The $339 million acquisition is the latest example of the convergence of business intelligence and performance management.
Posted Sep 5, 2007
Cognos announced today plans to acquire business performance management (BPM) vendor Applix for approximately $339 million, in a move to expand its position in the BPM market. Cognos, which provides business intelligence solutions and has its own performance management offering, says the cash tender offer of $17.87 per share equates to roughly $306 million net of Applix cash on hand. The vendor expects the transaction to close in the fourth quarter of 2007.
"This acquisition is a terrific strategic fit for Cognos," Cognos CEO Rob Ashe said in a statement. "Applix will broaden our solution offering and provide Cognos with an innovative 64-bit, in-memory analytics capability. It will also bring into the company a very strong employee and customer base that has been committed to performance management through high-impact analytics."
The acquisition nearly doubles Cognos' customer base of 3,500 by adding Applix's 3,000 customers worldwide, representing such verticals as insurance, banking, healthcare, telecommunications, and retail. In addition to customers, Cognos will add over 200 performance management experts to its team, across products, sales, services, and customer support, as well as new partners to its global network, with what Cognos describes as particular strength in the upper-midmarket segment. Westborough, Mass.-based Applix, for its part, has trailing-12-month revenue of $61.2 million and year-over-year growth of 45 percent, according to the announcement.
The acquisition is Cognos' second buy of the year. In January, the Ottawa, Canada-based firm bought privately held business intelligence solutions company Celequest Corp. for an undisclosed sum. Applix's performance analytics software is expected to complement the Cognos 8 suite of products by improving analysis and optimization of financial performance data, enabling new features such as profitability analysis, and providing access to technology such as the Applix TM1, a patented 64-bit in-memory multidimensional online analytical processing (OLAP) server.
The acquisition is representative of an industrywide trend toward merging business intelligence and performance management (PM). As a result, says John Hagerty, vice president and research fellow at AMR Research, "BI and PM have become two sides of the same coin," and are now being executed as one broad strategy. Recent acquisitions -- such as Oracle's purchase of Hyperion in March and SAP's acquisition of OutlookSoft in May -- are representative of this trend, as BI vendors look to fill out their PM functionality, and suite players look to gobble up niche players. "We continue to see the breakdown of the walls separating BI and PM," Hagerty says. "Customers don't notice such harsh distinctions between the two categories anymore, and are making deployment and purchase decisions accordingly."
The acquisitions won't stop there, Hagerty says, speculating that IBM, Hewlett-Packard, and others might be "likely acquirers in this market space." The market for these solutions is expected to increase dramatically in the coming years. North American businesses alone will spend $23.9 billion in 2007 on BI and PM solutions, an increase of nearly 9 percent over last year, according to a recent report by AMR Research.
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