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Update: Some users fear long-term effects of IBM-Cognos deal

Some say it could force them to alter investment plans; others, though, applaud move

By Heather Havenstein
November 12, 2007 12:00 PM ET

Computerworld - Some users fear that IBM's proposed $5 billion acquisition of Cognos Inc., announced today, could force sites running non-IBM database systems to significantly change their long-term technology spending plans.

Ted Bross, associate director of administrative information services at Cognos user Princeton University, said that while he thinks the short-term effects of the acquisition may be negligible on the university, "long term is a different story."

"We are primarily an Oracle shop, and this may eventually conflict with our strategic direction," Bross said. "We have tried to build our [Cognos] reporting strategy and data warehouse in such a way that we could switch products if need be. Having said that, it would be an incredibly arduous process to rewrite all reports using different technology."

However, he added, if IBM is serious about being a solutions provider and not just a technology company, its investment may help compensate for deficiencies in some Cognos products. "[Cognos] is not very strong in training, documentation and customer support," he noted. "As always, the devil is in the details."

The deal comes on the heels of last month's announcement by SAP AG that it plans to pay $6.7 billion for Cognos rival Business Objects SA. And last spring, Oracle acquired BI tool maker Hyperion Solutions Corp. for $3.3 billion. 

David O'Connell, an analyst at Nucleus Research Inc. in Wellesley, Mass., noted that while the Cognos acquisition looks good on paper, its success depends largely on IBM's ability to tightly integrate the acquired tools with its own offerings.

"I am not sure it will be more than a bolt-on for IBM," he noted "For end users, I am not sure what the benefit is. For IBM and Cognos, it means they can get into each other's customer bases."

Cognos users, O'Connell added, must carefully question their IBM sales representatives about the company's product road map to eventually benefit from potential price reductions for purchases of IBM software before the deal closes.

O'Connell added that Cognos users are better off than customers of Hyperion and Business Objects. He said that the ERP vendors that bought those firms will likely to try to force users toward their own enterprise applications.

Mark Lack, planning and financial analysis manager at Cognos user Mueller Inc., a manufacturer of steel building and metal roofing materials, said that he expects the deal to help Cognos users.

"I think IBM is a great company, one that understands the value of a dynamic product," said Lack, whose company runs Cognos reporting, analysis, performance management and planning tools. "Being part of the IBM group will open up Cognos solutions to an even wider audience, and in doing so will ensure that the best BI solution on the market is only going to get better."

Steve Mills, senior vice president and group executive for IBM's software group, said that the acquisition is aimed at offering users "next-generation" high-speed, high-quality business performance management tools to help them respond more nimbly to changing market conditions.

Mills also noted that long-term partnership agreements between IBM and Cognos were no longer enough to respond to user needs. "Independent companies finally reach a point where it becomes very challenging to execute against this set of complex, high-performance requirements," he said.

Read more about Business Intelligence/Analytics in Computerworld's Business Intelligence/Analytics Topic Center.



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