IBM to Acquire DemandTec

IBM plans to acquire DemandTec for approximately $440 million in an effort to extend its Smarter Commerce initiative by adding cloud-based price, promotion and other merchandising and marketing analytics designed to help companies better define the best price points and product mix based on customer buying trends.

“IBM Smarter Commerce is redefining how brands buy, market, sell and service their customers in ways that their customers want,” said Craig Hayman, GM of industry solutions at IBM. “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.”

IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone. Extending these capabilities to the cloud gives organizations immediate access to consumer information, providing instant return on investment, said IBM.

DemandTec delivers cloud-based analytics software that enables businesses to examine different customer buying scenarios, both online and in-store. These analytics help companies spot trends and develop shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.

“DemandTec has the 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. “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 DemandTec acquisition will extend the reach of IBM’s Smarter Commerce by enabling companies to use cloud computing services to gain insights about customer merchandising and pricing preferences to better market, sell and deliver the right product at the right place, and at the right price. DemandTec also expands IBM’s Software-as-a Service (SaaS) strategy by adding additional, subscription-based offerings to IBM’s SaaS solutions portfolio.

DemandTec has approximately 450 customers worldwide in retail, consumer products and other industries. Retail industry segments served include grocery, drug, convenience, consumer electronics, office supplies, apparel, department stores, and quick-serve restaurants. Manufacturer segments include fast moving consumer goods categories such as food, beverage, and health & beauty. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.

Consistent with IBM's Smarter Commerce strategy, IBM will continue to support and enhance DemandTec’s technologies and clients while allowing them to take advantage of the broader IBM portfolio. DemandTec will be integrated into IBM's Software Group, which is a key driver of growth and profitability for IBM.