IBM's Master Plan Takes Shape

Six years ago, IBM (NYSE: IBM  ) spun out its Electronic Data Interchange (EDI) services to private investors. Big Blue let go of the complicated business-to-business transaction management game to refocus on its WebSphere products, which can be teased to perform many of the same functions.

Today, IBM has decided that the time is ripe to get some pure EDI expertise back in-house, and so the company is buying EDI leader Sterling Commerce from its owner, AT&T (NYSE: T  ) . The $1.4 billion all-cash deal is expected to close in the second half of 2010, and AT&T will record a $750 million gain at that point.

It's a little more than getting back into EDI services, actually. Sterling is also good at managing supply chains and inventory systems, and all of these areas of expertise seem to dovetail nicely with the big blue machine. AT&T needs to think more about running its wireless networks and other infrastructure-style communications services, and less about being a provider of business software and services. IBM, on the other hand, is building an impressive jigsaw puzzle of services that not only fit together, but also enhance each other. The Sterling crowd, for example, will meld into the WebSphere team and enhance that product suite's B2B powers.

With Sterling under its belt, IBM intensifies old rivalries with SAP (NYSE: SAP  ) and Oracle (Nasdaq: ORCL  ) , both of which are big in the supply-chain management field. IBM also vaults into contention with established supply-chain sector leaders RedPrairie and Manhattan Associates (Nasdaq: MANH  ) , which don't face off against IBM very often. TIBCO Software (Nasdaq: TIBX  ) picked up smaller EDI specialist Foresight this January. The sector is consolidating fast, and there are probably more acquisitions coming. Choose your weapons.

I can't wait to see what IBM will become when it's done with a planned $25 billion acquisition program over the next five years. One thing's for sure: There is a master plan behind the seemingly disjointed pieces of IBM's puzzle, and the whole adds up to much more than the sum of the parts. That's more than you can say for some of the competition.

Whether you love it or hate it, feel free to discuss IBM's grand plan in the comments box below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of and has written puts on Oracle. Try any of our Foolish newsletter services free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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