Squeezing more decision-making power out of the data companies collect in the ordinary course of business is the most fertile ground for innovation in the information technology market today. Software and services companies have only scratched the surface. At the top of the software market Oracle acquired Hyperion and SAP acquired Outlooksoft, as market leaders see the need to have those arrows in the quiver. Services companies are hungry for consulting firms that focus on Business Intelligence because BI can rapidly grow the share of IT received from existing customers. BI is harder to offshore, requires substantial business acumen, and can drive major improvements in profitability and efficiencies. The M&A interest in BI-related software and services companies is hot first because the underlying commercial market for BI is strong today and will grow faster than the broader tech market. Given this strong commercial market environment, the back drop of healthy public market valuations for tech, larger players and financial buyers such as private equity funds can and are being aggressive.

Do you also expect more VC activity? What about private equity?

You won't see any more investment in general BI software platform businesses. However, large opportunities remain for software companies that focus on vertical market solutions where analytics can yield hard dollar revenue increases or cost decreases. VCs are hungry for those types of businesses.

One company I like is Riverglass.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.