Cognos customers are expected to receive a mixed “Big Blue” blessing if IBM buys Cognos as announced last month.
One camp of customers, those that already run on IBM database systems, can expect to get greater value for their money based on tighter integration, simplified support and improved administration. This will come, arguably, alongside a higher degree of vendor lock-in as customers are asked to make a call for a greater platform component.
Greater vendor lock-in, however, will also bring greater bargaining power, especially if the customer or prospect values the independence of business analytics vendors. While at the high end the market is consolidating, there are numerous new business analytics vendors entering at the low end.
The other camp of customers, those that run their Cognos analytics on competitive technologies, will experience a degree of uncertainty about Cognos’ future product roadmap.
This will put an obligation on IBM to prove it will keep its promise to remain platform-independent to further develop the integration and support for third party databases and applications.
History has shown, however, that acquisitions of this magnitude bring a certain level of customer churn. But what options do customers have? With only a very few significant stand-alone BI vendors remaining in the market, most alternatives would lead to a stalemate.
One thing is sure — we can expect the likes of Oracle, Microsoft, SAS and SAP to target exactly this group of indifferent customers. Their message will be focused around application-analytics integration, an area that IBM repeatedly denied it would move into.
At the end of the day, it will come down to the individual client engagement to identify whether companies favour an end-to-end analytics-application-data management platform over an independent but significant platform component.
IDC research indicates that New Zealand companies are relatively evenly balanced between both parties.
Another differentiator for competitors are pre-packaged horizontal and industry-specific analytic applications. With the exception of financial performance management applications, Cognos’ presence in this market is not comparable to those of Oracle, SAP or SAS. The lack of this specific solution expertise is also the price IBM is paying for not playing in the front-end application segment. This will put partners in a spotlight position to fill these gaps which will present them with greater negotiating power.
Competition for partners will reach a similar or even higher level than the competition for customers. The creation of skill clusters around business consulting, data warehousing and development will be crucial to bring the integrated platform proposition to market. Partners will also be the key to defend and grow the market share in the dominant mid-market segment.
Hyperion, Business Objects and now Cognos have been/will be acquired by large software companies that have their origin and significant mindshare in the large and enterprise customer segment. This could lead to smaller and mid-market companies turning away from these products which would present a golden opportunity for vendors such as Microsoft, MicroStrategy or one of the open source BI vendors.
The growing demand for business intelligence solutions will present strong growth opportunities for a combined IBM/Cognos entity. There would be several pros and cons for IBM/Cognos, their competitors, partners and customers following the proposed acquisition.
Personally, I would see more positives than negatives — but which factors will outweigh the others will be heavily dependant on IBM’s ability to establish a local business unit that has the dedication and responsibilities to address both, the opportunities and challenges associated with the acquisition.
Loeffler is IDC’s senior New Zealand software analyst