the federal government

Given the growing public and private investor appetite for quality businesses in the government contractor space, we expect further public company spin-outs along the lines of L-3’s divestiture of some government services operations and the ITT conglomerate breakup as profit margins shrink and corporations look to liquidate underperforming assets. We predict M&A activity to continue to be driven by strategic diversification into higher growth areas, stockpiled cash, and opportunistic action. Because we anticipate the government outsourcing market continuing to adjust through a period of significant transformation for their strategy, watch our research and deal flow for further insights and perspective.  Until then, let us know what you think.

Marc Baudry

Marc Baudry is an analyst at TripleTree covering the healthcare industry specializing in government health, population health management and informatics. Follow Marc on Twitter or email him at mbaudry@triple-tree.com.

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Don’t jump to conclusions as Thomson cries “Uncle” on healthcare

In the wake of the Thomson Reuters announcement that it’s exiting its healthcare business, many will point this as an example of why “non healthcare companies” will struggle to be successful in healthcare.  We assert that this knee-jerk reaction is wrong, and strongly believe that innovation in healthcare needs to come from outside the industry.

In recent years, some of the largest companies in the world (whom TripleTree internal labels “master brands” because of their breadth of service) have been verticalizing their solutions.   Topping their list of target areas is the healthcare vertical, which has been especially popular with the technology “stack” vendors who feel they are uniquely qualified to take on traditional healthcare stalwarts (Cerner, Epic, etc.)

Since January 2010, TripleTree has witnessed significant software and services consolidation by the stack vendors and as a gut check at the midpoint of 2011, we thought it made sense to review how four of the better known master brands (Microsoft, IBM, Oracle and SAP) are messaging their respective approaches around verticalization.

• IBM:  Via its “Smarter Healthcare” slogan, is messaging comprehensive and integrated industry solutions addressing healthcare organization needs
• Microsoft:   Is messaging helping to cost-effectively meet new regulations while strengthening patient outcomes
• Oracle:    Is messaging improving the quality of patient care, and enhancing provider operational efficiency
• SAP:  Is messaging lowering the pressure on healthcare organizations

The graphic below summarizes a very simple acquisition roadmap dating back to January ’10.  Each have been acquisitive, and three have made bold moves in healthcare to underscore their seriousness (IBM > Initiate; Microsoft > Sentillion; and Oracle > PhaseForward).

It’s easy to ask ‘what’s missing’ in each stack, but the gaps alone don’t make a massive statement.  Our team is left to opine that these vendors (arguably the largest of the non-traditional healthcare vendors) are focused simply on solution selling, not competing directly on clinical centric solutions.

Solution selling means taking each of their extensive portfolios into vertical specific deployment scenarios, which involves understanding industry problems and proactively pitching purpose-built solutions.  Knowledge comes from experience and these firms are still lacking it in healthcare.  Based on the roadmap above, our team considers the lack-of-acquired-healthcare-expertise a glaring gap and likely areas of focus for them in the quarters ahead.

Let us know what you think.

Chris Hoffmann

Chris Hoffmann is a Senior Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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HHS Announcement Signals Start of ACO Services Race

With the proposed rule from the HHS and CMS finally released today for public comment, reactions and analysis will grow in the coming days on what it all means for healthcare providers.  We thought it made sense to offer some perspective on how we’re viewing the evolving opportunities for innovators, their investors, and their partners.

While integrated delivery networks (IDNs) and other large provider groups will have plenty to sort through to determine the tradeoffs of seeking accountable care organization (ACO) status, a number of researchers are already digging into the thorny issues surrounding ACOs to help develop standards, best practices, and collaboration between different models that are likely to spring up in the wake of health reform.  See this and this as examples.

What is most interesting to us so far is the jockeying of HIT vendors to reposition themselves as experts to the developing ACO marketplace.  While there are a number of ways to think about this – and our thinking is evolving pretty much daily – we see a few targeted areas where vendors are going to play.  None will be able to offer anything close to the end-to-end ACO functionality that several claim in their marketing materials.

Our view on the rapidly developing market for ACO services follows:

• Creating the ACO:  Provider groups will require help sorting through those 1,000 pages of regulations, and we are already seeing opportunities for large, healthcare-focused consulting and implementation firms that have the ear of the hospital CEO to help steer the design and creation of these models. Companies like Accenture, IBM, Deloitte, Dell/Perot and the Advisory Board are being asked questions every day by their clients about ACOs – and at least one have already started to work on their own solution.  Partnerships with these consulting firms will aid adoption for vendors downstream in the areas below

• Enabling the ACO:  The clinical integration of the ACO is the area of hottest focus right now – transactions in this space clearly demonstrate this.  HIE and interoperability vendors Axolotl, Medicity, and CareFX have all traded in the past 12 months.   Payers like UnitedHealth and Aetna have placed their bets on HIEs as the backbone on which clinical data will be integrated.  For provider networks looking to challenge this paradigm, the recent wave of physician practice acquisitions by hospitals and/or the subsidization of a single EMR system in an area (Minneapolis is largely an Epic market, for example) indicate that there may be another approach to achieve clinical integration.

