IBM sees analytics growth rise, starting next year

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IBM sees analytics growth rise, starting next year

NEW YORK - IBM said on Thursday it expects revenue at its analytics business to grow by around 15 to 20 percent from next year on, as the fledgling unit wins more contracts.

By (Reuters)

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Published: Fri 14 Aug 2009, 7:45 PM

Last updated: Thu 2 Apr 2015, 2:52 AM

International Business Machines Corp said the analytics business, which helps clients plot trends, predict risk and cut costs, is likely to account for more than $2 billion in revenue in 2010 — a fraction of IBM’s 2008 revenue of $103.6 billion. This year, revenue from analytics could grow by about 10 percent, it said.

‘I’m feeling a positive lift in momentum in terms of our signing and our sales,’ said Fred Balboni, who heads the unit. ‘I think we’re moving in the right direction.’

IBM’s business analytics and optimization service unit was created earlier this year as part of its global services business.

‘We believe this is going to be a growing business and that it will grow faster than application-oriented hardware and software services,’ Balboni said in an interview.

IBM combines analytics, which incorporates advanced mathematics, with its software and consulting skills to help clients predict risks and plot trends.

For example, it can help governments plan against pandemics and aid banks in fighting financial fraud. Police also use analytics to mine data to predict patterns of criminal behavior.

IBM has shifted its focus from hardware to more profitable software and services over the past decade and has recently positioned the analytics business as a key growth driver, as it yields higher margins than the average IBM product or service.

The company announced late last month that it plans to buy business analytics company SPSS Inc for $1.2 billion in cash to better compete against rivals like Oracle Corp and SAP AG.

IBM also said it hopes to win more business from federal and local governments. In a sign it was making headway, IBM won a $20 million contract with the US military’s Special Operations Command for its global defense missions, a source familiar with the deal said on Thursday.

The source, who was not authorized to comment on the deal since it was not yet officially announced, said the five-year contract would help US forces plan and synchronize various operations against terrorist networks.

IBM shares were down 57 cents, or 0.5 percent, to $118.72 in afternoon trading.

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