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Reading Into IBM's Tealeaf Buy

Reading Into IBM's Tealeaf Buy

For a company like IBM, what's one more acquisition of an analytics firm? In the case of Tealeaf, perhaps a lot more than initially meets the eye. "IBM has moved from data to information to intelligent systems very quickly, and if they succeed they could end up as much as a decade ahead of their peers," said tech analyst Rob Enderle. "Think of moves like this as small steps to what could be a huge future for the company."

By Erika Morphy
05/03/12 8:45 AM PT

IBM is building out its digital marketing functionality in its Smarter Commerce portfolio with the acquisition of Tealeaf Technology, a provider of customer experience analytics. Financial details about the acquisition, which is expected to finalize in the second quarter of this year following customary closing conditions and regulatory clearance, were not released.

Tealeaf has more than 450 customers, including such Fortune 100 companies as Dell, Wells Fargo, Air Canada, GEICO, Orbitz, Crate & Barrel, Neiman Marcus, Expedia, Zappos, ING Direct, Best Buy, DirecTV, McKesson and StubHub.

A Session Record

Tealeaf software records and analyzes customer interactions on a company's website and any mobile channels it offers. It allows the company to catch any mistakes or glitches in the system that may be hindering the customer experience, Yuchun Lee, vice president of IBM enterprise marketing management within its Smarter Commerce Initiative, told the E-Commerce Times.

For example, by playing back a customer's online or mobile experience, the company may find that, say, an important form is partially covered by a banner ad, or the width of a particular field is too narrow, he said. "In other words, it highlights those tiny quirks that are hard to detect other than seeing it live. It can be hard to diagnose a problem otherwise."

For example, one Tealeaf customer, an online travel agency, found that when visitors misspelled a vacation package name and didn't pull up any results, they would leave the site without completing a booking. That prompted the company to offer other navigation options.

Smarter Commerce Integration

IBM's first goal with its new acquisition is to push Tealeaf globally, Lee said. It will also be integrated with other related IBM acquisitions, namely Coremetrics and Unica, of which Lee used to be CEO.

Those are the priority integrations, Lee said, but close on the heels of Coremetrics and Unica will be a Websphere integration. "We see this technology as crucial to e-commerce as well. How can you have an e-commerce platform but no ability to pinpoint problems with customer interactions?"

"We will also integrate it with service center capabilities so a session can be pushed to a service center," he said.

There is a portal product in the Lotus Group, the Exceptional Customer Experience Suite, with which Tealeaf will be integrated as well. "Other integrations will occur but these are the low-hanging fruits," said Lee.

Focus on the CMO

In the bigger picture, Lee views Tealeaf as a crucial piece of technology IBM will have in its toolkit to offer chief marketing officers.

"One thing we have come to realize is that the role of the CMO is expanding quickly. For most companies, there needs to be one executive in charge of a customer's end-to-end experience," he said. Increasingly, websites, mobile channels and e-commerce platforms are the heart of that experience.

These are ideas IBM is embracing throughout its many initiatives, Rob Enderle, principal analyst with the Enderle Group, told the E-Commerce Times.

IBM's Smarter Commerce initiative is a subset of its Smarter Planet effort, albeit with a focus on customer analytics aimed at improving marketing campaigns and broad customer Web interaction.

"IBM has seized on a very old idea -- the concept of making systems intelligent -- and they are currently largely alone in this effort," Enderle observed.

"IBM has moved from data to information to intelligent systems very quickly, and if they succeed they could end up as much as a decade ahead of their peers," he said. "Think of moves like this as small steps to what could be a huge future for the company."


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