IBM Acquires Coremetrics; Stifles Web Analytics Innovation
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Tags: acquisition, Coremetrics, IBM, innovation, web analytics
IBM’s acquisition of Coremetrics stifles innovation in the web analytics market. Worse, other big deals are contributing to the trend, e.g., Adobe’s purchase of Omniture and ATG’s purchase of Webtrends. Okay, the ATG Webtrends deal hasn’t happened yet, but it could.
The problem is that acquired companies find it very difficult to innovate. Their attention and effort is now focused on integration with the acquiring company rather than innovation within their product lines. That problem is then compounded by an exodus of talent. Young, energetic, entrepreneurial people don’t necessarily want to work for the acquiring company, so they leave.
The next logical innovation for Coremetrics – and Omniture, for that matter – would be a move to real time analytics, with the aim of optimizing the experience of individual visitors’ and increasing conversions. Coremetrics has already made some moves to update its dashboards more frequently, but displaying data faster is only a small part of the answer.
Traditional web analytics are vendors who are still too focused on reporting. Reporting is great to tell you how many people came to the site or dropped off at a particular page, but it’s really hard to make this data actionable. Where web analytics needs to go is to optimize the individual visitors journeys as they progress through a website. This requires real time analytics that can be embedded into the conversion process, not simply real time reporting.
However, a move to real time analytics for Coremetrics would require a complete rearchitecture overhaul, and IBM is unlikely to make the investment. The company just bought Coremetrics, and reengineering a last-generation analytics architecture is a long, expensive process that wouldn’t produce results for a year or more.
Meanwhile, Google continues to advance the cause and capabilities of free analytics. Yahoo! has free analytics as well, but Google Analytics is really the 800-pound gorilla here. With base analytics increasingly becoming free, paid analytics providers face constant pressure to deliver more capabilities and functionality.
What does all this mean for users? Lower prices. Most customers that have Omniture, Coremetrics or WebTrends also have Google Analytics, which puts huge pressure on the paid vendors to differentiate and reduce prices when renewing contracts and when signing new business. Meanwhile, customers running both WebSphere Commerce and Coremetrics can look forward to tighter product integration in lieu of lower prices.
hi, how are you?
just to play devil’s advocate… you mention 3 problems here:
1. Progress is being damaged by large companies buying up WA vendors, concentrating on integration over innovation.
2. The side-effect of this is that the smartest people in those companies will leave.
3. The vendors’ products need to change dramatically anyway, but they are so invested in the current setup that those changes won’t happen.
If all of those are true, then this could be ripe for innovation. The folk from point 2 may leave because of point 1 & may start up their own things to solve point 3?
Hi Dan
I always like a Devils Advocate!
I think you are spot on. The web analytics market is ripe for innovation. It’s too hard to make sense of the data you get in so many ways, let alone optimize. The existing companies started out counting sessions to provide some simple visibility of traffic in aggregate.
Ecommerce is a whole lot more complex now. It’s hard for them to ditch their legacy, so inevitably there will be another generation that picks up the mantle and charges forward.
Thanks for taking time to comment.
Hi Charles. Interesting reading. That is an interesting prediction about ATG acquiring Webtrends, but does it have the money? With about $179 million in 2009 revenue, it would be a stretch. They would have to agree to merge, but the combination would make sense. WebSphere now has analytics – and the other web content management and ecommerce engine vendors will have to arm themselves with analytics to stay in the game.
Your prediction about Coremetrics slowdown in innovation may be correct, especially with the blue-washing they are about to receive, but I think the result will be a stronger offering. SPSS technology will likely provide predictive features, which as you say, is a rarity in today’s market. IBM also has plenty of complex event processing tools to add more real-time features than Core already has. Yes, Core already offers real-time capabilities in segmentation, and has a real-time prediction engine, but it could do more. I’m not convinced of your claim that it would require an architecture overhaul.
Does this mean lower prices? Probably not to Coremetrics customers. It was, after all, IBM that purchased them. But, Coremetrics was never about cheap. The features it provides over Google Analytics, especially in the area of remarketing, is where the value is. Coremetrics offers applications on top of data that Google Analytics does not make available to analyze. Google Analytics is an accessory to those who generate enough eBusiness revenue to afford “the good stuff”. But, it leaves the small-midsize business market a bit behind.