• Optimizing the ACO:  Once an ACO is established, the network of providers will need plenty of technological capability:  decision support and evidentiary guidelines, contracting and risk tools, compliance reporting, and performance benchmarking analysis among them.  Many companies already providing these services to health insurers are sprinting to reposition themselves as experts for the provider community as well – visit the home page of any formerly payer-focused software vendor as proof.  Market interest in companies participating in this space is heating up.

• Marketing the ACO and Engaging with the Patient:  In our view, this is an overlooked area so far and will eventually be key to closing the loop on the ACO return on investment.  Vendors that will compete in this space are currently offering a range of services that can help do this, from health and wellness to member enrollment activities.  Once provider groups are operating as “mini-payers,” keeping patients healthy outside the facility walls while also keeping them happy with the level of engagement they experience with their physicians will extremely important.

Our research agenda and strategic advisory work have the ACO services space top of mind right now and our thinking is evolving constantly.  We’d love to know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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Sentiment 2010: Consolidation, Platforms and Compliance

Our team of analysts and senior bankers are taking stock of the past few quarters as we look ahead to 2011.  As such, we thought it might be useful to quickly summarize of our most popular posts below:

TripleTree’s Top 10 Posts – 2010

1. Humana’s Acquisition of Concentra Is A Multi-Pronged Move
2. Tech Platform Innovations in Healthcare Will Rely on “hCloud”
3. Understanding the Transition From ICD-9 to ICD-10
4. An Acute Focus on the CFO is Feeding IBM’s Appetite for Analytics
5. Risk Adjusted Payment Models for Medicare Advantage – New Markets and Business Opportunities
6. Health Plans & Provider Networks Seek Optimized “Channel to the Chart”
7. Prospective Payment Review: The MLR “Silver Bullet” for Health Plans
8. Seven Considerations for the Impact of Open Source on Healthcare
9. Is a Healthy Workforce a Competitive Advantage?
10. Reading the Tea Leaves: The HITECH Act & Health Reform in the Wake of the Election

Our research agenda and current sell-side mandates have taken shape, and include assessments of where best in class businesses can take advantage of opportunities in the Senior’s market, the growth of consumerism, content management, decision analytics and compliance platforms.  As expected, we’ll stay laser focused on delivery models like cloud, outsourcing and mobile.

We look forward to reconnecting and wish you a prosperous New Year!

Chris Hoffmann

Chris Hoffmann is a Senior Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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An Acute Focus on the CFO is Feeding IBM’s Appetite for Analytics – 10/27/10

Last week, IBM expanded upon its business analytics and optimization strategies by acquiring Clarity Systems, a Toronto-based software vendor principally focused on Corporate Performance Management (CPM) and regulatory compliance functions for the CFO’s office.

This acquisition in conjunction with IBM’s recently announced acquisition of OpenPages reaffirms several reoccurring trends by Big Blue and possibly sets in motion other market dynamics:

• Since IBM’s announcement in May, the global technology company has been busily executing its plans to invest $20 billion by 2015 in an acquisition strategy that shift its focus into higher value segments.  The anticipated volume of acquisition activity would double the pace of the preceding five years.  Having utilized around $5 billion of acquisition capital to-date, IBM appears well on track to its 2015 goal.
• IBM’s interest in business analytics & optimization, principally led by acquisitions made by IBM’s Software Group, will continue to be a primary driver.The acquisition of Clarity Systems marks IBM’s 24th related acquisition in the business analytics sector, including noteworthy acquisitions such as Cognos, Coremetrics, Netezza, SPSS, among others.  In fact, according to IBM, “in just four years, IBM has invested more than $14 billion in 24 analytics related acquisitions, dedicated 7,000 consultants and opened eight analytics Centers of Excellence around the world to help clients uncover hidden insights within their data.” We fully anticipate the battle ground for data management and business analytics will remain fierce as big systems vendors like EMC, HP, IBM, Oracle and others are all vying to help organizations deal with the ever-growing influx of (un)structured data and its relevancy to decision-making processes.
• Business analytics and GRC/compliance functions will converge. Interestingly, it was the regulatory compliance and reporting capabilities, not CPM, that sparked IBM’s interest in Clarity Systems.  The acquisition of Clarity Systems extends IBM’s business analytics initiatives, but represents a new level of commitment to address financial governance and risk management challenges faced by financial departments and the CFO’s office.  In particular, its products help address financial governance and risk management faced by automating financial, statutory and regulatory reporting for the close-to-report cycle required the U.S. SEC.

