Cognos’s plan to buy Applix comes at a time of significant mergers and acquisitions activity in the business intelligence/corporate performance management (BI/CPM) market. It was not long ago that Oracle bought Hyperion, Business Objects acquired Cartesis, and SAP opted for OutlookSoft. Furthermore, waiting to make its much-awaited entrance into the market is Microsoft’s Office PerformancePoint 2007, due for release in mid-October and aimed squarely at the mid-market.
Consolidation in this highly competitive arena had been much anticipated, and comes as no surprise as vendors compete for their share of growing demand. Companies of all shapes and sizes are turning to CPM to optimize performance and manage corporate risks and the increasing burden of compliance. Moreover, some organizations are moving to CPM following their earlier implementations of BI, and as the next step along the route to intelligence-based decision making, planning, and management.
The mid-market is still largely untapped and has become the new competitive battleground for BI vendors. Half of Applix’s customers are in this market, with the rest being larger organizations. The company first created its Applixware suite of desktop and development tools for accessing, analyzing and communicating information in real-time in 1993. Later, in 1996 it acquired the TM1 product with its purchase of Sinper, an OLAP software developer. The company has since gained a 3,000-strong customer base and revenues of $61.2 million. This has been achieved with a workforce of only about 200 and with a noteworthy year-on-year growth rate of 45%. Interestingly, that growth rate is mainly organic, with only about 9% attributable to its acquisition of Temtec.
Applix’s TM1 is an extremely powerful, 64 bit in-memory processing, multi-dimensional engine used to drive a suite of strategic planning, analysis, reporting and management solutions that can help improve the real-time performance of businesses. Its powerful multi-dimensional online analytical processing (MOLAP) engine allows many users of TM1 to custom-build their own applications using the rich developer environment.
Much has been said of the use of TM1 for financial performance management, but the product offers general flexibility with exposed APIs, and many custom-built applications that are focused on operational performance management (OPM). In fact, a strength of the TM1 solution is that it can be extended beyond the finance department to the operational arena to address line-of-business issues.
There is some functionality overlap between the two sets of products, most notably in the area of planning. Applix is more focused on centralized, heavily analytical and easy-to-update planning, while Cognos is designed for more distributed planning for a large number of users working in their own locations. As for the TM1 analytical engine, it is expected to become central to Cognos’s financial performance management solutions. Its exposed APIs should make the integration of the applications relatively easy. However, the integration must be done fast and smoothly for Cognos to take advantage of the acquisition quickly. All eyes will be on the company to see how well and efficiently that integration is carried out.
The Applix buy brings with it financial performance know-how, an area that Cognos has been gradually specializing in during recent times. This specialization gives Cognos a big differentiator against Microsoft, which has no presence in financial performance management and is highly unlikely to aim for that area. Applix also positions Cognos better to compete with the combined forces of Oracle with Hyperion, Business Objects with Cartesis, and SAP with OutlookSoft.
Additionally, the acquisition gives it around 1,500 mid-market or departmental customers, with opportunities for further sales. According to David Mahoney, CEO of Applix, around one third to a quarter of Applix customers are SAP and Oracle users. This is another advantage for the company that increases its footprint among those users. All in all, the Applix buy is a highly intelligent move.
Source: OpinionWire by Butler Group (www.butlergroup.com)
