IBM is peeling off $1.2 billion to buy SPSS.

It's paying $50 a share cash, a 42% premium, to expand its Information on Demand (IOD) portfolio and its business analytics capabilities as well as strengthen its ability to turn company information into a strategic asset.

IBM previously licensed SPSS widgetry but says it's expanding its focus on business analytics technology and services to meet growing client needs to cut costs, reduce risk and increase profitability through predictive analytics capabilities, which include advanced data capture, data mining and statistical analysis, the modern way of reading the entrails and predicting the future.

Information Management general manager Ambuj Goyal claims SPSS gives clients "true foresight."

"Predictive analytics," he's quoted as saying, "can help clients move beyond the ‘sense and respond' mode, which can leave blind spots for strategic information in today's fast-paced environment, to ‘predict and act' for improved business outcomes."

It's supposed to predict consumer buying patterns.

SPSS customers include Lloyds TSB, BT and Credit Suisse.

IBM quotes IDC's estimate that the worldwide market for business analytics software will swell to $25 billion this year, growing 4% over 2008.

Software sales these days brings in close to 25% of IBM's revenues.

The deal is expected to close later this half.

IBM recently bought Exeros, a data discovery outfit, for its Information Management portfolio, and Cognos, of course, a couple of years ago for its business analytics. Cognos set it back $5 billion.