Cognos and Applix - OLAP is the new Black

Cognos announced today that it plans to buy Applix (NASDAQ: APLX) for $339M in cash, or almost $18 per share. I speculated earlier that the consolidation wave in BI and performance management had crested with OutlookSoft's purchase by SAP. Guy also commented on the interest in Applix here and their stock premium here. Clearly surf is still up. But consolidation in the industry and this acquisition is a little more interesting when you take a little closer look. From the Cognos press release:

"Applix performance analytics will give customers new and enhanced capabilities to analyze and optimize financial performance. This will include improved analysis and optimization of large, complex financial performance data; strong finance self-service capabilities such as business rules management; new solution areas including profitability analysis; and innovative technology, including Applix TM1, a patented, 64-bit, in-memory multidimensional OLAP server."

Now let's take it apart.

New and enhanced capabilities to analyze and optimize financial performance? Highly configurable OLAP yes. Purchased by a BI company with an OLAP based platform, yes. New to Cognos - nope. More like double down on OLAP.

Not only is this more OLAP, but this is yet another financial applications acquisition by Cognos, who has made several. Interestingly the management bios for Applix include Michael Morrison, former Cognos VP responsible for the acquisition of Adaytum in 2003. Adaytum overlapped existing functionality with Cognos, and this is more of the same.

Innovative? You can't be serious. Not that TM1 is not strong, high performing technology with a loyal customer base, but innovative? The BI Diva, Cindy Howson, puts a fine point on this with unintentional irony in her weblog on Intelligent Enterprise, "TM1 in fact used to be the underlying engine for Hyperion Planning, prior to Essbase." While I get that slim ties are back in style, and that the Bangles have a new album, I would not suggest they are innovative.

The innovation lies in the in-memory capability that TM1 provides (great positioning) with the application of 64-bit technology. Credit and mindshare for this positioning in BI resides with QlikTec, now being managed by former SAP veterans. This helps explain some of the positive spin on the deal.

Cost here is 5X TTM revenue, as compared to Business Objects $300M acquisition of Cartesis at about 2.4X TTM revenue. Most of the financial reviews note the premium, but suggest this is still a good buy to compete with SAP, Oracle and Business Objects.

Overall this looks great for Applix shareholders and customers, but does not do much for Cognos shareholders or position in BI and performance management. Cognos gains customers and strengthens its story for performance management and in-memory analytics, but doesn't move the market needle.

What is interesting here is how little anyone has taken Cognos to task for yet another acquisition of overlapping technology, especially related to the multiple. Also notable that a number of trades and weblogs have written about the deal, including mention of the innovative technology acquisition when it clearly isn't. It is interesting that Cindy Howson calls out that the acquisition doubles the number of Cognos performance management customers to 3500. Not exactly staggering considering Cognos has claimed to be the leader in performance management dating back to their positioning change at the time of the Adaytum purchase.

Now the everyone has partnered up in performance management, let the games begin. Surf's up.