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IBM Acquires Cognos
The $5 billion deal marks ongoing consolidation in the Tier One business intelligence market; a "significant change" in IBM's direction, one analyst notes.
Posted Nov 12, 2007
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IBM has agreed to acquire longtime business partner and business intelligence (BI) software pioneer Cognos for $5 billion in cash, in a deal that is expected to close in Q1 2008. Cognos is the third major BI vendor to be acquired this year, following Oracle's $3.3 billion buyout of Hyperion in February and SAP's October acquisition of Business Objects for $6.8 billion. These deals leave MicroStrategy and SAS as the last remaining standalone Tier One BI players. IBM plans to fold Cognos, which has 4,000 employees and 25,000 customers, into the IBM Information Management Software division, where current Cognos President and CEO Rob Ashe will report to IBM GM Ambuj Goyal. IBM's announcement came on the first day of Oracle OpenWorld, which may be intentional, according to Claudia Imhoff, an analyst with Intelligent Solutions. "I doubt it was a coincidence. Oracle got Hyperion, SAP got Business Objects, and IBM had to respond to these substantial purchases." In the world of e-business, tit-for-tat acquisitions are nothing new, but IBM's acquisition of Cognos goes beyond the usual competitive posturing because it draws IBM into a virgin market for Big Blue: applications. "This is the first real application provider that IBM has purchased, and it does rock the boat," Imhoff says. "IBM has been an open and embracing partner with apps vendors, but that will change pretty substantially." For its part, IBM didn't frame the Cognos acquisition as revolutionary in this way, classing it instead as a building block in IBM's Information On Demand strategy. But the deal certainly puts IBM into head-on competition with the world's two largest applications vendors, Oracle and SAP, rather than with the application infrastructure giants (BEA Systems and Hewlett-Packard) who are IBM's typical foils. On the other hand, IBM has long employed a very expansive definition of middleware, according to which applications such as BI are swallowed by infrastructure rather than continuing as standalone apps. The key question is whether Information On Demand will extend beyond what IBM calls the "under the covers" aspects of BI and application infrastructure to assimilate front-and-center application categories such as CRM. IBM's promotional email alert for the Cognos acquisition noted that real-time access to information could help companies in "capturing new revenue opportunities, improving customer service, fighting crime, or avoiding disasters." The first two of these cited categories are traditionally considered part of the CRM vision, which implies a possible overlap between the back-office BI component of Information On Demand and front-office software. Given how IBM is blurring these previously discrete categories it is worth wondering if, on a long enough timeline, all apps will simply become infrastructure.
Whatever the long-term implications of IBM's foray into applications might be, the acquisition of Cognos doesn't necessarily shake up the CRM world today. Cognos had no particular CRM technology partners of note, and does not bring IBM any CRM-relevant technology beyond a basic capability in customer analytics. Intelligent Solutions' Imhoff notes most of the advanced customer analytics work is being done by SAS and Teradata, not Cognos. Related articles: Forrester Wave Ranks Cognos and Oracle Tops in Performance Management Forrester Research's ranking of BPM vendors provides a snapshot of a market in motion. SAP to Acquire Business Objects [Oct. 2007] The friendly takeover folds new business intelligence capabilities into one of the leading enterprise software platforms; amidst differing opinions, rumors loom of a counteroffer from Oracle or IBM. Oracle Is Set to Purchase Hyperion [March 2007] The $3.3 billion acquisition would be Oracle's largest since Siebel, and continues Oracle's focus on BI while undermining rivals; more BI acquisitions are to come, according to analysts. Cognos To Purchase Applix [Sept. 2007] The $339 million acquisition is the latest example of the convergence of business intelligence and performance management. Analytics Demand Has an Online Answer Applix bolsters its user community with a cache of new applications, development tools, and tips; one analyst says Applix On-Demand could become a SaaS offering of its own. For Cognos, The Time is Now [May 2007] The company releases a new BI and performance management solution tailored for the SMB segment and based on technology acquired from the Celequest purchase. Feature: The 2007 Market Awards: Business Intelligence Cognos, in the face of investigations into company finances, continues to be a top contender in the BI space. BI Tools Market Shows Continued Growth A study by IDC reveals that BI software is both popular and necessary; Business Objects and SAS continue to lead the field. Cognos Brings BI to Excel The business intelligence vendor adds search and analysis capabilities for business users of Excel; more vendors will follow, according to one industry analyst. Cognos's Quest for Real-Time BI The BI vendor adds real-time operational dashboards to its performance management solution and announces tighter integration with Salesforce.com. Gartner Releases Its BI Magic Quadrant The analyst firm expects the business intelligence market to experience sustained growth as the technology includes more users within an organization.
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