Business Intelligence Network - The Vision for BI and Beyond

The Last of the Great Performance Management Acquisitions?

Published: November 14, 2007

Although some industry consolidation will likely continue in the near term in this highly competitive market, IBM's acquisition of Cognos is likely one of the last multibillion dollar transactions of note.

With the recent announcement of IBM’s intent to acquire Cognos, it appears that the lineup for a horse race for leadership in the performance management and business intelligence category is now complete. Microsoft, Oracle, SAP, Infor and now IBM are all key participants. Based upon the information available, BPM Partners is net positive about this latest announcement.

According to the joint company briefing on November 12, Cognos and IBM have had a 15-year partnership that has included both marketing and joint development projects. The companies claim that this acquisition results in minimal client disruption and product solutions overlap. Due to their historic commercial partnership, product architecture maps and systems support already had “go-to-market” alignment. Our take is that there are no major platform decisions to be made from this announcement, although Cognos still is sorting through the product ramifications of its recent Applix acquisition. Although there will be predictable redundancy in some administrative and tactical functions that needs to be addressed, there will not be the same degree of distracting legacy client transition issues that have required the focus of senior team members for some of the other recent performance management mergers.

Due to the fact that IBM already partners with most of the major ERP vendors, this announcement will not require a change to the ERP-independent mantra that Cognos has been chanting for some time. Although one could assume that there may be some complexity on database integration due to open competition between Oracle, Microsoft and IBM, all of these companies have recognized the realities of “co-opetition” – remaining competitors but enabling data integration across database platforms. The ERP-independent positioning could reap benefits for IBM that other competitors will not be able to leverage.

Another opportunity exists in the integration of the broader IBM Global Services organization and Cognos’ vision for vertical market-specific solution blueprints. With the focus of the larger IBM integration team, targeted vertical market solutions can be rapidly constructed, enabling companies to get an 80% solution specific to their vertical market. Over time, this could lead to breaking the traditional 1:1 ratio of software sales to services, but one should assume that IBM will likely bundle their offering as one “complete” solution, minimizing the differences between the various core components (software, implementation services and hardware).

For users of performance management systems that were considering the Cognos platform, this announcement should not change your perspective dramatically. Although you may now have a broader array of implementation service choices available, and you may be able to tie your performance management initiative together with other IBM activities underway in your organization, the net direction of your planned investment is still sound. There may be opportunities to consider on the hardware side to unify your platform choices to optimize the “on demand” elements of the combined companies' offerings, but that is simply a worthy option

Although some industry consolidation will likely continue in the near term in this highly competitive market, this is likely one of the last multibillion dollar transactions of note. Out of all the recent major announcements in the performance management and business intelligence category, we believe that this one has the opportunity to be the fastest out of the gate. As with most transactions, this now comes down to execution and creating a vision for both new and existing clients that is compelling enough to help them accelerate their adoption of the attractive benefits of performance management.

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