October 21, 2010 – IBM stated its plans to acquire Clarity Systems, a privately held financial governance software company based in Toronto, which analysts say should enhance the company’s offerings in the financial and governance, risk and compliance areas, and provide an opportunity for other GRC vendors.

Clarity provides financial governance software that enables organizations to automate collection, preparation and certification of financial statements for electronic filing, particularly for SEC and other regulatory mandates, according to an IBM news release. The buyout gives IBM an innovative financial government product in Clarity, and could open up room for others in Clarity’s place, says Dave Kasabian, founder and analyst with Pervasive Performance Group, who was briefed on the acquisition by IBM after Thursday’s announcement.

“[The acquisition] is good for IBM and Clarity, and will likely be good for smaller vendors in this space as Clarity was at the top of the food chain of independent financial performance management vendors. With IBM’s clear desire to focus on financial statement reporting, it could open opportunities for vendors who used to compete head-to-head with Clarity in budgeting and planning opportunities,” Kasabian says.

Eventually, Clarity, which has 600 customers and about 400 employees, will be integrated into IBM’s business analytics software portfolio. For now, it will operate under IBM with standalone products.

Rob Ashe, IBM business analytics general manager, said in a news release that this acquisition would extend IBM’s reach in the financial and GRC realms.

IDC business analytics research manager Brian McDonough agrees, noting that Clarity features should boost capabilities of IBM Cognos in the financial performance and strategy management (FPSM) market.

“While IBM can and does sell other FPSM modules … it would be better if its customers chose IBM Cognos’ consolidation and close solution because of the additional integration points for the benefit of the customer and IBM sales,” McDonough says.  

The acquisition is one of two-dozen by IBM in the last four years, at a combined price tag of more than $14 billion, according to a company news release. Financial details of the acquisition were not disclosed.

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