IBM's £2.5bn purchase ofCognosis the latest in a series of
buyouts by large database providers ofbusiness intelligencesoftware
suppliers.
As a result of this trend, business intelligence users could
eventually be influenced into using one provider for both their
database and business intelligence software through offers of
cheaper licensing deals in the short term.
But if the database component becomes entrenched in the
business, it can be expensive for users to change provider, and
this could reduce the ability of business intelligence users to
negotiate their licensing and support costs in the long term, say
experts.
IBM's bid follows high profile buyouts of independent business
intelligence suppliers this year, namely
Oracle buying
Hyperion for its financial reporting software and
SAP buying Business Objects for its business intelligence tools
- all to offer integrated systems which are quicker to configure
and manage.
Ray Wang, senior analyst at Forrester, said users might
genuinely benefit from integrated business intelligence solutions
as the big four (Oracle, IBM, SAP and Microsoft) effectively buy
the best-of-breed suppliers in business intelligence the
market.
"This signals the move to incorporate these capabilities into
the middleware platforms and create more lock in around the
traditional products such as databases offered from the big four.
Users need to keep in mind the trade off between sole sourcing with
one vendor and the risk to innovation and compatibility," he
said.
Helena Schwenk, senior analyst at
Ovum, said users might initally be offered better licensing
terms to use a business intelligence tool with a specific company's
database, but in the long term, this could create lock-in.
"business intelligence users could use the recent consolidation to
negotiate better terms with their existing database and ERP
providers," she said.
However, Andreas Bitman, a senior analyst at Gartner, thinks
that end-users will be largely unaffected by the acquisitions, as
the business intelligence technologies bought by the IBMs and
Oracles are to fill out holes in their product portfolios.
"There are certain areas where technologies overlap (eg. data
integration in Cognos and IBM) that can cause sun-setting of some
products, but typically not without any migration strategy.
Although there are no imminent implications for current contracts,
renewals and maintenance cost may need to be renegotiated in the
long term," said Bitman.
Gartner recommended that enterprises take advantage of the
highly competitive environment to negotiate contracts and buy basic
business intelligence functionality at lower prices, but stressed
that they need to prepare for changes in technology and
products.
Mark laRow, vice-president of products at Microstrategy, an
independent business intelligence software supplier, urged users
who are negotiating business intelligence software licensing costs
to remember that selling licences on databases offers a greater
return for these suppliers than selling business intelligence
tools. The decision to go with a single provider for database and
business intelligence tools should be reflected in lower licensing
costs over an agreed period.
"Selling databases is where they make their money. Databases are
stickier applications compared to business intelligence ones and
offer the Oracles and Microsofts a greater annuity from customers
over time," he said.
An IBM spokesman said that the company does not anticipate any
changes to Cognos licensing agreements following completion of the
purchase in 2008 and that IBM was committed to ensuring its
products interoperate with other software suppliers.