As we assess the marketplace and continue an active briefing schedule with a range of global leaders and emerging innovators, the progression of functional compliance acquisitions into analytical settings is inevitable.

Let us know what you’re seeing the market place. Thanks and have a great week!

Brian Klemenhagen

Brian Klemenhagen is a Director at TripleTree covering enterprise application across numerous industries and specializes in Software as a Service. You can email Brian at bklemenhagen@triple-tree.com.

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Seven Considerations for the Impact of Open Source on Healthcare – 10/18/10

There has been much written by TripleTree and others on the influence of cloud technologies on healthcare, but what about open source as a transformative technology?

No doubt open source technologies will make their way into and have an impact on healthcare in some way, but we’re of the mindset that it will take a long time to get here, and the size of the impact could be minimal. Here are seven considerations for healthcare CIOs and their technology partners:

1. Commercial open source vendors are small and unsophisticated in the ways of healthcare IT. So with little investment and large barriers to entry (slow buying cycles, antiquated architectures, compliance, etc.), healthcare will be a hard sell. There will probably be some experiments, trial runs, and partnerships with early stage ISV’s looking to triangulate around the trend of SaaS/Cloud/Open Source; but in reality it will take a few years to get efforts ramped up into large commercially viable solutions.
2. Virtualization will have a bigger impact on HCIT operational efficiency than simply open source. Sure, where virtualization and open source intersect (specifically at the Xen hypervisor), there may be some impact, but I think open source gets overshadowed by virtualization investments.
3. The IT “master brands” vendors with expressed interest in healthcare (MSFT, IBM, HP, etc) are pushing their proprietary stacks.  Deeper pockets will prevail and the only new entrant that can make an impact is probably Google (and their HC commitment is questionable). Will they push ChromeOS into HC and make a meaningful impact?  Not likely as ChromeOS is too new and Google Health is too consumer (rather than system) focused. Plus with Oracle taking out Sun, another open source proponent will move to a proprietary stack (Fusion)
4. Workflow and process integration in HC systems are mostly manual. Before open source has a meaningful impact on data integration a process automation evolution within healthcare is needed…and process automation in healthcare is nascent.
5. Open source has had a good seven year run of enterprise acceptance. Given that healthcare is lagging about 10 years behind in IT innovation, we likely have two plus years before HC starts thinking about open source more widely. In smaller pockets, we could see early open source efforts where a few innovative vendors expose limited/departmental use cases or in public sector instances where states try to be innovative with alternative procurement (e.g.  HIE may see open source experimentation).
6. The mainstreaming of SaaS and other alternate delivery/licensing/outsourcing models from groups like Athena provide a better value proposition.  This is relevant to the likely adopters – small and mid-size doctor’s offices – who want to avoid on-premise open source systems and related complexities of specialized IT knowledge and a willingness to go-it-alone with limited vendor support.  SaaS wasn’t mainstream when enterprises began to embrace open source; but now that SaaS (and cloud) is prevalent the same drivers of open source adoption don’t exist.
7. Open source will probably have more of an impact in research/government/university settings where a healthcare focus and established open source culture (around longer running projects) can coexist.  Within healthcare, open source will emerge more readily with health plans where large data centers and processing make it an interesting operating system.

The list of technology issues confronting healthcare is considerable, and it’s unclear that open source would have impact given other innovative tools.  We’re watching the likes of Citrix and RedHat as vendors that could step forward and we’ll continue to update this blog with our latest thinking.

Thanks and have a great week!

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

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Feeding the Giants – 09/24/10

It’s official. The recession is over and has been for some time. According to the folks who track this at the National Bureau of Economic Research (NBER), the recession ended in June 2009. While most folks on main street may not have heard this news yet, a few of the global software master brands have been busy delivering the good news to a fairly large group of software shareholders over the last 16 months in the form of aggressive acquisitions.

Among the corporate development groups at IBM, HP, Microsoft, Oracle, SAP, and Cisco, a total of 57 deals have been transacted since the recession ended. Throw in Intel, EMC, Google, and Dell – all of whom are active in targeting software acquisitions – and the total deal count passes 100!

Software is not only hot, but it’s a market that is consolidating quickly. There is clearly an active race to shore up enterprise spend on software and related IT technologies. With hundreds of billions in cash lying around corporate balance sheets of the largest master brands, the fevered pace of software acquisitions will continue.

Just look at Oracle’s statements within the last couple weeks. In explaining why they hired Mark Hurd, Oracle Co-president Safra Catz stated “… we need people experienced in operating a $100 billion business”. Hurd ran the largest technology company in the world at just about $125 billion in annual sales. For Oracle to almost quadruple in size to hit the revenue target Catz mentions, the company will have to step-up its already aggressive acquisition pace.

