VARs: IBM's Cognos Takeover Was Inevitable

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The first question on Cognos partners' lips on hearing news of the announced $5 billion acquisition by IBM is: What took so long?

"This was supposed to have happened last year. There was a strong rumor in 2006 that IBM would buy Cognos," said Hemant Warudkar, CEO of Cognos partner Express Analytics in Irvine, Calif.

For David Jones, director of business intelligence (BI) software specialist Paragon Consulting in London, IBM's Cognos purchase finishes off an M&A trifecta: he bet a friend £100 that Oracle would buy Hyperion, Business Objects would buy Cartesis and IBM would acquire Cognos. This year, all three deals have come to pass. (SAP's move to snap up Business Objects was an unexpected round on the BI Buyout Bingo board, Jones admitted.)

The only real surprise in IBM's Cognos buy is the way it contradicts IBM software chief Steve Mills longtime stance that IBM isn't in and doesn't want to be in the applications business. IBM spent $3.5 billion in 1995 buying e-mail and collaboration applications maker Lotus, a deal the company has struggled with: IBM's Lotus integration was rocky, and Lotus Notes continues to steadily lose ground to Microsoft's rival Exchange.

Mills softened his "no applications" position in a conference call with press on Monday, following the Cognos announcement. "We haven't changed our strategy in any fundamental way. We have applications technology in our portfolio today," Mills said, citing Notes and FileNet, the content management software maker IBM bought last year.

Pending shareholder and regulatory approvals, IBM expects the Cognos deal to close in the first quarter of 2008. Channel integration plans won't be worked out in detail until further in the planning process, according to Mark Register, a vice-president in IBM's information management unit. He expects IBM to begin actively working with partners on channel road maps several months after the close.

Although IBM has its own extensive services business, the company knows it needs to continue working with Cognos' existing partners, Register said.

"We recognize that customers often make a choice for incumbent systems integrator vendors. That won't change," he said. "We'll still be maintaining the relationships that Cognos has with all their systems integrator partners in exactly the same way."

Cognos VARs say they don't expect any changes in the short term but are waiting to see about the long-term impact of the IBM buy.

Next: Mixed VAR Experiences With Past IBM Acqusitions.

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