So the big news today is that IBM has acquired Cognos for about $5 Billion. This is not a major surprise as last summer many articles (such as this one and this one) speculated about this exact thing happening, and rumors of this partnership have been swirling continously for quite some time. But while it may not be a total shocker, it’s worth thinking about how this acquisition is representative of one of the two big trends we are seeing in the business intelligence (BI) space – consolidation in traditional markets around ecosystems.

If you go back through the recent history, Oracle has bought Hyperion (and also nabbed Siebel analytics as part of the Siebel acquisition), Microsoft bought Proclarity and an assortment of smaller players, SAP bought Business Objects and some other small players, and now IBM has bought Cognos. Cognos represented the last traditional publicly traded independent (SAS is a slightly different story), and this trend will likely continue in other areas of the BI space as the ecosystem story evolves. Might Teradata be next?

A second trend we are seeing also partially drives the first one – many newly funded players that are emerging with a variety of widget/ gadget options, in-memory alternatives, advance predictive algorithms, and assorted other bells and whistles. Perhaps most importantly to many, the interfaces being provided by many of these new players are extremely user friendly and streamlined (think: the Google look), making BI far more valuable to ever more people.

In conversations with friends of New Paradigm, we are finding that Enterprise customers are going more and more with an ecosystem approach – the baseline trend is that if you go SAP, you increasingly go with their BI solutions, etc. However, at the same time leading edge customers are giving the new entrants a test run on specific projects – with a particular focus on ROIs achieved. In all honesty, while many of these new entrants will likely be wildly successful, it’s still very hard to predict which ones in these early stages.

As these new entrants emerge, and the established players consolidate, the future of BI (what we like to call B.I. 2.0) is very hard to predict, and often seems to change daily. However, the overarching trend is that not only are companies increasingly looking for ways to leverage their significant investments in collecting internal data, they are simutaneously trying to supplement it with extraordinary quantities of information that are flowing into them through the power of wikinomics.

As more time passes, and BI 2.0 evolves with the enterprise, this ability will become an absolutely neccessary competitive weapon – and will generally require a very different approach than many companies have taken in the past. Organizations will need a new generation of BI tools and applications to integrate all of their internal, external, partner, (etc.) data they have into order to gain real insight – and achieve transparency as well. This is one of the areas of future research that New Paradigm is extremely excited about.

So how the Cognos acquisition plays out will be interesting to watch in it’s own right – strategically, it seems to make a lot of sense for both parties – but far more exciting will be how companies big and small learn to reap the benefits from whatever player(s) manage to compete in the BI 2.0 space the best. IBM and Cognos appear to be heading in the right direction in this area, and the rewards that flow to the company that figures it out first should be great…

For some good write-ups on the Cognos acquisition (offering a few different perspectives), I recommend Cognos buys more pipe for IBM by Darryl Taft, VARs: IBM’s Cognos Takeover was Inevitable by Stacy Cowley, Cognos buy a defensive move for IBM by Elizabeth Montalbano, and Some users fear long-term effects of IBM-Cognos Deal by Heather Havenstein… I’m sure many more interesting articles will appear over the coming days.