Intelligent investment: IBM in motion to buy Cognos

Cognos, which has an OLAP platform, specializes in query, reporting, and performance management that will complement IBM’s existing capabilities in data transformation and integration, change data capture, customer data management, data archiving, and more.
By Tony Baer, senior contributing editor November 14, 2007

In a long-awaited move, IBM on Monday announced a $5-billion offer to buy business intelligence (BI) solutions supplier Cognos . Under terms of the proposed acquisition, Cognos will retain its brand and its Chief Executive, Rob Ashe, but will become a unit of IBM’s Information Management Division , which is the group that includes DB2 and Information Server products.
“We see this as being complementary to what we are providing with real-time business process management and analytics,” says Steve Mills, senior VP and group executive for IBM Software Group.
Cognos, which has an OLAP platform, specializes in query, reporting, and performance management that will complement IBM’s existing capabilities in data transformation and integration, change data capture, customer data management, data archiving, and more. Both companies are hardly strangers, given their strategic alliance around the service-oriented architecture-based Cognos 8 BI platform, which integrates with IBM WebSphere.
Speculation about a possible deal grew after two of Cognos’ largest rivals, Business Objects and Hyperion , were acquired by SAP and Oracle respectively in the last six months. After the announcement of SAP’s offer to buy Business Objects back in October, Cognos’ shares jumped by nearly 40 percent in anticipation of a deal.
While the buy further fills out IBM’s BI portfolio, rivals point to Cognos’ loss of independence and their claim that Cognos does not offer a full BI solution.
“Customers value having an independent provider because they must deal with multiple platforms,” says Jake Freivald, marketing director for Information Builders. “Cognos, and Business Objects before that, are very strong in query and reporting, but that’s a very narrow space,” adds Russ Cobb, VP of alliances and product marketing for business intelligence specialist SAS . “Most of our [BI] revenue comes out of advanced analytics and data integration, which we term enterprise intelligence.”
IBM expects the Cognos deal to close in Q1 2008.