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SPSS Has A New ShowCase

Written By: M. Reed
Published On: November 14 2000

SPSS Has A New ShowCase
M. Reed - November 14, 2000

Event Summary

On November 7, 2000, SPSS (NASDAQ: SPSS) announced that they have signed an agreement to purchase ShowCase Corporation (NASDAQ: SHWC). SPSS expects that this move will bolster its presence in the analytical customer relationship management market (as versus operational CRM). The transaction is expected to be concluded during the quarter ending March 30, 2001 and is valued at $94 million. Under the terms of the deal, one share of SPSS will be given for each three shares of ShowCase.

"SPSS is a leader in analytical solutions which enable organizations to develop more profitable customer relationships," said Jack Noonan, SPSS president and CEO. "and we expect this key acquisition to move SPSS ahead in the marketplace, faster. ShowCase adds to the number of capable people we have selling and implementing our analytical solutions, broadens our technology, opens us to a new, solid customer base, brings new management talent and improves our cash position."

"This agreement benefits all the main stakeholders: customers, shareholders and employees," said Ken Holec, president and CEO of ShowCase. "Combining the strengths of ShowCase and SPSS will accelerate our delivery of CRM analytic solutions, bringing more products to customers and prospects just as the CRM Analytics and AS/400 markets are poised for explosive growth. A history of strong balance sheets and earnings, paired with this future market growth potential, will greatly benefit our shareholders. And our customers can now add the predictive capabilities of SPSS data mining to the measurement capabilities of ShowCase analytics. Employees will enjoy pooling expertise and resources to deliver better solutions faster and will benefit from greater career opportunities in a larger organization. The interaction of the organizations will be facilitated by a common culture that values employee innovation and dedication."

Market Impact

Mr. Noonan believes that the analytical CRM market is going to expand by at least 50 percent per year. SPSS covers all market sizes, and a customer base of over 250,000. ShowCase has concentrated on the mid-market, and SPSS wants to increase its piece of the pie. Until recently, ShowCase software ran strictly on IBM AS/400's (it has recently been ported to Windows NT). ShowCase also has a large installed base that can be leveraged. In addition, both companies have overlap in specific vertical markets, (retail, manufacturing, and consumer packaged goods). SPSS also concentrates on telecommunications, healthcare, banking, finance, insurance, market research, and the public sector. SPSS brings its extensive data mining experience to the equation, and believes that there has been little penetration of data mining technologies in the mid-market.

SPSS believes that the addition of ShowCase will strengthen its current analytical CRM solution, CustomerCentric, by adding technology that extends the current offering. This move may help SPSS compete more effectively with companies like E.piphany and Broadbase, who, although smaller in size, have a strong mind share among CRM customers.

User Recommendations

Customers evaluating customer relationship management products (and who isn't?) should look at SPSS' offering when it becomes available. Keep in mind that this can't be before late 2001, (the acquisition isn't even going to be completed until March 30 of next year). After the consolidation, the companies will have to go through the standard merger pains (employee attrition, merging of code bases, etc.). However, development has already begun, and there is an agreement in place to integrate each other's technology starting immediately. Given that some companies will not be willing to wait that long, offerings from E.piphany, Broadbase, Quadstone and thinkAnalytics, among others, should also be evaluated. The SAS Institute is also working in this direction, although it is behind the development curve also.

Although SPSS is starting out from behind, it has a chance to end up in a strong position. That's an important consideration for prospective customers who may want to buy, so they can feel assured that the product can survive. What SPSS will have to do is deliver the product according to the schedules given out by its sales force, choose the correct vertical markets, and - most importantly - develop a pricing schedule that appeals to the mid-market. SPSS may just pull this off.

 
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