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How Will IBM Benefit from Its Meteorix Acquisition?

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IBM’s Global Business Services acquires Meteorix

Previously in this series, we discussed IBM’s acquisition of Cleversafe. Not long ago, before Cleversafe, on September 28, 2015, IBM (IBM) announced another acquisition. IBM’s GBS (Global Business Services) will acquire Meteorix, a consulting and implementation services provider for companies looking to deploy Workday’s (WDAY) cloud-based HR (human resource) and financial management software. Financial details of the acquisition were not disclosed.

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IBM aims to benefit from Workday’s prominence in market

Started in 2011, Meteorix has 200 consultants who specialize in the implementation of Workday’s cloud-based HR and financial apps. Workday is a SaaS (software-as-a-service) provider, with products gaining prominence against on-premises solutions. Workday is estimated to generate $1.16 billion in revenue in the current fiscal year. It expects $1.59 billion revenues in fiscal 2017.

According to HfS Research, with the acquisition of Meteorix, IBM has become the third biggest Workday services player in the market. IBM, with a total of 380 certified Workday consultants, is behind only Deloitte and Accenture, with 600 and 550 Workday consultants, respectively. As the diagram above shows, IBM’s position has now elevated to the HfS’ “Winner’s Circle” of Workday service providers.

Currently, IBM provides implementation and consulting services for SAP (SAP) and Oracle (ORCL). By integrating Meteorix into its portfolio, IBM will have a wider expanse—by installing Workday finance and HR software it could also pitch its analytics and cloud software. Through Meteorix, IBM’s share of certified billable Workday consultants will double. Its larger scale will boost its competitiveness with peers Accenture, Deloitte, and AON Hewitt on large Workday deals.

To gain exposure to IBM, you could consider investing in the iShares U.S. Technology ETF (IYW). IYW invests about 4.2% of its holdings in IBM.

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