Cognos announced today a $ 339 million cash agreement to acquire Applix. Based on Applix trailing 12-month revenues of approximately $ 61 million it looks like a good deal for their shareholders. For the two companies, employees, customers, and prospects there is a lot that makes good sense about this deal. First of all, these are two growing, successful companies with highly satisfied customers and strong technologies. The recent major acquisitions in the space (SAP/OutlookSoft, Oracle/Hyperion, Business Objects/Cartesis) have changed the playing field. In the end, size does matter. By acquiring Applix Cognos picks up 3,000 more performance management customers they can sell their applications to, and 200 additional performance management experts join their staff in sales, services, and development. Applix has the high-performance TM1 OLAP engine, an extremely satisfied customer base, and strong partner network. However, as a relatively small company in a space dominated by big players they were missing out on being involved in many performance deals. With Cognos' larger sales force, marketing, and deep R&D pockets this is a big win for Applix. What about customers and prospects?
The combined companies are stronger than either was alone in the area of Financial Performance Management. Cognos' consolidation and planning applications combined with Applix' financial analytics gives them a strong offering in this area. As part of this Cognos will now have its own profitability analysis solution (part of our BPM 2.0 framework). Also, the combined entity will be a force to be reckoned with in the mid-market. Applix and its product set were fairly successful in this market segment. Combined with the Cognos brand and marketing/sales reach this should be even more true in the future.
What about the negatives? Integrating two companies, people, and technologies is always a time-consuming distraction. I think this is less of an issue here since it is easier to absorb a much smaller company with a narrowly focused product set. The biggest challenge will be around product overlap. Although I have not seen PowerPlay and TM1 go head to head in many deals and they have very different strengths, the products have been presented in a similar manner from a marketing perspective, If both products are to co-exist they will need to reconcile the messaging and positioning of each in a way that is clear to the market and their own salesforce.
I wasn't expecting this deal (thanks Cognos and Applix for keeping me in the dark), but in the end it makes perfect sense.
Posted September 5, 2007 7:10 AM
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As you said, this makes the combined much larger than the parts. Doesn't that also make Cognos more marketable. Won't the next step be for a larger business to absorb all the benefits of Cognos? What will keep Cognos off the purchase blocks or does it need to be there?
Why are you comparing TM1 and Powerplay Craig - what about Cognos Planning / Adaytum?