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IBM Acquires Sterling Commerce

IBM today said it has agreed to acquire Sterling Commerce, a supplier of software that performs large scale business-to-business transactions, from AT&T for $1.4 billion.

One best known as a leading provider of electronic data interchange (EDI) software, Dublin, Ohio-based Sterling Commerce processes large volumes of transactions between b-to-b trading partners through public and private networks and cloud-based exchanges.

Sterling was acquired in 2000 by AT&T, then known as SBC Communications. But as AT&T is now focusing more on broadband communications and wireless services, observers say Sterling was less strategic to the carrier.

Meanwhile, for IBM, Sterling compliments its WebSphere Commerce server portfolio. Sterling said it has 18,000 customers, including large banks, telcos and retailers. "This is a big customer acquisition," said Altimeter analyst Ray Wang, in an interview. "These are typically the largest clients that are looking at scaling issues here, so when you fit that into the IBM portfolio by vertical, then you can see a lot of synergies happening."

On a conference call announcing the deal, Craig Hayman, general manager of IBM Software Group's WebSphere business, said IBM will bring Sterling into the WebSphere suite, and layer Big Blue's rules management, analytics and business process management software into Sterling's software.

"We will now be able to offer clients the flexibility of managing their business partner networks in their own premises under traditional enterprise model or through a cloud computing delivery model -- something we believe is very appealing to a large number of our customers," Hayman said.

IBM said it expects the deal to close in the second half of this year, pending regulatory approvals.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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