IBM is skimming its c$20bn acquisition fund to add another vendor to its growing software portfolio and make a strategic addition to its Smarter Cities initiative. The target is Dublin-based Curam Software who provides software for social services programmes, primarily for government agencies.
Terms were not disclosed but reports suggest IBM paid around $150m, which is small beer for the company. The reports also indicate Curam’s revenue dropped by c12% last year to $78.9m with a pre tax profit of $8.2m, but that 2011 revenue is expected to be in the $100m range. The deal is expected to close by the end of December. Curam is PE-backed - Fidelity Growth Partners Europe put $10m into the company and will now be reaping its rewards.
IBM and Curam were already close partners having worked together since 1999 on federal, state, local, and provincial-level social program solutions. Curam’s software is certified for use with the IBM Government Industry Framework and has been part of IBM Global Business Services’ Integrated Case Management solution since 2001.
The company will join IBM’s software business unit and become a contributor to IBM’s Smarter Cities initiative (the programme that promotes intelligent and efficient ways of analysing data, anticipating problems and coordinating resources so public sector organisations can better serve citizens and stakeholders). It is one of IBM’s four identified growth drivers and a big strategic bet for the software part of the business – the target is to generate $10bn of revenue from the Smarter Planet/Smarter Cities programme by 2015. Curam is expected to play a lead part in taking the business forward – another example of innovation coming from small suppliers (and being snapped up by the giants of the industry).
Bringing an important contributor in-house generally makes sense and if Curam’s revenues dropped last year the acquisition will also minimize future risk to one of IBM’s important businesses. However, as this is the second recent acquisition in the area we think the positive strategic boost was the driver. The other acquisition was of UK-based i2 (see IBM snaps up intelligence analytics specialist i2), the public sector focused, intelligent analytics company. IBM is clearly committed to the Smarter Cities and broader Smarter Planet initiative and they are tagged as one of its growth engines so there will be more to come.