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January 29, 2016updated 30 Aug 2016 3:05pm

IBM boosts digital design practice with Digital Agency buyout

News: Resource/Ammirati acquisition will see it join the iX unit.

By James Nunns

In a move to boost its digital practice IBM has acquired Resource/Ammirati.

The plan is to combine the companies’ strategic, creative and technology skills in order to address a rising demand from businesses that are seeking to reinvent themselves for the digital economy, in addition to looking to provide differentiated experiences to their customers.

Essentially this comes down to digital transformation which is a major trend among businesses as they look to take advantage of mobile and cloud technologies in order to better appeal to customers.

IBM is no stranger to helping businesses with digital transformation, it has been working with Shop Direct, a multi-brand online retailer that is spending £50 million as part of a personalisation programme.

The marketing and creative agency is Big Blue’s first acquisition of a digital marketing creative agency; the acquired company has a client list that includes DSW, Nestle, Victoria’s Secret and Birchbox.

The reason why the deal is of significance is because it helps to broaden the tech company’s talent and business in an area that is growing. Global spending on media is forecast to rise at a compound annual rate of 5.1% over the next five years to $2.1 trillion in 2019, from $1.6 trillion in 2014 according to the CMO Council.

What this shows is that there is a demand in the market and picking up a company that has some big name clients should be a boost to IBM.

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The acquisition falls under IBM’s iX or "Interactive Experience" unit, no financial details have been revealed but the company said that Resource/Ammirati will keep its brand and will operate "somewhat independently".

The iX unit has over 10,000 employees and will be joined by the 300+ associates from Resource/Ammirati. The deal is expected to close before Q2.

The purpose of the IBM unit is to bring clients a fusion of industry insight, design thinking and end-to-end digital transformation, from both the individual experience to core processes of enterprise businesses, the company said.

Nancy Kramer, Founder and Chairman, Resource/Ammirati said: "Our associates and clients will all benefit from IBM’s global reach and resources, including access to additional strategic, design and development talent as well as powerful analytics and technology expertise in cloud, mobile development and systems integration."

IBM has been busy diversifying its portfolio as it looks to recover from declining revenues. The company recently acquired Ustream to join its newly-formed Cloud Video Services unit.

With the tech industry suffering due to declining revenues and falling share prices, it is looking like an increasingly good time for companies like IBM to buy competition that strengthens its current portfolio and also expands it into new areas.

Resource/Ammirati appears to be an acquisition that bolsters its current expertise in the area, adding the company that was founded in 1981 gives IBM more specialist insight into how to dress up the image of companies that are going through a digital transformation.

While IBM can excel in the technology element of a digital transformation, businesses with a consumer facing side need to be able to effectively engage with customers in order to show the benefits of the transformation.

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