Updated: IBM to buy Cognos for £2.5bn

IBM has agreed to buy business intelligence software vendor Cognos for around US$5bn (£2.5bn) in cash, in a bid to expand delivery of business intelligence beyond the traditional user base.

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IBM has agreed to buy business intelligence software vendor Cognos for around US$5bn (£2.5bn) in cash, in a bid to expand delivery of business intelligence beyond the traditional user base.

The move follows a period of consolidation in the BI and performance management software market, where Oracle bought Hyperion, while Cartesis and ALG Software were snapped up by Business Objects, which is itself being swallowed by SAP. Cognos also bought the much smaller performance management software vendor Applix earlier this year.

The acquisition will especially be a blow to IBM rival Hewlett-Packard, which sells a business intelligence and data warehousing platform built using products from Cognos.

To some analysts, the move into BI applications marks a new strategy for IBM, which has long said it does not want to compete with partners in the application market.

"This is a change of direction for IBM," said David O'Connell, senior analyst at Nucleus Research in Wellesley, Massachusetts.

But IBM said in a statement: "Business intelligence and performance management are not stand-alone applications."

"Our intent is to be careful not to compete with our ecosystem," IBM insisted, even though it works with SAP and Oracle, and both are now present in the BI market.

Cognos will be the 23rd company IBM has bought in pursuit of its "information on demand" strategy, launched in February 2006, IBM said.

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