Cognos Buys More Pipe for IBM

However, Ashe said when IBM initially made an overture, Cognos was not for sale. "We felt no need to go out and sell ourselves," because of the increasing consolidation in the market, he said.

But with the proposed acquisition, Cognos customers will benefit from the depth of IBMs service and support, observers said.

Creese noted that both Business Objects and Cognos have boasted of being agnostic, "but now as part of IBM, will Cognos make sure DB2 is the first version they ship," he asked. Creese said he did not believe IBM would function that way. IBMs Mills acknowledged that it would not.

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Evelson said many questions arise from the IBM/Cognos deal. "But the main one that puzzles me is, will IBM completely deviate from their strategy of not being in the apps game now that it will be competing head to head with Oracle, SAP and Microsoft on BPS [Business Performance Solutions]? Whats next, an ERP acquisition of Lawson or Infor? Or a CRM acquisition of Salesforce.com playing on IBMs latest Information On Demand strategy?"

Mills addressed the issue of IBM and the applications business during the press call, saying, "we have some application technology in our portfolio" such as Lotus Notes and WebSphere Commerce Server, but these are technologies that sit outside the traditional application space. So IBM views that technology as well as the Cognos BI technology as being a "horizontal" play.

Evelson said other, more obvious, questions include: "What happens to the IBM and Cognos reliance on partner network, such as IBMs strong relationship with Business Objects and Cognos relationship with Informatica? I am sure politically correct answers from both companies will be status quo but I dont think thatll cut it for the IBM salesforce pitching to the same accounts and for the same opportunities as Business Objects and Informatica."

Another question is: "Will Cognos be a key component in IBMs intent to highly optimize enterprises," Evelson said. "Absolutely yes. IBM is likely to pour significant dollars and resources into making its overall BI [including Cognos] offering process centric—a key component in our opinion to ultimately optimized enterprises."

The bad news, Evelson said, is that "all new BI behemoths—IBM, Oracle, SAP, Microsoft—will now be forced to spend more time on product integration, potentially pulling resources away from and reducing priorities of new functionality development.

"Watch remaining smaller pure plays [SAS, Microstrategy, Information Builders, Actuate] and Tier 2 BI vendors [Panorama, QlikTech, Jaspersoft, Pentaho, Logixml, Inforsense and many others] jump on that opportunity. Good news is that the BI market is very hot."

Tony Baer, an analyst with onStrategies, said: "The other shoe has dropped. But its really no surprise at all. Just look at how investors have been bidding up Cognos stock since the SAP-Business Objects deal. Given the fact that Cognos is the only Tier 1 independent left, a 9 percent premium on the share price would have otherwise looked rather modest."

Baer also pointed to a possible Web 2.0 connection.

"The deal does create room, maybe even a vacuum, for midmarket players to fill," Baer said. "At this point theres no clear anointed successor to pick up the mantle of BI 2.0: a dynamic, easy-to-use BI approach thats highly dynamic, borrowing the best of Web 2.0 technologies with innovative approaches to smart data caching. Whoever rises to that challenge should find a very receptive audience."

Gaurav Verma, product marketing manager at SAS Institute, said: "IBM just now gains business intelligence/query and reporting and financial performance management from Cognos. However, IBM still does not have predictive and advanced analytics or vertical-specific apps.

"SAS is the largest independent software vendor offering companies integrated business intelligence/query and reporting, data integration and analytic capabilities with a long line of vertical-specific applications."

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