Deconstructing IBM's smart building software bet

Summary:It has begun: The strategic consolidation of the energy and carbon management software category got its first high-profile example this week in the form of IBM's proposed acquisition of Las Vegas-based TRIRIGA.With literally dozens if not hundreds of smaller software developers innovating in this burgeoning applications category, it is not surprising that IBM is staking its claim early -- especially to supplement its aspirations in the smart building sector.

It has begun: The strategic consolidation of the energy and carbon management software category got its first high-profile example this week in the form of IBM's proposed acquisition of Las Vegas-based TRIRIGA.

With literally dozens if not hundreds of smaller software developers innovating in this burgeoning applications category, it is not surprising that IBM is staking its claim early -- especially to supplement its aspirations in the smart building sector. TRIRIGA is one of the better known players in this space.

Danny Sabbah, general manager of the IBM Tivoli division, which will assume operational responsibility for TRIRIGA, says the application will become part of the IBM smart buildings portfolio. That category, according to recent IDC data, will grow 25 percent annually to roughly $3.9 billion by 2013. Although the terms of this acquisition weren't disclosed, the IBM software division has made over 70 acquisitions since 2003.

Software is an increasingly strategic focus for the company: On a call to discuss the merger, Sabbah said the IBM Software business will contribute half of all IBM profits by 2015. Or at least that's the mission statement. The Smarter Planet initiative, of which smart building are a part, is expected to drive $10 billion in revenue for IBM by that same timeframe.

There are three different tasks that TRIRIGA's various software applications address, says Georg Ahn, the current CEO and president of TRIRIGA.

  1. Real estate portfolio management, including space requirements, leases and such.
  2. Capital project management, which is an area that analyzes building conditions and assesses when things like a roof replacement should be addressed.
  3. Energy and environmental sustainability metrics, including electricity and water consumption.

Let's be real: It takes a special type of risk-taker to entrust a major enterprise application like energy, carbon and facilities management -- especially one that is becoming more critical by the minute -- to a company that isn't well-know. This merger definitely raises TRIRIGA's profile. Immediately. Which means it is only a matter of time before some of the other players in this category become acquisition targets, too. Here are some other independent software developers you should keep your eyes on:

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Topics: Banking, IBM, IT Employment, Software

About

Heather Clancy is an award-winning business journalist specializing in transformative technology and innovation. Her articles have appeared in Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. In a past corporate life, Heather was editor of Computer Reseller News. She started her journalism lif... Full Bio

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