Cognos (NASDAQ:COGN), a developer of business intelligence (BI) software, recently purchased Celequest. The undisclosed purchase price was too small to be considered material, in light of Cognos' $3.8 billion market cap, but the deal is still important. It provides Cognos a critical technology, and a way to move toward Web-based applications.

Cognos builds applications that help companies better analyze data. This is a more complex process than it sounds, especially in medium-to-large organizations, whose information technology (IT) environments often have different operating systems, databases, and business applications.

However, Cognos's system has some gaps, including a lack of real-time information monitoring. In today's ultra-competitive world economy, this is becoming a "must have" feature.

It's also exactly what Celequest provides, through software delivered via the Internet. This type of online approach is becoming much more popular in corporate America, as seen in the success of companies like (NYSE:CRM), Taleo (NASDAQ:TLEO), and RightNow (NASDAQ:RNOW). Celequest's technology has been battle-tested by customers including Citigroup (NYSE:C) and Adobe (NASDAQ:ADBE).

Cognos mostly sells its software to large enterprises, while Celequest's Web-based approach helps keep its product affordable for small- to medium-size customers. Buying Celequest can help Cognos penetrate a new market segment.

Cognos's prospects look promising in 2007 -- especially with the new launch of its flagship BI product, as well as its recent cost-cutting measures. And while the Celequest deal will take some time to get results, it shows that Cognos is trying to find ways to keep pushing its long-term growth.


You can check out any of the Fool's newsletters free for 30 days.

Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 1,623 out of 19,864 in CAPS. The Fool has a disclosure policy.