Maureen O'Gara

IBM is going to buy Sterling Commerce from AT&T for approximately $1.4 billion in cash. It is one of IBM's pricier acquisitions since it took over Cognos for $4.3 billion three years ago. IBM, which wants to double its earnings in the next five years, is currently on a software acquisition tear to build up its revenues.

The acquisition of Sterling, whose B2B wares include network- and cloud-based data storage and managed hosting as well as application and computing services, is supposed to help organizations create more intelligent and dynamic business networks by simplifying and automating the way they connect and communicate with customers, partners and suppliers both on-premise or through the cloud.

IBM figures Sterling, which is not core to AT&T, will give it more skills in integrating key business processes through the entire cross-channel solution lifecycle, from marketing and selling to order management and fulfillment.

It said these offerings also give clients the flexibility to manage their networks of business partners through public or private cloud computing environments.

Sterling currently claims 18,000 global customers and says it enables more than a billion business interactions a year for clients in financial services, retail, manufacturing, communications and distribution.

IBM sees these interactions growing dramatically due to the proliferation of electronic business transactions, from banks exchanging transaction data and manufacturers sourcing raw materials electronically, to retailers automating stock replenishment and managing orders online.

Sterling's widgetry apparently already complement IBM's middleware so IBM reckons it should be able to deliver new cross-channel solutions and get additional capabilities to boot. When the deal closes sometime in the second half, Sterling and its 2,500 people will be attached to IBM's WebSphere group.

SBC Communication brought Sterling in 2000 for $3.9 billion and then bought AT&T in 2005 and changed its name to AT&T.

A few weeks ago an Oraclesque IBM anticipated spending $20 billion on acquisitions over the next five years and figures that software will represent half its earnings by then.