Cognos President and CEO Rob Ashe talks about competition and product differentiation in a consolidating market.
In the midst of being acquired by IBM for $5 billion-a deal expected to close this quarter-business intelligence software developer Cognos released Version 8.3 of its Cognos platform at a Jan. 15 event in New York. During the launch, Cognos president and CEO Rob Ashe sat down with eWEEK Senior Writer Renee Boucher Ferguson to talk about his plans to differentiate Cognos' performance management software under the IBM umbrella in the face of mounting competition and a consolidating BI market. You've said that the last 10 years have been a beta stage for performance management. Why now is this area coming to fruition, particularly with IBM's acquisition of Cognos, Oracle's acquisition of Hyperion and SAP's of Business Objects-all with a focus on performance management?
I think we've seen a couple things. We've seen a period of [companies asking], What did I get from all those investments in collecting data? I've done the big ERP [enterprise resource planning] implementation. So I've got all the data and I've got to put it to use. Second of all, I think that there is just an acknowledgement amongst customers that I talk to that those systems that just automate things-for Ford or GM so they both have SAP on the back end-it doesn't matter. The issue is how do they take advantage of their reach, of their inventory, of decisions that are about optimization? It's how to deal with things that are different. IBM calls it performance management. We kind of like that. It's how to express in a solution around data what's unique about my company. And the consolidation in the industry has contributed to it-Oracle, SAP and IBM all jumping in big-time just suggests they're seeing large companies demand [performance management] on a scale they hadn't seen before.
How do you plan to differentiate Cognos (under IBM) from Oracle and SAP, particularly given that Oracle and SAP have vast transactional suites to tap for BI?
First of all, at a very high level, they will be spending an embarrassing amount of time integrating those acquisitions. Customers are going to be confused and [Oracle and SAP] are going to have to rationalize. We have a very clean trajectory; we don't have to rationalize-we don't have to replace our performance management products with IBM's or vice versa. So what we will be really focusing on is that trajectory around integration and a lack of rationalization. We will compete on that basis firstly.
Secondly, when you talk about what's under the table-transaction systems down here and performance management systems as the center of gravity-transaction processing is fundamentally different. If it was the same [as BI], those companies would have been wildly successful without their acquisitions. IBM has always been neutral-with infrastructure, services-but it's not supplying core transactions. So our ability to go into those environments where companies have different transactional systems, [and say] we are with a big neutral supplier called IBM, that's another differentiator. And we have a much better ability to effectively deliver on our promise [of an integrated system]-what we're showing with Cognos 8 v. 3-and to compete on the fundamentals, which is the independence of performance management solutions.
Will the competitive landscape continue to play out around performance management or will there be other areas that emerge?
Performance management is the new battleground. And we've been saying that for six years, at least. There's sort of a category collapse going on where CPM and BI, reporting, [and] analytics are kind of starting to merge. The lines are getting very grey and I think customers are broadly viewing all this stuff now as performance management.
Customers have talked about waiting to migrate from [the Cognos 7] suite to the 8 platform because of a lot of initial bugs with Cognos 8 [released in 2006]. Moving into the 8.3 edition, do you find you are still fighting that perception of a buggy platform?
I think we're over that hurdle. Cognos 8 was a big new capability and it brought really cool new stuff, but probably quality wasn't at the level we would have liked, and some of our customers would have liked it. So 8.2 really moved the bar on that; 8.3 puts it all on a mature level. So I think customers will move to 8.3. I hate to use the word rapidly but I think we'll see a lot of customers upgrade.
What's the percentage of customers on Cognos' suite versus the platform?
It's interesting. Probably somewhere between 40 and 50 percent of suite customers have bought ReportNet on Cognos 8 and built applications with it, but somewhere between 10 and 20 percent have migrated their applications. There's a huge population of applications that can be migrated.
IBM has been criticized in the past for not integrating acquisitions well. Any fears that could be the case with Cognos? Any challenges to being acquired by IBM?
There are always challenges-there are challenges being acquired by anybody. The issue is, Do you have the processes and an approach that will overcome the challenges? IBM has done more than 50 acquisitions, so they've very openly expressed learnings-good and bad-from those acquisitions. Personally I've been impressed so far with their thoroughness and their approach that they've taken. They've not shown up with a cookie cutter, which is great. And they've been very careful about what they may have done poorly in the past.
I think today in the marketplace-I read a Wall Street Journal back in August-that right now they're viewed pretty positively in terms of their ability to absorb these acquisitions. They do have a different approach. And their approach is not based on squeezing profits out of things; their business case is based on continuing to drive growth. So they don't buy a bunch of overlap technology and cut it up. They think strategically about every piece that they add, and I think that heightens the opportunity for success.