Software // Information Management
Commentary
11/12/2007
01:02 PM
Mark Smith
Mark Smith
Commentary
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IBM (Not So Stubborn After All) Digest Cognos

Considering that it has placed brands like Tivoli, Rational, Lotus and WebSphere at the same level, IBM is spending a lot of money to place Cognos under Information Management, which is focused on middleware technology and infrastructure. There are some great synergies between Cognos BI and IBM Information Management group where they have a great opportunity to have deeper integration, but...

Today's breaking news is that IBM announced a definitive agreement to acquire Cognos. Just last week I called IBM stubborn for not addressing BI seriously at its annual IBM Software Group analyst summit. Well for a good reason, IBM was avoiding the BI discussion as they have been working rigorously on the details on this announcement. This finishes the years of rumors and the fall of Business Objects, Cognos and Hyperion into the hands of large enterprise software providers. Making the announcement today is strategically an interesting time as Oracle launches its annual OpenWorld conference and highlights its progress with the acquisition of Hyperion. IBM is smart to act now or be left out of the strategically important BI and Performance Management market.

IBM plans to add Cognos to its Information Management division, which is a precarious position to place the company as this group is not well versed on the BI market, as I have previously written. Considering that it has placed brands like Tivoli, Rational, Lotus and WebSphere at the same level, IBM is spending a lot of money to place Cognos under Information Management, which is focused on middleware technology and infrastructure. There are some great synergies between Cognos BI and IBM Information Management group where they have a great opportunity to have deeper integration, but it will impact Cognos' current agreement to license competitive Informatica data integration technology.The challenge will be for IBM to not diffuse the momentum Cognos has had selling applications into finance and operational line-of-business areas. It has a much broader reach than IBM has had with Information Management, so it might need to rethink this structure as the battle for BI requires full attention to the details required by buyers.

IBM, which also reviewed the opportunity to acquire Business Objects, is now making its move with Cognos. SAP, which recognized the value and potential of Business Objects, says it will make its planned acquisition a subsidiary to ensure that it gets the opportunity to maximize impact in the market. As I have pointed out, this will be a rocky year for organizations as they work through the transition to new ownership over their software investments. Oracle, which made Hyperion part of its middleware technology division, is still working through the challenges in managing finance, operations and IT-focused efforts in one division. All of these activities have impacted existing customers of these organizations and Cognos will be no different. This move by IBM will present challenges for Cognos customers, who are used to a certain type of service and support - support that has advanced Cognos' position in the market over the last decade. This will definitely have impact to the market in 2008.

IBM, which obviously could not miss out on the software and services opportunity, has made a reversal of its position about buying into the BI market. It will clearly go through a large learning curve to understand the full potential and nuisance of this technology segment. The applications that Cognos delivers for performance management will also present some new twists for IBM, which has historically refused to get into the applications business, like Infor, Oracle and SAP. The Cognos organization will now have to drive the value of its brand through a much larger organization like IBM; that will present challenges, as other acquired companies can attest.

My prediction for IBM is that in 2008 it will see the need to reorganize its planned acquisition of Cognos and placement under Information Management into a separate brand or into a new unified brand that highlights Cognos rather than burying it into the existing product portfolio. If you are a customer of Cognos, you better start voicing your opinion to IBM to ensure that you are comfortable with the end result of new ownership.

What's next for BI market? Well, we have an interesting situation in which HP and Teradata now have to closely look at the other publicly traded BI provider, MicroStrategy, and data integration provider Informatica to determine if they want to play at the similar portfolio level like the larger enterprise software providers. Both HP and Teradata have deep partnering experience with these organizations. For now, IBM will be joining Infor, Microsoft, Oracle and SAP in the enterprise software battle for mind share and market share in BI and Performance Management. Let's see how this one plays out for you and for other vendors that are quietly up for sale behind the scenes.

Mark Smith is CEO And Senior Vice President of Research at Ventana Research. Write to him at mark.smith@ventanaresearch.com.Considering that it has placed brands like Tivoli, Rational, Lotus and WebSphere at the same level, IBM is spending a lot of money to place Cognos under Information Management, which is focused on middleware technology and infrastructure. There are some great synergies between Cognos BI and IBM Information Management group where they have a great opportunity to have deeper integration, but...

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