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  • Power Systems Division Eyes Cognos Deal; Business Systems Shrugs

    November 26, 2007 Dan Burger

    For the typical System i shop, the ramifications of IBM‘s acquisition of business intelligence software provider Cognos two weeks ago will have less effect than tossing a cup of water in the ocean. Not now, not next month, or next year. That’s not because there is little or no interest in business intelligence among the users of i5/OS and OS/400. Business intelligence, regardless of how you define it, is a factor in the IT planning within many System i-centric companies–the bigger the company, the bigger the BI factor.

    It’s pretty safe to say that the IBM-Cognos deal will only be significant to the top end of the System i customer demographic. The distinction between the System i shops that have their eyes on the Cognos move and the ones that will shrug this off follows the same fissure that split the System i division into the Power Systems division (enterprise customers, mixing large System i boxes and the entire System p lineup) and the Business Systems division (small and medium businesses running smaller System i gear). Certainly the Cognos playbook meshes with Power Systems customers, who often have multiple platforms, data warehouses, sophisticated reporting strategies, storage area networks, and a higher degree of IT complexity than common System i customers do not require or have the skillset to implement even if they did require it. This is Global Services territory, IBM’s biggest revenue generator and always the epicenter for IBM’s moves in the IT space.

    IBM executives have pigeon-holed Cognos as a good fit for Big Blue’s Information Management division within its Software Group. The Information Management unit controls IBM’s database management, data warehousing, content management, and data integration products. Cognos products are expected to play a big role in the set up one-stop BI shopping with data integration products that fit the bill for enterprise customers. At the same time, IBM has a best-of-breed, a la carte approach that is being accomplished through partnerships that reach into the SMB market as well as up into larger enterprises. But Cognos products are an unlikely choice for the SMB customers. The value of Cognos for IBM’s prized enterprise-level customers should not be underestimated, however. It will more than pull its own weight in the important areas of add-on hardware and software sales, but the real halo effect comes in the services area. If you like the word synergy, here’s a place where it fits nicely. Business intelligence, at the Cognos level, is a service contract deal for the most part.

    It’s a little early to be seriously talking about product roadmaps, but existing Cognos customers, those that are not in the IBM camp, must be wondering whether their needs will be served in the future. IBM is more interested in integrating Cognos with software from its Information Management Group than it is with advancing Cognos integration with the Oracle database stack, for instance. Companies that are Cognos/Oracle shops are going to be fish out of water, at least for awhile until things get sorted out a bit. There are System i shops that know just how that feels. Check with JD Edwards users after the two acquisitions they lived through.

    Will IBM have an interest in pushing Cognos technology into the majority of System i customers that occupy the SMB market? I would doubt it. It would seem a higher probability that IBM, Oracle, and SAP will negotiate a trade of their “prisoners of the BI war” so that companies that find themselves on the wrong side of corporate loyalties (after Oracle acquired Hyperion and SAP did the same with Business Objects) can return to their homelands. And I would give that about as much chance as seeing pigs that can fly.

    I tend to agree with Bill Langston, the vice president of marketing at the New Generation Software, a business intelligence software vendor specializing in the CPF, SSP, OS/400, and i5/OS platforms since it was created in 1982. Cognos will likely follow the path blazed by Software Group, which is to follow the money. That is, to develop software for the Unix, Linux, and Windows platforms. “I don’t think IBM will get the return it wants by making Cognos software run native on i5/OS,” Langston says. “IBM will present this to the System i customer base, but not necessarily as a native solution. They will suggest ways to partition and run it in another environment that can be run on System i.”

    As Langston points out, the market for business intelligence products is confusing to the average person trying to sort out the flurry of acquisitions.