So the race is on. The tech giants will continue their acquisition spree with sights set on filling portfolio gaps and entering net-new areas. With literally thousands of software vendors, the landscape is on one hand a target rich environment. However, in considering sale, size, solution uniqueness, profitability, architectural and cultural fit and a host of other factors that go into acquisition decisions, the universe of highly attractive targets which are large enough to move the needle for these behemoths is limited. Aggressive competitive bidding will become the norm.

Case in point is the much publicized bidding war between Dell and HP for 3Par which saw the acquisition price more than double from $1.13 billion to $2.4 billion in a matter of a few days. While 3Par may seem an anomaly and extreme case, competitive bidding is a fairly common occurrence, especially for the best assets in the market.

Even though the recession does not feel over for the folks on Main Street, the corporate development groups in some of the largest master brands have never been busier. Oracle, HP, IBM, and others mentioned will continue to target best properties in the race to round out their stacks and become the dominant players in enterprise IT.

Have a great week!

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

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Can Cloud Computing Help Fix Healthcare? – 08/23/10

(The following is an excerpt from an article our colleague Scott Donahue authored for CloudBook magazine on hCloud – read the full article here)

Few topics have dominated the political news cycle over the past year more than health care reform. The recently passed Patient Protection and Affordable Care Act are aimed at improving the quality, cost, and accessibility of health care in the United States – an indisputably massive but much-needed undertaking.

Aside from political debates in Washington, the technology industry continues to buzz about cloud computing. It may seem, at first glance, that health care reform and cloud computing are unrelated, but TripleTree’s research and investment banking advisory work across the health care landscape are proving otherwise; the linkage with cloud is actually quite significant.

Our viewpoint is that cloud computing may end up mending a health care system that has largely let a decade of IT innovation pass by and now finds itself trapped in inefficiency and stifled by legacy IT systems.

Much has already been written about cloud computing’s potential and demonstrated successes at helping enterprise IT infrastructures adapt and transform into more efficient and flexible environments. But where does cloud computing fit within health care?

We have long espoused that innovation in health care needs to come from outside of the industry. Today, the likes of Amazon, Dell, Google, IBM, Intuit, and Microsoft have built early visions for cloud computing and see a role for themselves as health care solution providers. We are convinced that traditional HIT vendors will benefit from aligning with these groups such that their domain-specific knowledge can attach itself to approaches for cloud (public, private and hybrid), creating a transformational shift in the health care industry.

Cloud is active, relevant and fluid…see our colleague Jeff Kaplan’s recent blog post on the changing competitive landscape.

We’d be interested to know what you think…have a great week!

Chris Hoffmann

Chris Hoffmann is Research Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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Connecting Some Dots on IBM’s Acquisition of Unica – 08/16/10

Last week, IBM announced the acquisition of the legacy marketing automation vendor Unica.  This is a surprising move when you consider the $480 million price tag for the no-growth $110m revenue mostly licensed software vendor stagnant at $10m of EBITDA.  IBM’s purchase equates to about 4.4x revenue, 48x EBITDA, and a 120% premium to the previous days closing stock price.  This valuation is a good benchmark for public CRM vendors who have struggled to grow (salesforce.com excluded).

On a stand-alone basis Unica gives IBM a platform for CRM marketing where it has historically not been a strong player.  When you consider some of IBM’s more recent acquisition we can see the Unica purchase is part of something greater, a new ‘e-commerce strategy’ that aligns IBM for competition against web presence and analytics leader Adobe/Omniture.  Earlier this year IBM acquired Sterling Commerce for B2B e-commerce and back office billing/payment fulfillment (for $1.4 Billion) and CoreMetrics for marketing analytics. If IBM intends to build out a complete e-commerce platform under the IBM Websphere banner, Unica will fulfill a large portion the B2C marketing automation function.  Other areas where IBM may look to expand its functionality include email and deeper marketing content capabilities.

IBM’s strategy is likely to provide customers with a more complete suite of tools to manage online transactions, relationships, web presence, and content. Typical of IBM, it has decided to build out this roadmap through acquisition. Sterling Commerce will serve as the B2B e-commerce engine for relationship management with Unica providing the customer facing lead / campaign management, and CoreMetrics providing the measurement and reporting around marketing activities.

When you consider the resources that IBM is committing to this new e-commerce strategy, it positions IBM to challenge web presence leaders like Adobe. IBM has stated it will spend $20 Billion over the next few years on technology to bolster its higher margin software offerings.   Let us know what you think.

Have a great week!

Michael Boardman

Michael Boardman is an associate at TripleTree covering the healthcare and technology industries, specializing in clinical software solutions.  Follow Michael on Twitter or e-mail him at mboardman@triple-tree.com.

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