Knowing the Future

“The opportunity is to move from sense-and-respond decision-making to a predict-and-act model.” — Ambuj Goyal, General Manager of I.B.M.’s information management business.

http://www.nytimes.com/2009/07/29/technology/companies/29ibm.html

There’s a lot to be said for not proceeding too quickly in an economy like this one. There’s also a lot to be said for knowing the future.

That’s the gist of the message to learn from IBM’s acquisition of SPSS, whose website features “customer intimacy” and “knowing what your customers will do, before they do it.”

In the old days, there was “test marketing.” In fact, today’s Wall Street Journal shows evidence that the “old days” are still with us. Today’s WSJ features a story about Procter and Gamble and a test market of a product they’re calling “Tide Basic” (a scaled-down version of their industry-leading Tide brand of laundry soap.)

P&G of course wants to know the future. They want to know how this product will be received, and so they have manufactured a little bit of it, which is “currently for sale in about 100 stores throughout the South.”

This is the “sense-and-respond” model of business marketing — P&G will measure actual sales of the new product and decide whether to roll it out, based on those sales.

With its acquisition of SPSS, IBM has just bet $1.2 billion that that model of decision-making is going to be too slow for future marketers. In fact, the NY Times article linked above suggests that most of the major software companies are continuing to invest heavily — to the tune of more than $15 billion — in the notion that more companies will rely on the “predict-and-act” scenario in the future:

Major technology companies have made a flurry of such purchases in recent years, grabbing suppliers of software that helps businesses and governments organize and analyze data to make better decisions. The industry segment is broadly known as business intelligence software. In the last couple of years, I.B.M., Oracle, SAP and Microsoft have collectively spent more than $15 billion buying makers of such software.

I think this is so important to understand that I’m planning a series of postings on this topic. Please stay tuned, and feel free to ask any questions that you might have.

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