Acquisitions bad for customers

In the short term at least. Acquisitions can kill R&D funding and unfocus company direction during the internal integration process. Then there is all the time and effort spent on a new company message announcing the "new" product and service offerings - marketing, architectures, training.

Thank you Fayu for sending in this IT Week article about acquisitions in BI will stem innovation.

As well, it could be that during the Oracle, SAP, and IBM acquisition/integration efforts, it may create a vacuum while these big three BI vendors (geez I guess they are now) focus on internal integration. This downtime vacuum may open up a space in the market for the entrepreneurially minded. I hope it does!

Sure business for the acquired (BO, Cognos, Hyperion) will continue to sell licenses. However I agree with the article that behind the scenes people are going to be pulled into committees, working groups and potentially let go, okay, re-shuffled.

This all equates to not pushing the envelope nor being laser-focused on customer needs and the competition. Unfortunate for them... Opportunity for others!

Who's Next

Who's next in acquisition fever?

Yes, there is already debate on who's to be acquired next. I guess it could be the natural progression of things but more likely the herd mentality is cropping up. I know, I know, BI is hot right now.

But like speculators on the stock exchange who drive prices up, make their money by selling at the top, and watch the prices fall on those unaware investors... aka us normal folk who are just trying to make a buck...

I've noticed attention being focused on the remaining tier 1 independent BI vendors - but I don't want to jump on the propaganda band-wagon for companies that didn't really standout before. Not meant as an insult but there are excellent reasons why Cognos, Business Objects, and Hyperion were acquired first (I would also include Microsoft with these best of breed companies).

Then I read the typical "watch for the up & comers" called tier 2 vendors. I believe both these tier 1 & 2 vendors should all be considered either "up & comers" or "been-there-and-done-that'ers".

The question is, if we sober up from our high on acquisitions, down deep in places we don't mention in polite company, "do you really feel the need for the industry to continue consolidating?"

I think not! Any acquisition now would come across as a follower in a sea of leaders. I may exclude acquiring SAS from that list, although there are post-acquisition, merger problems with a privately owned company such as SAS.

Alas where people, investors, acquisition-hungry companies should focus their attention on are innovative, thinking-out-of-the-box companies, technologies or people that will shift BI away from lengthy, costly implementations; allowing BI to permeate throughout a company delivering on the "BI Promise"!

Otherwise BI will be downgraded to simply a component or attachment to an ERP initiative, perceived as the second-cousin, something we will do later after the "must-haves" are complete. You know, similar to what operational reporting is today. There are winners to this downgrade... IBM, SAP, and Oracle's of the world win by having a complete solution to offer, where customers can go shopping in one place for everything they need.

Another word for this... WALMART!

And how do you compete with Walmart? Carefully, not head-on and not on price. Luckily IBM, SAP, and Oracle are not selling cheap commodities - their prices are high. In stark contrast, Microsoft's licensing model is built for growth... huge growth.

So where does this leave us as customers, consultants, and practitioners? With options.

As competitors consider how you will be competitive within this consolidated BI world.

As customers consider how you will win with either the Walmart's or the up & comers.

And a final up-lifting note on market change for up & comers. A market that is squeezed into a corner has high magnitude potential for paradigm shifts and innovative ideas to alter the status quo... sometimes in a significant way!

Here's a TED video of Larry Lessig telling 3 great stories of change.

Final acquisition - IBM

The story has hit the airwaves. One of the more obvious acquisitions in recent months completes the trend that has taken place in the Business Intelligence industry for several months/years now.

What this means for the industry specifically is too hard to tell at the moment. So as a CIO or business manager will you jump for joy or go running for the door.

IBM acquired the Canadian-made Cognos yesterday for $5 billion. This Wallstreet Journal article states Cognos is No. 3 in the BI industry following SAS (No. 2) and BO (No. 1). The IBM price is slightly less than SAP's BO ($6.78B) and more than Oracle's Hyperion ($3B).

Some may say IBM's hand was forced with the industry consolidation by competitors Oracle and SAP. However I think the IBM-Cognos deal was in the works for some time.

Cognos and IBM have 'played' together on large government projects. IBM tested Cognos tools in their performance lab. IBM and Cognos have done joint whitepapers. IBM consulting services has people focused on Cognos. I think the writing was on the wall -- just when and how much.

Plus you don't make a $5B decision in cash over a couple months because of pressure from your competition. At least I couldn't (my cheques don't have the space to write that many zeroes).

Overall:

IBM is known for going after the "big and scary projects that no one can do" -- in IBM's words. Cognos is known for selling to large companies and governments. Probably a match made in heaven.

But let's take a step back for a moment. We know the acquisitions of BI companies will change the landscape of the industry. BI could simply slide into being another component of ERP vendors. Or BI may continue to stand on it's own as a business improvement driver by gauging performance.

The big picture question is, "with independent BI companies gone, where will BI go?"

Just like most acquisitions, the ecosystem of toolset vendors, consultants, customers, and 3rd party vendors can change dramatically. How? I would like to think our drive to improve BI for the betterment of organizations and people is the underlying goal. But that may get in the way of profits, selling licenses, and implementing large BI projects because they can.

Don't let them tell you "nothing will change; it is status quo" -- it will change.

Don't let them tell you "more benefits exist by being acquired" -- there can be huge drawbacks.

Don't let them charge more because "IBM, Oracle or SAP specialists are doing your BI" -- the business problem and expertise have not changed.

Don't let them tell you "this is the only way to do BI" -- get a second opinion from someone independant.

And welcome to the confusing jungle of seriously large companies where BI is just one line item on their financial plan.