by Boris Evelson.

I remember my days as a PricewaterhouseCoopers consultant in the late 90's and early 2000, when the company was awash in HP acquisition rumors and then later discussions of the failed transaction. IBM beat HP and picked up a gem — PwC in these days was hard to beat in many areas, especially in business intelligence management consulting offerings. HP then went on an picked up a much smaller BI boutique Knightsbridge. Now that IBM is acquiring Cognos, will HP follow the same fate and acquire smaller Information Builders, Microstrategy or Actuate? There's also still SAS that would give HP a complete BI stack, but as we know acquiring the world's largest privately held company can be a financial and cultural fit nightmare (plus a rumored $20B or more than 10x revenues price tag is hard for anyone to swallow). That's why I thought that HP's potential acquisition of Cognos + Informatica + Teradata could've given HP best of breed components in all areas of BI stack. But just like with PwC, HP will now have to pursue smaller, more niche BI opportunities.

Back to IBM. Well, not so fast. Back to IBM and SAP. In my opinion, IBM/COGN and SAP/BOBJ deals are defensive moves since both companies have been telling us for years that they prefer to grow their BI portfolios organically, with smaller tuck-in acquisition. However, organic growth is not happening fast enough, and giving in to sideway pressures from Oracle (with two top of the line BI products from Siebel and Hyperion) and upward pressures from Microsoft (after Proclarity acquisition and with significant Performance Point market momentum), IBM and SAP had no choice but to react.

Many questions arise from IBM/COGN announcement today, but the main one that puzzles me is will IBM completely deviate from their strategy of not being in the "apps game", and now compete head to head with Oracle, SAP and Microsoft on BPS (Business Performance Solutions)? What's next, an ERP acquisition of Lawson or Infor? Or a CRM acquisition of Salesforce.com playing on IBM's latest Information On Demand strategy? Please watch blog from my colleague Paul Hamerman on these implications and likely scenarios.

Other, more obvious questions are:

• What happens to IBM and Cognos reliance on partner network, such as IBM's strong relationship with Business Objects and Cognos' relationship with Informatica? I am sure "politically correct" answers from both companies will be "status quo", but I don't think that'll cut it for IBM sales force pitching to the same accounts and for the same opportunities as Business Objects and Informatica. There sure to be changes and realignments. One specific relationship surely to be straigned and potentially reevaluated is recently announced IBM/Business Objects partnership to bundle BO XI limited edition product with all DB2 installations.
• What is the roadmap of integrating 100% overlap in IBM'ss Alphablox, DB2 Cubing Services, Cognos' Powerplay and recently acquired Applix from the OLAP engine, OLAP functionality point of view? Long term, Powerplay is a likely potential looser here, since given the real time and operational nature of BI these days, building batch aggregates is no longer the best OLAP solution.
• Will Cognos be a key component in IBMs intent to "highly optimize" enterprises? Absolutely yes. IBM is likely to pour significant $s and resources into making its overall BI (including Cognos) offering "process-centric" — a key component in our opinion to ultimately optimized enterprises.

Bad news for Cognos and all other quickly disappearing BI pureplay vendor customers is that all new BI behemoths — IBM, Oracle, SAP, Microsoft — will now be forced to spend more time on product integration, potentially pulling resources away from and reducing priorities of new functionality development. Watch remaining smaller pureplays (SAS, Microstrategy, Information Builders, Actuate) and Tier 2 BI vendors (Panorama, QlikTech, Jaspersoft, Pentaho, Logixml, Inforsense and many others) jump on that opportunity. Good news: the BI market is VERY hot, given that BI (= effectiveness, better insight into information and more better informed decision making) is the latest frontier of competitiveness — all BI vendors, large and small, are likely to continue to pour billions of dollars into better, faster, more scalable, more intuitive products.

What is the most likely next major acquisition? Probably Informatica is next to go. HP should lead in that deal, but Forrester expects that Oracle will make the move. The primary rationale for Oracle acquiring Informatica would be a strategic blocking move against their main nemesis, SAP, since SAP customers rely heavily on Informatica for data integration and data quality (SAP now OEMs Informatica).  In addition, although Oracle has existing ETL products with Oracle Warehouse Builder and Oracle Data Integrator (from the Sunopsis acquisition last year) they do not have a single offering that can effectively support the data integration and data quality needs across its application, middleware, and database portfolio.    While introducing some redundancy for sure, Informatica would help Oracle fast track that goal.