Four Reasons IBM Spent $5 Billion on Cognos

The VAR Guy is usually skeptical of software acquisitions. But IBM's $5 billion buyout of Cognos, the business intelligence specialist, makes perfect sense. Here are four reasons why the pending deal, announced today, is a good fit for IBM.

1. Similar Cultures: The VAR Guy spent many months moderating CIO events for Cognos, and also visited the company's HQ in Ottawa. The company's corporate culture is professional, fun and enterprise focused -- a good match for IBM. Cognos would have been a poor fit for Oracle's win-at-all-costs approach.

2. Location, Location, Location: Cognos is headquartered in Ottawa. IBM runs Canada's largest software development facility in Toronto. IBM also has a software lab in Ottawa. Anyone else seeing a neighborhood pattern here?

3. Extending DB2: Cognos's business intelligence software is a natural extension to IBM's enterprise database. But IBM will need to make sure Cognos continues to strongly support Oracle and Microsoft SQL Server, while also beginning to embrace open source databases like MySQL and EnterpriseDB.

4. Consulting Dollars: Business Intelligence is a perfect addition to IBM Global Services' toolbox. Big Blue's consulting and services arm will be able to promote BI to CEOs, CFOs, chief marketing officers and other C-suite members.

Still, the deal has its share of challenges. When SAP announced plans to buy Business Objects for $6.4 billion in October, lots of folks expected Cognos to be the next object of desire. Some Cognos insiders began updating their resumes, The VAR Guy hears, because they were prepping for new ownership. IBM will need to work overtime to retain the Cognos talent.

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