IBM Quarterly Results Point to Business Analytics Benefits

IBM’s second-quarter 2012 results included significant upticks in business analytics and cloud revenue, even as other software and systems revenue remained flat or trended slightly down.

IBM’s business analytics revenue was up 13 percent in the first half of 2012, while cloud revenue doubled its first-half 2011 numbers. That’s despite software revenue being flat (up 4 percent with currency adjustments) and services revenue down 3 percent (up 1 percent, when adjusted for currency). Systems and Technology revenue declined 9 percent (down 7 percent when adjusting for currency).

Overall, IBM reported net income of $3.9 billion for the second quarter, an increase of 6 percent from the same period in 2011, on total revenues of $25.8 billion—a year-over-year decline of 3 percent (1 percent, when adjusting for currency).

IBM’s results help explain why so many companies have taken a particularly gung-ho stance of late to the business-intelligence and cloud markets. Although neither of those segments is likely to float a massive company’s bottom line on their own, they both can serve as significant revenue drivers at times when more traditional lines of business—including software and services—are soft due to the economy or other factors.

Recent B.I. tools developed by IBM include the Analytical Decision Management platform, designed to deliver insights to workers in a matter of seconds; the platform also integrates social network analytics into its predictive models.

IBM competitors such as SAP and Oracle have also been refining their B.I. offerings. Earlier this week, SAP unveiled feature pack 3 for the 4.0 release of its SAP BusinessObjects B.I. solutions, with new capabilities such as support for Apache Hadoop, an open-source framework for reliably running distributed applications on large hardware clusters, as well as deeper support for SAP’s HANA in-memory database technology.

Research firm IDC recently predicted that worldwide spending on business-analytics software will hit $50.7 billion by 2016, with a robust compound annual growth rate of 9.8 percent on the way to that number. The buzz surrounding “Big Data,” which has brought analytics increasingly to the attention of companies big and small, will help propel that growth.

And it’s that growth, in turn, which could help IT vendors looking to bolster their bottom lines a little bit more.


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