IBM is to acquire Canadian business intelligence vendor Cognos for $5bn in a move that sees the last of the big three publicly-traded BI specialists move into the giant software stacks.

The acquisition is IBM’s biggest ever and comes a month after SAP’s agreement to acquire Business Objects for $6.8bn and not long after the $3.3bn March purchase of Hyperion by Oracle. With BI specialists now few and far between, IBM’s capture will also widen the gap between the giants and the rest.

Andreas Bitterer, research vice president at analyst Gartner, said the move was uncharacteristic of IBM, which has traditionally focused on database software and middleware. “But given the acquisitions around them, IBM could not just sit and wait,” he added.

Neil Macehiter of analyst Macehiter Ward-Dutton said, “[BI fits] with the IBM strategy [of focusing] on the cusp of business applications and infrastructure.”

Steve Mills, IBM senior vice president of software, said the shift in the market to endorsing business analysis and performance management software had created a business need for IBM to “get out in front” in the sector. Customers want end-to-end capabilities that deal with the increasing amounts of data sourced from heterogeneous platforms, and the acquisition of Cognos gives IBM these capabilities, Mills argued.

Both firms noted that there is little crossover in products, potentially accelerating integration efforts between the two companies.

However, Gerry Cohen, chief executive of privately-held BI firm Information Builders, said that the consequence of consolidation is lack of high-value product development and potential for disruptive staff turnover.

“Innovation is only done by the smart new [and private] companies,” he said. “Once they get bought up, it’s over. You trade best-of-breed for the stack.”

IBM has been on a huge merger-and-acquisition spree in recent years and Cognos marks the twenty-third acquisition in support of its Information On Demand strategy. Other purchases include content management specialist FileNet, information integration firm Ascential Software and data archiving outfit Princeton Softech.

Meanwhile, Cognos has also participated in the action and recently completed a deal to buy analytics firm Applix.

IBM’s buying is unlikely to stop with Cognos, however. “All IBM is missing now is an automated enterprise search and discovery solution,” said senior Ovum analyst Mike Davis.

Other watchers said that BI is now likely to stabilise. “This is the end of the BI market as we know it,” Gartner’s Bitterer said. “SAS Institute is the biggest independent out there but it is private so it is not so likely to be acquired.”

Bitterer noted that SAS and data warehousing specialist Teradata are forming an “interesting alliance” but added that MicroStrategy is unlikely to be acquired because of its “tricky” ownership structure, with chief executive Michael Saylor owning a large part of the company.