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November 12, 2007

IBM to purchase Cognos

Reports across the Web today say IBM will tender an offer to purchase Cognos, the maker of PowerHouse development software for the HP 3000 as well as Windows-based Axiant, the development environment Cognos offers to migrating HP 3000 sites.

The deal will put $5 billion on the table to acquire Cognos, a company whose product line and IT focus has settled squarely in the business intelligence marketplace for many years now. SAP and Oracle recently snapped up BI providers, and the Cognos stock moved from the middle $40s to above $50 a share since Oracle's acquisition of Hyperion Solutions.

IBM offers to pay $58 per share in cash for Ottawa-based Cognos, a 9 percent premium over Cognos' $52.98 closing price on Friday. The stock settled in at a closing price of $57.15 after today's trading. In an IBM press release, the company said that

Following completion of the acquisition, IBM intends to integrate Cognos as a group within IBM's Information Management Software division, focused on Business Intelligence and Performance Management. IBM also will appoint current Cognos President and CEO, Rob Ashe, to lead the group, reporting directly to General Manager, Ambuj Goyal.

With HP announcing its exit from the 3000 market, Cognos recently offered a mature product support plan through 2009 for the MPE/iX version of PowerHouse. HP followed suit about six weeks later with its own Mature Product Support deal for the 3000 and MPE/iX, through 2010.

Reaction from the PowerHouse mailing list about the acquisition has been limited to customers and long-time consultants as of this afternoon. But one Canadian user of PowerHouse tipped his hat to an historic partner in the 3000's legacy. Cognos, after all, began as Quasar Systems in the middle 1970s, selling the first independent report writer for the 3000 as its only product. Quiz made Cognos possible.

"Mind you, quite a success story," said Guy Werry, Senior Systems Analyst of Hudson Bay Mining & Smelting Co. Ltd. On the mailing list he posted, "From a smallish consulting company with an in-house report writer to a $5 billion company in about 30 years? Not too shabby."

The PowerHouse and Axiant operations are a small part of the Cognos business, but the company insists that the products and their customers are a profitable segment. When consultant Robert Edis speculated on the fallout from the late 2006 Cognos-Speedware alliance, Edis said that development was likely to cease. PowerHouse product manager Bob Deskin replied that "Eventually everything comes to an end. But we have a while to go yet."

IBM, to its credit, maintains products much longer than nearly all other vendors. The AS/400 server business, rooted in 1970s systems, has morphed several times during the last decade to include the latest in IBM hardware and software technology, the i5 series. Charles Finley of Transformix, an HP migration solutions and consultancy, pointed this out today on the PowerHouse list.

The saving grace is that IBM does not seem to “pull the plug” on any software product that produces recurring revenue.  My guess is that they will do what they have done with [the database] Informix. They keep supporting it but they do not enhance it much. At the same time they offer substantial migration paths to other IBM offerings.

What I mean is that they offer a comprehensive solution including tools and services to help customers change to some product and technologies that IBM considers sustainable in the current software markets.

The PowerHouse mailing list is visited often by Cognos product manage Deskin. In the near future it's possible that Deskin will weigh in with a "no changes in the immediate future" message, a communique that's common in the weeks after an acquisition announcement. As these consolidations become the norm for the larger 3000 partners — Speedware and Acucorp come to mind — the results of the deals take years to surface. Change sometimes does not surface at all, even if everything does end eventually.

04:02 PM in Homesteading, Migration, Newsmakers | Permalink

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