IBM scoops up Datacap

IBM (NYSE: IBM) announced today that it purchased Datacap, a small document management company located in Tarrytown, NY, not far from IBM headquarters in Armonk. The Datacap website has already been updated to indicate it is an IBM company.

Why would IBM be interested in a small company with 200 customers, especially when they probably already have products that do some of the same things?

Tony White, founder at Ars Logica, a consulting firm specializing in content management, wrote in an email that despite the fact that IBM already has much of Datacap's capability in its Filenet family of products, the purchase was likely motivated by three factors.

"They made the acquisition to: (a) expand penetration for their data-capture and unstructured-content technologies specifically into the insurance and health care verticals, where Datacap has a marquee list of 200+ customers; (b) supplement their existing data capture capabilities, especially in these verticals where exception-handling capabilities dramatically improve an application's performance in complex use cases (a small percentage of complex, high-value can represent a large percentage of transaction value); and (c) block the acquisition of Datacap by ECM rivals (and current Datacap partners) Open Text and Oracle (NASDAQ: ORCL)."

Alan Pelz-Sharpe, an analyst with the Real Story Group, saw this more as a way to solidify IBM's case management portfolio. "IBM made this purchase as they have been clear they want to build out their advanced case management capabilities further to meet the needs of their core customer base. They certainly have good case and process management capabilities already. But the Datacap acquisition will allow them to more easily transform multiple format files into a single, easily analyzed format."

That IBM would buy a company as a defensive move to block its rivals is clearly compelling, and White believes it is a primary reason why IBM made the purchase. He wrote, "The deal is not insignificant, but it was 70 percent a block move (keep rivals from doing the same), 20 percent a technology move, and 10 percent a marketing move (to demonstrate continued dedication to these verticals)."

Neither analyst went so far as to suggest this was a huge deal, but neither was it insignificant. As Pelz-Sharpe said, "It's not 'game changing,' as the phrase goes, but it makes a lot of sense for IBM."

For more information:
- see the IBM press announcement

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