The announcement Monday by IBM Corp. to acquire Cognos Inc. was made amid assurances the business intelligence vendor's customer base will be little affected, given distinct portfolios.
The Armonk, New York-based company will pay US$5 billion for the Ottawa-based company and the deal is expected to close in the first quarter of 2008, subject to shareholder and regulatory approvals.
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Drivers behind the acquisition included the fact that customers would have "virtually no product overlap to deal with" and hence little portfolio rationalization, said Cognos' president & CEO, Rob Ashe.
Besides that advantage, Ashe said both companies have complementary cultures around their customer base, innovation and people, therefore making the much-anticipated union a "natural fit".
IBM's senior vice-president of software, Steve Mills, reiterated the partnership, calling it an "obvious move" and said Cognos' status as a platform-agnostic independent business intelligence vendor won't change either. "Strategically, architecturally, both companies have been on the same track for a long time and that will continue," he said.
The Cognos product brand will continue to exist, said Mills, given its familiarity to the Cognos customer base.
Regarding the issue of integration between front-end Cognos tools and IBM's Information on Demand software, Mills dismissed the idea that users will encounter migration issues, saying the technologies work well together, and in the future, the companies strive to further better that "fit and finish".
"That doesn't require wiring down Cognos to any IBM technology. We don't take away from customers what they already have," he said, adding IBM will continue to follow a federated model to its technology.
The majority of Cognos technologies were built on a set of open standards with a lot of products well integrated with WebSphere and with other IBM products in general, said Ray Wang, principal analyst with Cambridge, Mass.-based Forrester Research Inc.
"It's been going on for quite some time," he said, adding for that reason, he predicted Cognos would be a primary choice for IBM.
IBM's other partnerships with other business intelligence vendors will proceed as usual, said Mills, adding the company is looking to preserve those connections.
IBM will continue to operate from a services integration standpoint to meet customer needs post-Cognos acquisition despite having having partnerships with other business intelligence vendors, said Joel Martin, vice-president of enterprise software research with Toronto, Ont.-based research firm IDC Canada.
If a customer has a non-Cognos business intelligence solution, said Martin, "IBM will continue to support that but it is also in a good position to bring in complementary analytics and business performance management tools from the Cognos acquisition that the company may not already have installed."
But Martin added this situation might still create a little friction and competition.
The acquisition is important to customers who are responding to a "shift toward a real-time prospective approach to business analysis, business optimization, business decision making, business performance management" and are looking for comprehensive technologies to deal with that, said Mills.
The acquisition, thinks Martin, "rounds out IBMs' role as an integrator and trusted advisor to companies" and grants the ability to offer a comprehensive tool set to respond to company business needs.
According to Ashe, Cognos, a long-time partner to IBM, "was not for sale" prior to this process, nor did it have the urge to sell itself given the consolidation of other business intelligence vendors. "In fact, we saw this as a great opportunity because of the dislocation in the marketplace."
Oracle bought Hyperion earlier this year, while SAP bought Business Objects, leaving SAS Institute Inc., the one remaining large vendor in the space.
The acquisition might be filling a "deficiency" in IBM's portfolio, however, Cognos won't bring the much-sought analytics and vertical-specific applications that drive business transformation, said Gaurav Verma, global product marketing manager for Cary, NC.-based SAS.
SAS's position hasn't changed, nor is it concerned, amid the recent consolidations in the market, he added.
In fact, this is good news for vendors like SAS as these acquisitions validate the importance of the marketplace, said SAS's vice-president of marketing, Cameron Dow.
But Martin disagrees that Cognos' offerings are lacking, as is evident in the company's roadmap, but "more importantly, it made a decision to go out and really focus on performance management aspects, which is what the CEOs and CFOs are really responding to these days."
At any rate, SAS is "not really in play for an acquisition" anyway given it is privately held, said Martin. But, he said, it's in a "good spot" because it's not beholden to any one database or SOA application. "That independence is going to be their differentiating factor."
Jake Freivald, vice-president of corporate marketing with New York-based Information Builders Inc., echoed the same, saying that acquired large business intelligence vendors end up belonging to "someone's stack". "The problem is most organizations don't have one company stack."
Although Freivald admits the company has engaged in discussions around a possible acquisition, he said the company has at the moment "no intention of being acquired by anybody or going public."