Now that it has finished up the paperwork on its latest acquisition, Cognos has to figure out a way to make the tools it has purchased incompatible with one of its rival’s software.
Cognos Monday said the US$160 million buyout
of privately-held Adaytum, which it announced on Dec. 19, was complete. Adaytum, which was founded in the U.K. 13 years ago and is based in Minneapolis, makes software that helps enterprises with tasks like financial planning and budgeting. Cognos executives say Adaytum’s products will be a good fit with its own business intelligence tools like PowerPlay, which analyze and report on a company’s data.
There’s just one problem: Adaytum’s software is already integrated with one of Cognos’ main competitors, Business Objects.
Cognos vice-president of analyst relations Mychelle Mollot said the firm had a 30-day plan during which it will “”de-integrate”” the Adaytum’s product with Business Objects. In the meantime, it will also be sending out a free copy of PowerPlay to all existing Adaytum customers, which include Toyota, Lockheed Martin and Kellogg’s.
Patrick Morrissey, Business Objects’ director of marketing in Redwood City, Calif., laughed when he heard of Cognos’s timeline. “”I would really like to see that,”” he said. “”That is not an easy thing to do at all.””
Dan Moran, an analyst with the Boston-based Aberdeen Group, said that while product integration is always a concern when one company buys another, Cognos staff are very technically adept to handle the task.
“”In software, it becomes an issue of deconstructing if you will — they have to tear down while building up,”” he said. “”I believe the intersection will be the Adaytum file system and the (Cognos) Metrics Manager.””
Mollot said the hard work would be worth it. Cognos wants to use Adaytum to gain a foothold in what analysts call the corporate performance management market (CPM). This is an area where finance and other enterprise departments plan spending and measure their results, or “”scorecarding.””
“”People don’t have the luxury of being five months out of date,”” she said. “”There is no margin anymore for error. Two years ago money was flowing everywhere, so if some initiative didn’t work or if the plan wasn’t being fully executed, it didn’t really matter.””
Morrissey countered that most enterprises already have their financial planning under control. In fact, he said one large high-tech customer told him they struggle with getting the information they need and doing the proper analysis on it.
“”There’s a disconnect between what’s going on in the finance department and what’s going on in the buy side of the business, much less how do we service customers,”” he said.
The market leader in CPM is a company called Hyperion, but Mollot said Adaytum would give Cognos an edge in selling to chief financial officers.
“”The No. 1 planning pain is really in expense management,”” she said, “”but from there it migrates across the organization.”” This can include areas like inventory management and marketing campaigns, for example.
Moran said Business Objects could continue to compete with Cognos as it enters the CPM space by partnering with another firm instead of buying one, though he added the field will not be restricted to business intelligence experts.
“”The group I would be more concerned about is the bigger ERP suppliers,”” he said. “”The pie is hefty. There are people of different technical and business cultures. There’s more than enough room for quite a few players.””
As a result of Monday’s deal, approximately 90 employees from the combined organization were laid off, Mollot said, mostly from the Adaytum side. About 10 per cent of these were “”pay to stay”” layoffs where the affected individuals would remain with the organization for up to three months. Mollot said Cognos would refocus its sales force through the integration process and will introduce PowerPlay to Adaytum’s network for value-added resellers.
The Canadian Advanced Technology Alliance recently said the Adaytum acquisition was the largest deal in the Canadian market last year.