11.12.07

Putting Us Out of Our Misery

Posted in Business Intelligence at 3:29 pm by Tony Baer

Well it finally happened. Barely a month after SAP announced it was buying Business Objects, and roughly 8 months after Oracle announced same with Hyperion, IBM has closed the circle by announcing its intent to buy Cognos.

Unless you were sleeping under a rock, the deal shouldn’t have caught you by surprise. Do the math. IBM’s two major enterprise software rivals buy up two of the BI field’s three Tier 1 pure plays. And ever since acquiring Ascential 2 ½ years ago, IBM has been synthesizing an information server strategy whose prime missing link was business intelligence. Not that IBM and Cognos are strangers, 18 months ago both concluded a strategic alliance, and today, Cognos remains IBM’s prime BI partner – and vice versa.

Wall Street was obviously expecting a deal, given that Cognos’ shares surged almost 40% since last month’s SAP-Business Objects announcement.

IBM vehemently claims the deal was not defensive. Asked what took IBM so long, Software Group senior vice president Steve Mills spoke at length about the due diligence necessary for doing a $5 billion deal. While there’s little question that this was IBM’s deal to lose, IBM wasn’t the only possible suitor. HP, whose CEO came from Teradata, could have been a dark horse, but this horse would have been extremely dark. Yes, HP offers the Neoview data warehouse, but that’s no substitute for the more comprehensive strategy that converges information management, real-time business activity monitoring, and business process management strategy that it takes to elevate BI to the next level.

As we stated when Oracle announced its intentions with Hyperion, BI has little reason to remain a standalone market. As we argued with a colleague, the hockey stick phase of BI implementation happened a decade ago when client/server, later the web, introduced visual reporting and analysis tools, and when innovations in back end data transformation provided the added push for takeoff. At that point there was value-add in tools, as there was the need to reconcile different approaches to building analytic data stores. Today that technology has matured to point where enterprise platforms can federate data sources, reporting tools have grown commoditized, while adjacent disciplines ranging from enterprise performance management to BAM and BPM are beginning to erode the frontiers between historical, current, and future trend analysis.

We would agree with eBizQ’s Beth Gold-Bernstein who maintains that “Cognos fits very well into the IBM stack.” Five years ago, they revamped what became Cognos 8 as a J2EE-, SOA-based platform that will play quite well with IBM WebSphere and Information Server. She also astutely notes that the deal lacks the feed-forward predictive analyses that Software AG (which just agreed to OEM Cognos 8 into its CentraSite SOA middle tier) and Tibco have. And we concur with Dana Gardner that “IBM has wasted no time nor expense in cobbling together perhaps the global leadership position in data management in the most comprehensive sense,” naming Watchfire, DataMirror, and Princeton Softech as recent examples.

While the deal takes out the last of the Tier One BI pure plays, it does create room, if not a vacuum, for players targeting bottom-up solutions for SMB to fill.

Yes, Microsoft commoditized OLAP many years ago by building it as an option to SQL Server, but Microsoft’s approach is still largely a do-it-yourself jigsaw puzzle that does at least leverage the ubiquitous Office/SharePoint front end. You have more traditional mid-market players like Information Builders whose BI business grew 13% last year, but has not publicly demonstrated that it is winning new penetration outside its 30-year old base. And there are next-generation providers like QlikTech, which offers cached data snapshots that are supposed to overcome the limitations of traditional OLAP cubes.

In fact, an argument could be made that if you cross Cognos’ recently-acquired Applix technology, which caches data cubes on 64-bit boxes, with its DataPower appliances (IBM has gone on record saying it will spread the technology beyond its XML firewall roots), presto, you could have a relatively simple enterprise performance management box that you could plunk into an SMB.

But what we’re thinking about is a step beyond all of this. Call it BI 2.0: Combine the simplicity of appliances, the performance and growing scalability of caching, and the dynamics of Web 2.0, where you could compose analytics mashups that could bridge the differences between historical, real-time, and predictive analyses. At this point nobody’s yet stepped up the plate here, but when they do, they’ll definitely find a highly receptive audience.

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