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IBM Buys SPSS: More Quants For a Smarter Planet

The technology industry, by nature, turns niche activities into mainstream ones. Even Thomas J Watson, founder of IBM, so the the apocryphal story goes, claimed the world would never need more than 5 computers. The flipside? Remember Bill Gates saying he wanted to put a PC in every home- oh how we laughed.

Well it seems the latest technology that is going is going to be pushed into mainstream business life is statistics and deep data mining and analysis. Back in 2006 BusinessWeek heralded the age of the “Quant” in article entitled Math Will Rock Your World.

With the SPSS deal that era may be arriving. My ex colleague at InformationWeek, Bob Evans, certainly thinks so:

I think IBM’s acquisition of SPSS will mark a seminal moment in that company’s evolution, and that it will also accelerate — perhaps even greatly accelerate — the broader evolution of the IT industry from one fixated on boxes and code that run internal operations to one that’s focused on providing insight and expertise that helps customers grow.

Google shows us every day the results of relying on data, and the law of large-numbers, for decision-making. The Google spell checker for example, is based on normalizing all of the different spellings people use of a word, rather than a traditional dictionary-based approach. Google’s idea of great design is… count the times. Google’s disease tracking efforts, meanwhile, are showing real success against more traditional approaches – see Flu Trends.

So, apart from the fact it was quants, the rocket scientists on Wall Street, who apparently confused inches with centimeters in their financial models who nearly brought down the world economy… now the argument is – we just didn’t have enough data. Because of the Wall Street Guassian model fugazi I am skeptical of IBM claims that SPSS brings them predictive analysis, but really deep analysis is plenty useful.

Banks, for example, are now looking to analyse not just 5 days of data to calculate market risk, but five years.

The scale of data we’re dealing has fundamentally changed. We stand on the cusp of a big step forward in environmental sciences, for example, again based on Big Data, as we start trying to mitigate the effects of climate change. Think of carbon-trading on a global scale and the data volumes involved. Think about retailers certifying and tracking every tree from the forest to the futon.

In retail and supply chain RFID tags generate obscene amounts of data. Queue SPSS.

The Reality-based community believes in data. Science relies on data, not just opinion. Where climate research under the last US administration was about editing press releases, the new EPA is all about the data. The entire US government apparatus is arguably a lot more data-focused than it has been in a long time. I have been written about Stimulus and Smarter Planet alignment before.

Every IBM Smarter Planet deal is going to have a major statistics and Big Data aspect. Smarter Planet is an engagement model: IBM now owns all the tools to sell into these big deals. It’s probably worth reminding ourselves what SPSS stands for – Statistical Package For The Social Sciences. Will SPSS have a role to play in IBM’s burgeoning Services Sciences play? You would have thought so, certainly.

It’s important to note the wider context – its not just IBM that wants to make quantitative approaches more mainstream. The New York Times recently wrote a gushing article about another statistics software technology, a language called “R”, more commonly associated with statistics and maths and physics classes than business schools. A new company, Revolution Computing, was recently formed to commercialise R. Data Analysts Captivated by R’s Power.

The world is going mad for maths, or as my colonial side of the family might put it, mad for math. We even have “hot” computational search engines now- anyone for Wolfram Alpha, which could change software?

Doctor Jim Goodnight, founder of SPSS’s biggest competitor, the bigger, more commercially oriented and successful SAS Institute, must be feeling good today. IBM just strongly validated its model. So while SAS will find itself competing more directly with IBM Software Group, it will also have IBM effectively marketing Big Data analysis. I expect IBM Global Services will also continue to partner with SAS.

Just to dork out a little and get specific. One very interesting area I haven’t seen anyone else comment on is mainframe pricing. IBM has done a lot of really solid work making the mainframe less expensive for non-CICS and IMS workloads like Linux (IFL), DB2 (zIP) or WebSphere (zAAP). IBM is determined to drive datawarehousing workloads to the mainframe. But SAS Institute was a “stick in the mud”, effectively forcing users to pay capacity-based mainframe charges, and so making it less likely customers would run Big Data analytics on z. Well now IBM is in a great position to offer specialist offload processors for data analytics workloads, but also push SAS Institute into a price war that can only benefit customers interested in mainframe consolidation- and don’t think that’s an isolated group. What was the first thing SAS claimed about the acquisition? It would force up prices. Good luck with that… One other thing IBM mainframe customers will be able to do- analyse all of their CICS transactions for patterns.

Like SAS another company in an interesting position right now is SAP. It recently signed a deal to resell SPSS tooling as part of its Business Objects portfolio. This is the second time in a month or so that has SAP has lost an ecosystem partner – see my analysis of Software AG’s purchase of IDS Scheer.

It wouldn’t surprise me in the least to see HP acquire Teradata now.

