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

While the Cognos acquisition looks good on paper, its success depends on IBM's ability to integrate the acquired tools with its own offerings, says analyst

Some users fear that IBM's proposed US$5 billion (NZ$6.56 billion) acquisition of Cognos, announced last week, could force sites running non-IBM database systems to significantly change long-term technology spending plans.

Ted Bross, associate director of administrative information services at Cognos user Princeton University, says 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 says. "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 adds, if IBM is serious about being a solutions provider and not just a technology company, their investment may help compensate for deficiencies in some Cognos products. "[Cognos] is not very strong in training, documentation and customer support," he notes. "As always, the devil is in the details."

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

David O'Connell, an analyst with Nucleus Research, in Massachusetts, says 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 says. "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, he adds, must carefully question their IBM sales representatives about the company's product roadmap to eventually benefit from potential price reductions for purchases of IBM software before the deal closes.

O'Connell says Cognos users are better off than those of Hyperion and Business Objects. The ERP vendors that bought the latter firms will likely to try to force users toward their enterprise applications, he says.

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

"I think IBM is a great company, one that understands the vale of a dynamic product," says 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, says 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 notes that long-term partership 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 set of requirements," he says.