    “It’s not unusual for IBM to have a strategic partnership in one area of its business, while in another area of the business there will be a different partnership that is just as important even though the two might seem contradictory,” he says. “For example, on a global basis, IBM is more tied to SAP than any other enterprise software vendor. Now SAP owns Business Objects. I don’t think IBM’s and SAP’s executives would ever allow the potential conflict between Cognos and Business Objects to stop them from cooperatively chasing the bigger ERP market. Even Oracle and IBM work together when it is in their best interest to do so. That doesn’t mean they won’t compete at other times. Same way with ourselves, we’re a niche player in the System i ISV landscape and we are focused on the SMB market. There are times we work cooperatively with IBM and they work well with us. At the same time, they are working with the Information Builders and other companies.” NGS is an advanced member of IBM’s PartnerWorld and its BI product, NGS-IQ, is an IBM-approved ServerProven solution.

    Information Builders has a BI product called WebFOCUS. In March, the company signed a distribution agreement with IBM that IBM promoted as an option when customers bought a new System i. Attempts to reach a spokesperson at Information Builders regarding the IBM/Cognos news were unsuccessful, but the company’s Web site posted its canned response to the Cognos deal. The tone of the response can be gathered in this quote: “IBM’s intended acquisition of Cognos is not unexpected, as all major platform software vendors have now added business intelligence software to their offerings. While IBM, SAP, Oracle, and MicrosoftMicrosoft have just recently recognized the value of this critical technology, Information Builders has done so for more than 32 years.”

    Although, as Langston says, IBM’s relationships with its partners range from cooperative to competitive, Big Blue is unlikely to take a “this is the solution” approach with it customers now that Cognos is coming in-house. Not that Software Group won’t push hard to get Cognos in as many shops as possible. We all know that sometimes it is the tail that wags the dog. “There will always be a handful of solutions with different market segment target,” says Langston.

    “For the System i, ISV support is the name of the game,” says Clay Ryder, an analyst with the Sageza Group. “Without broad ISV support, the System i has limited opportunity since so much of that platform is moved through the channel. Channel partners need the apps to move the iron and offer servers, so ISVs are essential. IBM did exit the business application marketplace a number of years ago. While BI could be viewed as re-entry into this space, I would posit that IBM is viewing it more as an underpinning or framework on which other applications and greater solutions can be built.”

    Gartner analysts have also posted their view of the business intelligence marketplace since IBM reeled in Cognos. It describes the IBM Information Server, MDM Server, and the DB2 Warehouse infrastructure in combination with Cognos’ analytical and visualization layer as “a strong entry in the market” and “a good fit.” It also ranks IBM’s data management infrastructure as superior to Oracle’s and SAP’s offerings, and emphasizes that IBM does not need to integrate Cognos with any other BI platform, as is the case with Oracle and SAP.

    System i business intelligence vendor SPSS declined to comment for this report and attempts to connect with Help/Systems were unsuccessful.

    RELATED STORIES

    IBM Acquires BI Software Specialist Cognos for $5 Billion

    SAP Boosts Sales and Profits in the Third Quarter

    No Run on BI Vendors, Info Builder’s CEO Says

    IBM to Distribute Info Builders’ iSeries BI Tools

    Oracle Buys Hyperion Solutions for $3.3 Billion

    IBM, Hyperion, and SPSS Part Ways on DB2 OLAP Server



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    Tags: Tags: mtfh_rc, Volume 16, Number 37 -- November 26, 2007

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TFH Volume: 16 Issue: 37

This Issue Sponsored By

    Table of Contents

    • Redefining Security the New Goal of Former i5/OS Security Architect
    • Redefining Security the New Goal of Former i5/OS Security Architect
    • Redefining Security the New Goal of Former i5/OS Security Architect
    • Reader Feedback on Native .NET for System i
    • IBM Slashes Linux SupportLine Prices for System i and p
    • The System i Fourth Quarter Sales Strategy
    • Is There an NSA Back Door in Encryption Algorithms?
    • Power Systems Division Eyes Cognos Deal; Business Systems Shrugs
    • Top Execs at TomorrowNow Depart, SAP Hints at Sale
    • As I See It: The Sick Guys in Your Wallet

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