IBM has a major marketing job on its hands convincing the world of the value of statistics and deeper analytics driven decision making, but since when did IBM not like a major marketing job.

It is definitely worth checking out Forrester’s analysis too.

disclosure: IBM and SAP are clients, Software AG and SAS Institute are not.

Categories: Uncategorized.

Comment Feed

21 Responses

  1. James Governor’s Monkchips » IBM Buys SPSS: More Quants For a Smarter Planet http://bit.ly/XSNwJ [Wave of the future, Dude.]
    This comment was originally posted on Twitter

  2. found @monkchips on IBM Buys SPSS: More Quants For a Smarter Planet http://bit.ly/XSNwJ to be really informative and well-written. go math!
    This comment was originally posted on Twitter

  3. RedMonk (@monkchips) discusses the recent purchase of SPSS by IBM – http://is.gd/1UPId
    This comment was originally posted on Twitter

  4. #carbon James Governor’s Monkchips » IBM Buys SPSS: More Quants For a …: Think of carbon-trading on.. http://bit.ly/UeNKr
    This comment was originally posted on Twitter

  5. James Governor’s Monkchips » IBM Buys SPSS: More Quants For a … http://bit.ly/Kj4eT
    This comment was originally posted on Twitter

  6. Save the planet with …. statistics? RT @smarterplanet RT @monkchips IBM Buys SPSS: More Quants For a Smarter Planet http://bit.ly/XSNwJ
    This comment was originally posted on Twitter

  7. James Governor’s Monkchips » IBM Buys SPSS: More Quants For a Smarter Planet: “Google shows us every day the res.. http://u.mavrev.com/whd6
    This comment was originally posted on Twitter

  8. good post from @monkchips on IBM /SPSS http://bit.ly/dXCkF
    This comment was originally posted on Twitter

  9. There’s something like a “perfect storm” gathering with respect to IBM’s renewed push into business intelligence, including their mainframe-related moves. For example, did you happen to spot this IBM System z announcement for a new Data Warehousing package (and 6 other packages), aggressively and competitively priced?

    http://www.ibm.com/systems/z/solutions/editions/

    • You are not wrong, Timothy. System z has no intention of going quietly into the night as a platform too expensive for data analysis. IBM has a great deal of flexibility in how it can charge for mainframe workloads, particularly new ones, particularly when its the application provider. SPSS on z – is an absolute shoe-in

      James GovernorAugust 10, 2009 @ 11:10 amReply
  10. James, more analysis on more data will not save the world. Richard Rumelt recently coined the term “smooth sailing fallacy” to remind us that you cannot manage results by simply looking at the meter.
    http://alignment.wordpress.com/2009/08/09/smooth-sailing-fallacy/

    This is consistent with my own viewpoint that we have descended into measurement madness using the motto “you cannot manage what you cannot measure”. Our obsession with metrics means we’ve lost sight of business outcomes. “Not everying that counts can be counted and not everything that can be counted counts”. Perhaps organizations would be better served to focus on what they are trying to achieve than to just keep score. http://alignment.wordpress.com/2008/09/15/focused-organizations/

    • Great point Jonathan, but smarter analysis might help, no? Science doesn’t thrive on a lack of data. We need to measure outcomes and act on them. Of course decision-making will never be based on data anyway, humans are too messed up for that. But look at medicine, for example, and unnecessary but routine medical procedures- by measuring and monitoring outcomes and being truly evidence-based these can be cut out. Or oil exploration IT companies, that buy up old “discarded” data, and process it. I agree a lot of collected data has very little real business value, but the problem as ever remains knowing what to discard. In the mashup, where new uses can be found for old data, this problem is tougher than ever.

      James GovernorAugust 12, 2009 @ 2:44 pmReply
  11. more quants for a smarter planet: missed this interesting post last week from @monkchips on IBM’s purchase of SPSS http://bit.ly/jpSVA
    This comment was originally posted on Twitter

  12. Cases of wishful and predictions based without data :

    “HP acquire Teradata” – What happens to Several millions spent on Neoview

    SAS Institute, must be feeling good today: Its model did not validation from IBM. SAS should rather be scared that its business is getting a new entrant IBM to take away its market share

    • niraj. in what sense “wishful?” I have no skin in HP’s game, but I do believe that M&A in a market sector leads to further consolidation. there is plenty of data out there to support such a case. “several millions spend on neoview” – in this game that is very small change indeed. SAS- has shown itself to be a pretty formidable player in the space, and if the market as a whole grows, that is good for SAS. But of course I also lay out the opposite scenario – with IBM driving price pressure on SAS revenues

      James GovernorAugust 21, 2009 @ 12:15 pmReply
  13. The only way that IBM can realize the value of the SPSS purchase is to open source the SPSS software (such as their PASW Statistics and PASW Modeler) or release it free to the community,just like their Eclipse IDE.



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