• December 8, 2011
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

IBM Plans to Acquire DemandTec

IBM today announced plans to acquire DemandTec, a provider of cloud-based business analytics software, for approximately $440 million.

IBM will incorporate DemandTec's price, promotions, marketing, and merchandising analytics software into its Smarter Commerce Initiative. DemandTec, which is based in San Mateo, Calif., will operate within IBM's Enterprise Marketing Management Group headed by Yuchun Lee.

"The DemandTec technology is a very complementary piece to our own solutions," says Jay Henderson, global strategy program director in IBM's Enterprise Marketing Management Group. "It adds pricing and promotions optimization to our Smarter Commerce portfolio."

"IBM Smarter Commerce is redefining how brands buy, market, sell, and service their customers in ways that their customers want," said Craig Hayman, general manager of industry solutions at IBM, in a statement. "Bringing science to the art of pricing and promotion is a big part of this strategy, and the combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability." 

DemandTec has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis. It also has approximately 450 customers worldwide in retail, consumer products, and other industries. Among them are Best Buy, ConAgra Foods, PETCO, Home Depot, and Target.

IBM will continue to support and enhance DemandTec's technologies and clients while allowing them to take advantage of the broader IBM Smarter Commerce portfolio. "We plan to keep the DemandTec products intact and structured the way they are," Henderson says. "Customers shouldn't expect any radical changes other than bringing them onto the IBM [Smarter Commerce] infrastructure."

The IBM acquisition also gives DemandTec’s customers tighter integration with leading collaboration and business intelligence tools, Henderson says.

"DemandTec has unprecedented capability to improve customers' price and promotion tactics on a stand-alone basis and connect retailers and manufacturers for collaborative planning through the cloud," said Dan Fishback, president and CEO of DemandTec, in a statement. "IBM Smarter Commerce is the perfect fit for DemandTec. IBM is the only provider of price and promotion offerings within a rich solution set that supports companies' buy, market, sell, and service processes."

The acquisition also ties into IBM’s plans to extend its cloud-based offerings, according to Henderson. 

The acquisition of DemandTec is the seventh acquisition this year for IBM and the fourth under the Smarter Commerce initiative. It follows the acquisitions of CoreMetrics in June 2010 and Unica in August 2010.

Together, the Unica, CoreMetrics, and DemandTec products give companies "great legs to grow their businesses on," Henderson states.

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