Cognos To Acquire Applix For $339 Million

The acquisition will help Cognos stave off Oracle-Hyperion, and gives it ownership of an innovative technology called in-memory analytics.

Mary Hayes Weier, Contributor

September 5, 2007

3 Min Read

Cognos today said it plans to acquire Applix Inc. for $339 million, which should strengthen its position against the lurking Oracle-Hyperion combo and gives Cognos ownership of an innovative approach to business intelligence called in-memory analytics.

Cognos, the world's third-largest BI vendor last year with $622.3 million in revenue, plans to use Applix to expand its already strong position in financial performance management. The acquisition adds Applix's 3,000 customers to Cognos's existing customer base of 3,500 for financial performance management software, the company said.

Cognos is only one of three vendors holding 10% or more of the broader BI market, but it faces growing competition in a shifting and consolidating market that more software vendors want to be a part of. Cognos' growth last year was 9.8%, slightly trailing the industry average of 11.5%, according to an analysis by IDC. However, it's been growing at an above-average rate in the segment of BI known as performance management.

Applix is somewhat of a niche player in the BI market, with its software particularly popular for financial planning. Cognos says the company brings to the table tools it doesn't currently offer. "This is giving us the ability to address new solution areas like profitability analysis and price-volume variance analysis; complex areas we haven't been addressing for our customers," Mychelle Mollot, Cognos' VP for Market Strategy and Strategic Communications, said in an interview.

Cognos is also keen on Applix's in-memory technology, a fledgling approach to BI that's starting to gain more understanding and acceptance in the marketplace. "Applix will broaden our solution offering and provide Cognos with an innovative, 64-bit, in-memory analytics capability," said CEO Rob Ashe in a statement.

That technology makes use of modern-day 64-bit servers, and allows the software to perform analysis tasks within a server's memory. The more conventional approach to BI calls for the IT department to take the data that needs to be analyzed and build online analytical processing cubes. But lower memory costs make in-memory analytics more feasible, and can let users bypass IT and get faster answers to queries.

Mollot said in-memory analytics is more appropriate for determining future outcomes, as it "can be done at the speed of thought." Traditional OLAP, however, remains more appropriate for analyzing historical information, she said.

QlikTech, the fastest growing BI company in the market with sales that nearly doubled last year to $44 million, has grown largely on the strength of its 64-bit in-memory analytics platform.

Cognos, meanwhile, faces increasing heat from Oracle, which earlier this year acquired one of its toughest competitors in the financial-performance management market, Hyperion, for $3.3 billion. Oracle President Charles Phillips noted at the time that Hyperion was "the system of record for financial reporting and regulatory filings for most of the Fortune 500."

Cognos trails only first-placed Business Objects and SAS in BI market share. Business Objects grew even more slowly last year, at 7%, while SAS grew at a healthy clip of 16.6%. Hyperion, Oracle, Microsoft, and others had growth rates that beat the industry average.

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