BI leader Cognos gets scooped up by IBM

The thought on the street was that Cognos had to get bought soon, given the business intelligence (BI) consolidation land-grab of late -- punctuated by Oracle's acquisition of Hyperion and SAP's buy of Business Objects.

So now Big Blue steps up to the plate, and for $5 billion in cash, buys Cognos. This quite large acquisition for IBM quickly adds more BI-oomph to the IBM "Information" portfolio, but also importantly takes Cognos off the market from anyone else. Other suitors would probably have been Microsoft, EMC, and perhaps HP. This BI value could have burnished HP's total managment drive and complemented the Opsware purchase. EMC needs to move up the data lifecycle value chain further still.

Publicly held Cognos, of Ottawa, Canada will become part of IBM’s Information Management software and should well augment IBM's aggressive Information on Demand initiatives through new BI and Performance Management capabilities. The Cognos assimilation will be led by managed by Information Management General Manager Ambuj Goyal. The deal is expected to close in Q1 of 2008.

It will be interesting to see how IBM will support all the Cognos partnership deals with many vendors, ISVs, channel players, SIs, and users. For example, Cognos just joined a partnership with Software AG, which competes with IBM on several levels. Tony Baer says IBM put us out of our misery by finally buying Cognos.

Despite the complications of how to best merge the Cognos ecology into the IBM arsenal/universe, the purchase shows the importance of insight into and improved management of business activities to the global enterprise leadership. IBM has put a premium on ramping up its Information on Demand values through rapid acquisitions and business development. Just this year, IBM has bought (or is in the process of buying) Watchfire, Telelogic, DataMirror, WebDialogs, and Princeton Softech.

Helping huge and complex corporations to get a handle on their data, content, metadata, and digital assets -- as well as to refine, consolidate and automate access to said assets -- forms a needed foundation for IBM's strategies around services oriented archirecture (SOA) and business process managment (BPM). Providing end-to-end, top-to-bottom value in the data lifecycle also buttresses IBM's goal of easing the customization of and ongoing agility of business applications and processes, even into granular vertical business niches. And all of these values further empower IBM's professional services offerings and depth.

Indeed, IBM has wasted no time nor expense in cobbling together perhaps the global leadership position in data management in the most comprehensive sense. IT vendor competition has long centered on entrenchment via platform, development framework, proprietary technologies, and price-performance persuasion. Long-term advantage via best solutions for complete data lifecycle management and mastery has additional relevance in a market where virtualization, SaaS, SOA, and open source are dislodging the old-school vendor lock-in options.

Of the ways that Cognos and IBM come together to help their customers, the emphasis will be on allowing leaders to become pre-emptive in how they behave in their markets, as well as on attaining higher levels of business efficiency.

Cognos assembles metadata on business activities and IBM already provides troves of metadata on technical and systems metadata. The whole metadata story, in theory, is greater than the sum of these parts. The IBM-Cognos match-up should quickly lead to consistent systems for making business decisions in real time at the department or enterprise level. And there is more room to grow up the value chain for business decision makers.

"[The acquisition of Cognos] will allow us to move into leadership on next-generation capabilities," said Steve Mills, senior vice president of IBM's software group.

IBM and Cognos just 18 months ago entered into a strategic partnership. And IBM, as a long-time partner dating to Cognos's inception in 1969, is Cognos's largest partner in such areas as joint sales and professional services and integration services. As a result, IBM expects to make Cognos synergistic with IBM rapidly, an essential ingredient to a purchase of this size, said Mills in a call today with analysts.

Another apparently enticement to the IBM grab of Cognos at this time was Cognos's own acquisition recently of Applix, an OLAP and corporate performance management vendor, for $339 million in September, with an eye to the mid-market.

IBM also appears interested in straddling two trends in the BI and information lifecycle markets, said Mills. On one hand, customers want openness, ease in federation of data, and modularity. On the other hand, they need complete solutions that offer breadth across data warehousing and business metadata to provide that pre-emptive analysis of what's happening in their complex businesses.

To satisfy the demand to deliver and support both of those kinds of BI requirements, IBM has added Cognos to its stable, seeking the means to deliver both openness and completeness. I expect we'll be hearing that Oracle, SAP, and Microsoft have their own spin on IBM's latest upgrade.