IBM buying Cognos

The last large independent vendor of business intelligence solutions is about to fall: Cognos has agreed to be acquired by IBM. The price values Cognos at nearly $5 billion. IBM's move follows similar moves by competitors earlier this year, when SAP's agreed to buy Business Objects for $7 billion and Oracle bought Hyperion for $3.3 billion.

The Wall Street Journal is reporting this morning:

...The head of IBM's software group, Steve Mills, said acquiring Cognos -- which already had a business partnership with IBM -- was not inspired by those previous deals. IBM has been on an acquisition tear in recent years to build out its software portfolio and improve the company's overall profit margins.

"We never do acquisitions on defensive moves or based on what others are doing,'' Mr. Mills said.

Like Hyperion and Business Objects, Cognos is used by organizations with a variety of enterprise systems. In fact, many smaller ERP vendors have partnered with Cognos in the past to provide data warehouse and business intelligence functionality for their solutions. For example, QAD, Epicor, MAPICS (now part of Infor), and ROI (now part of Infor) both use Cognos as part of their total solution. Even SAP has a partnership with Cognos as part of its business warehouse offering.

From this perspective, IBM--which for the most part does not compete with business application software providers0--is a good home for Cognos. IBM is more of an infrastructure and tools provider for other software vendors. I would expect, therefore, that IBM would continue and even expand these partnerships.

[Updated Nov. 14 to correct list of ERP vendors partnering with Cognos.]

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