IBM to buy Sterling Commerce for US$1.4bn

25 May 2010

IBM is to buy Sterling Commerce from AT&T for US$1.4bn in cash in a move that will expand the technology giant’s ability to help organisations build more intelligent and dynamic business networks.

Sterling Commerce’s technology helps organisations automate the way they connect and communicate with customers, partners and suppliers both on-premise or through cloud-computing delivery models.

Today, more than 18,000 global customers use Sterling Commerce offerings. The company enables more than 1 billion business interactions a year for clients in the financial services, retail, manufacturing, communications and distribution industries.

IBM sees these interactions growing dramatically due to the proliferation of electronic business transactions, from banks exchanging transaction data and manufacturers sourcing raw materials electronically, to retailers automating stock replenishment and managing orders online.

In addition, Sterling Commerce technology will complement IBM’s industry-focused software offerings, enabling the addition of capabilities to IBM’s frameworks, supporting the retail, manufacturing, communications, healthcare and banking industries.

“Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organisation’s four walls are blurring,” said Craig Hayman, general manager, WebSphere, IBM.

“This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers and clients and deliver a consistent customer experience across channels. In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers.”

Smarter and more efficient networks

According to IBM, the combined technologies and expertise of IBM and Sterling Commerce will make business and partner networks smarter and more efficient by enabling integration beyond the enterprise.

The company believes that through this acquisition, clients will be able to extend the capabilities of their existing systems using, for example, IBM’s rules management, analytics and business process management software. This can enable these organisations to respond more nimbly to sudden business challenges as they happen.

“Sterling Commerce is a solid business that complements IBM’s suite of products and services. Our focus is on developing and providing a world-class portfolio of networking-based solutions and services, including network- and cloud-based data storage and managed hosting, application and computing services,” said Ray Wilkins, chief executive officer, AT&T Diversified Businesses.

“And AT&T remains committed to its strategic alliance with IBM, our largest customer, to provide a unified set of telecommunications and computing services to multinational corporations across the globe.”

Following the close of the acquisition, about 2,500 Sterling Commerce employees will be integrated into the WebSphere organisation within IBM’s Software Group.

“The broad global reach and additional capabilities IBM offers make this acquisition great news for our customers and partners,” said Bob Irwin, chief executive officer, Sterling Commerce.

“The combination of IBM’s products, services and skills with the Sterling Commerce B2B integration and cross-channel capabilities resulting from this acquisition is unparallelled.”

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years