IBM to consolidate in Bay State

IBM Corp., which has snapped up nine software companies in the state over the past dozen years, plans to consolidate many of its Massachusetts operations at an 800,000-square-foot "software campus" near Interstate 495.

The campus, consisting of two buildings the technology giant is now leasing in Westford and two adjoining buildings it will lease in Littleton, about three miles away, will employ about 3,400 of the company's 5,000 Massachusetts employees when the move is complete by the end of the decade.

IBM will close software offices in Bedford, Lexington, Lowell, Marlborough, Waltham, and Westborough. It will retain its Lotus research and development center in Cambridge and another off Route 128 in Waltham, where it works with business partners that develop programs for IBM's software platforms.

The changes are intended to foster more collaboration between Massachusetts software companies IBM has acquired since 1995, including Lotus Development Corp., Rational Software Corp., Ascential Software Corp., and, most recently, Watchfire Corp.

Engineers from these companies will do software coding and testing across product lines in new labs in Littleton, which will handle software development, quality assurance, and customer support, said Bob McDonald, vice president of technical support for IBM's Lotus Software unit.

The buildings in Littleton, formerly occupied by Hewlett-Packard Co., are being renovated to host the labs.

In the Westford buildings, already occupied by some IBM employees, the company will consolidate sales and marketing, human resources, finance, and product management for its Massachusetts software units.

Both buildings will have room for growth, as the company continues to build up its software operations. Software sales are expected to generate half of IBM's corporate profits by 2010.

"We're committed to expanding our software portfolio, and we continue to look at Massachusetts as being one of our prime locations for acquisitions," McDonald said.

The state is home to IBM's largest concentration of software operations. Over the past 12 years, IBM employees in Massachusetts have been awarded 2,773 patents, and the company has partnerships with over 100 smaller software firms.

McDonald said some of the software applications IBM acquired could be merged into large suites, but there are no plans to do so immediately. "For the foreseeable future, these brands will continue because that's the value proposition of the acquisitions," he said.

Rebecca Wettemann, vice president at the Wellesley consulting firm Nucleus Research, said the changes are long overdue.

"It's great they're going to be consolidating their operations," she said. "But they also need a strategic vision for how they're going to integrate these applications to deliver more value to their customers."

Unlike rivals Microsoft Corp. and Google Inc., which are consolidating their Massachusetts operations in Kendall Square, near the Massachusetts Institute of Technology, IBM decided to shift its state operating hub to Interstate 495 because it needed more room, McDonald said. The company considered building a new campus, but determined it would be faster to lease space.

"We had to go further outside the city to meet our total square-footage requirements," McDonald said. "This had nothing to do with our competitors. This is about meeting our business needs."

Robert Weisman can be reached at weisman@globe.com.