As Oracle Corp. was attempting to focus the software spotlight on its OpenWorld 2007 show in San Francisco, IBM Corp. stole its thunder by announcing its acquisition of Cognos Inc. for $5 billion in a move to expand its business intelligence (BI) and business performance management (BPM) repertoire.
Cognos becomes the latest in a series of software companies to give into consolidation mania, after swearing independence just as Business Objects did before SAP AG scooped it up last month and Hyperion did before it was bought by Oracle in February. In the end, Cognos CEO Rob Ashe tried to save face: "They made us an offer we couldn't refuse." So what else is new?
Now, SAS Institute, the biggest independent enterprise intelligence provider, with $1.9 billion in revenues, is considered by consultants to possibly be the next big software play. But SAS, no surprise, says differently. "We will not be sold," says Gaurev Verma, SAS global marketing manager for the enterprise intelligence area that combines BI, data field integration and data quality and predictive analytics tools. He notes that as an independent, it can pour 24% of its revenues back into research and development. SAS remains a major partner with IBM to provide predictive, forecasting, modeling and optimization tools to create complete solutions, and has also worked with SAP.
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This is IBM's 23rd acquisition to support its information-on-demand strategy. With Cognos, IBM also gets Applix technology, which Cognos acquired earlier this year. IBM is not alone in building its BI and BPM suites. Oracle purchased Hyperion. And Cartesis and ALG Software were bought by Business Objects, which in turn is now being acquired by SAP.
"Customers are demanding complete solutions, not piece parts, to enable real-time decision making," says Steve Mills, senior vice president and group executive, IBM software group. "Our broad set of capabilities-from data warehousing to information integration and analytics-together with Cognos, position us well for the changing business intelligence and performance management industry."
That's not to say customers wont' still have options. The complicated relationships among all the big vendors appear to be keeping the BI and BPM choices open. For instance, even as IBM was talking to Cognos in October about buying the company, it announced a partnership with Business Objects, which will soon be owned by SAP and is a top competitor of Cognos'. Business Objects will distribute and resell IBM DB2 Warehouse with Business Objects XI and CFO Performance Management software, and IBM will distribute a limited license of Business Objects XI with DB2 databases and warehouses.
Much of the IBM/Cognos news has focused on the BI technology Cognos brings to the table, but for finance executives it will be the analytics and business performance management that will ultimately matter most. The rise of analytics, combined with data integration and BI reporting, are leading companies in all industries to seek more complex analytical software, says Verma. "More than reports that tell them what happened last year, last month or last Tuesday, they need to see around corners and know what will happen next–next Tuesday, next month, next year," SAS said in a statement.
The business analytics software field is big business. According to IDC, the market reached $19.3 billion in 2006, representing a growth rate of 11.2%. The authors expect the worldwide business analytics software market to continue to grow at a compound annual growth rate of 10.3% over the next five years.
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