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IBM Lays Out Ambitious Cognos Strategy

NEW YORK -- With the $5 billion acquisition of business intelligence provider Cognos formally concluded last Thursday, IBM wasted no time unveiling a slew of new products and its plan for integrating the company into its information-on-demand (IOD) strategy.

Addressing analysts and press in the rooftop suite of the St. Regis Hotel here in Midtown Manhattan, Steve Mills, IBM's software group executive, heralded Cognos as the culmination of two years of acquisitions and initiatives to improve how companies store, organize, retrieve and visualize data.

"The Cognos acquisition completes [an] end-to-end set of capabilities IBM can offer," Mills said, adding quickly that IBM would continue its aggressive pursuit of the business-optimization market. "It's not just the roadmap we've been on -- it's the roadmap going forward."

Ottowa-based Cognos's visualization and reporting applications will put a face on IBM's IOD initiative, begun almost exactly two years ago.

Through purchases of companies like FileNet, Princeton and Solid Information Technologies, IBM amassed the core information-management and in-memory database infrastructure to build a suite of dynamic business-data storage solutions scalable to companies of all sizes.

But Big Blue still lacked one element. Cognos delivers the visualization and reporting that allow companies to peer into their data to make better business decisions -- "the top of the iceberg that carries the whole thing forward," Mills said.

Because IBM and Cognos both use open standards and architectures, businesses can tap their tools to aggregate "any data, anywhere, [using] any application," he said.

That's fortunate, since according to IBM, enterprises face a lack of advanced BI and IOD tools.

While every business that IBM consults with has a clear idea of what products they want to put in place to improve operational inefficiencies, they rarely have a vision for their "information agenda," said Ambuj Goyal, IBM's general manager of information management software.

For IBM, that is the difference between business automation and business optimization.

Slippery terms, to be sure, but Goyal summed it up in brief: "Information on demand is about unlocking the business value of information."

The goal is to level the barriers created when an organization's data is siloed, said Rob Ashe, who previously served as Cognos's CEO before assuming the position of vice president of IBM's newly created Business Intelligence and Performance Management division.

Ashe said a unified BI application produces "coordinated decision making." For instance, it can ensures a company's marketing and customer service departments are able to access the same information packaged in a customizable, user-friendly dashboard.

He will have 35,000 employees across IBM's three major units of software, hardware and services supporting the BI efforts that he is to lead. Cognos' operations will remain in Ottawa.

When BI companies like Cognos burst on the scene, they offered "whiz-bang reporting," Marc Andrews, IBM's director of IOD and Cognos integration marketing, told InternetNews.com.

Yet, two reports could produce wildly differing data, he said. As a result, the problem of flashy but faulty data representations highlighted the precariousness of the standalone BI industry.

That's where IBM came in. Cognos will become the face of IBM's underlying IOD campaign, advancing its business-optimization services for companies of all sizes.

Business optimization -- what Ashe called the "marrying of future data with historic data to get a complete picture" -- is the fastest-growing segment of IBM's industry, the executives said.

IBM wasn't the first enterprise computing powerhouse to recognize the need to add BI capabilities. The acquisition followed SAP's $6.7 billion bid for Business Objects in October, and Oracle's $3.3 billion purchase of Hyperion last March.

Fortunately for IBM, a 15-year relationship between it and Cognos, and the open standards and architecture that each uses, has helped it move quickly to integrate the smaller company into its operating structure.

"They fit hand and glove," Ashe said, noting that the buyout received approval of 99 percent of Cognos' shareholders.

The integration seems to be proceeding briskly also given the laundry list of products announced today, less than two months after IBM announced the acquisition.

IBM showed off 10 Cognos-enabled industry-specific applications that (according to IBM's promotional literature) "turn information into a strategic asset." These include shelf-space management and store planning for retailers, financial risk-planning for banks and crime-management insight for government agencies.

Company executives also introduced a Compliance Warehouse -- a unified software, hardware and services environment to support a business's legal compliance efforts with Cognos reporting.

The Compliance Warehouse includes a content repository, records management services, e-mail archiving and Tivoli and Lotus software, among other features.

The other new products IBM announced today included a Cognos 8 BI "starter pack" for IBM InfoSphere Warehouse, pre-integration of Cognos 8 with IBM's information server platform and bundling of IBM's Dashboard Accelerator with Cognos 8 BI.

Given Big Blue's long business history with Cognos, Mills said he had often been asked why IBM opted to purchase the company, rather than continue operating as independent partners.

"The world around us is changing," he said. "The phenomenal escalation of data volume demanded tightened integration" of the two companies' applications.

Citing projections of a 100-fold increase in the number of bytes over the next four years, Mills said consolidation of the two companies was a natural move.

He also said IBM would continue to invest further in Cognos technology, research and development.

"We acquired Cognos for leverage," Mills said. "We buy companies for lift, for growth, for strategic advantage -- not just for mass."

After all, he said, "anytime you invest $5 billion to acquire a business, there must be some important reasons."