There are deals happening in tech — they just aren’t always with venture-backed startups. IBM agreed to buy the Sterling Commerce business software division of AT&T today for $1.4 billion.
The pending deal is another example of how big tech companies are now starting to do everything themselves on behalf of their customers (being more vertical, rather than horizontal), rather than just supplying components to the customers that have to be cobbled together into a usable solution.
Earlier this month, IBM said it would be aggressive about acquisitions and spend up to $20 billion on those deals through 2015. That is more than IBM has spent on acquisitions in the last decade. Sterling’s technology is used in managing supply chains, payment systems, logistics and other business-to-business services. The software can be integrated with IBM’s own WebSphere middleware, which offloads a lot of corporate computing work from small, medium, and large businesses. IBM wants businesses to come to it for a total solution, rather than have those potential customers turn to open source software that they have to customize themselves.
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Sterling chief executive Bob Irwin said that the merger will allow Sterling to expand into new markets such as healthcare or new geographic regions. It’s worth noting that IBM, which used to be known as a hardware company, now generates 42 percent of its sales from software.
Dublin, Ohio-based Sterling has 18,000 customers and it enables more than a billion interactions per year among them.