This creates a bit of a vacuum in the market for the next generation of innovation, such as what Seewhy offers, but users are not in a mood to be buying many stand-alone, non-integrated products. Until a tagging standard is here (maybe IBM can help), the suite approach like Adobe, AT Internet, IBM, Nedstat, WebTrends and Unica are going to rule. I think Coremetrics, er… IBM, will do well. Where is Omniture going to get its world-class analytics to keep up from? Adobe?
Hi Bill
I agree that IBM is assembling a formidable array of acquisitions in the broader analytics space, and I blasted them last year about not having a web analytics strategy. Now it’s more rounded, and from an IBM point of view, this acquisition makes a ton of sense.
But whether they can exploit it, however, remains to be seen. Certainly the IBM Coremetrics division should see growth in revenues as it gains access to a much broader customer base (as both Cognos and Business Objects have benefited from being purchased).
But it’s altogether more complex to actually integrate all the parts to make them into something greater than the sum of the parts. Many have tried and not succeeded down this path (include me in this list – I know from personal experience that it’s hard). And in the meantime, it’s very challenging to keep innovating, particularly whilst wearing a stripy blue straightjacket!
A Universal Tag standard would undoubtedly spur innovation and we would welcome it and enthusiastically support it. I’ll put it on my Christmas list and keep fingers crossed.
Good point on Omniture looking left out BTW.
Thanks for commenting – it’s always great to get the Gartner viewpoint.
I think the fear of a lack of innovation is a real concern. Many moons ago, I was in the Lotus Notes area which was a thriving business for many people. Then IBM bought Lotus and within a few years, Lotus Notes was gone. The Web Analytics field is very dynamic and I think speed is critical here. Hopefully, this acquisition won’t stifle innovation as it did with Lotus Notes…
Don’t forget, IBM sold their web analytics, SurfAid Analytics, to Coremetrics in 2006. Unless IBM keeps Coremetrics as a unit and invests in them, IBM will end up having to sell to one of the other tools remaining. I think the infrastructure is too expensive to maintain to have angry customers eventually leaving (changing wa vendors isn’t fun, but if a financial case can be made . . .).
Ideally they would try to integrate Coremetrics’ data stream with the Cognos BI solution.
Charles, you say “Where web analytics needs to go is to optimize the individual visitors journeys as they progress through a website.” Adam would certainly know more about this than me, but won’t Test & Target do a form of this already?
Hi Andrew
I think the most likely integration point between Cognos and Coremetrics is around the Coremetrics data warehouse. This will be a much easier integration than trying to integrate the stream. Dealing with real time streams of web data and getting them into a form that is usable by a BI tool is tricky. The same applies whenever people talk of connecting up SPSS.
While these look like quick wins, they don’t really move the dial beyond making something that you could have done already, a bit easier.
On Test and Target, I understand what you’re getting at, but the challenge here is to make this stuff easier and much more automated. Stepping back from web analytics as a whole, it’s still way too hard to get up and running, and too hard to get any deeper insight beyond the high level metrics that 90%+ use. Only a tiny proportion of ecommerce teams actually test anything at all……
Charles
Thank God you people aren’t actually controlling any important decisions. The original article makes some wild claims with nothing to back it up, and the responses aren’t much better.
Lotus Notes is gone? What am I supposed to use now, and why didn’t anyone tell me? What about the rest of my very large company? Why is Howard Stern still using it?
thevarguy.com in January 2010 said: “Microsoft and IBM have resumed their 15-year-old email cat fight — only days before IBM kicks off Lotusphere 2010. Microsoft is promoting free training and three key channel partners — Binary Tree, CASAHL Technologies and Quest Software — to help customers migrate from Lotus Notes to Microsoft Exchange and SharePoint.” Did everyone else move to Exchange and SharePoint and forget to tell me?
Forgot to ask …. this wouldn’t have anything to do with your fear of competition, would it? If it’s so bad for Coremetrics, wouldn’t it be good for your business? And if it’s good for your business, wouldn’t you just keep quiet about it and let it fail while the customers jump ship and run to you?
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