Tuesday, September 25, 2007

I'll See Your Myth and Raise You One Fallacy...

I had wondered if my earlier post on "The Myth of BI Standardization" would get any takers, and I'm happy that Timo Elliott has stepped up to the plate and made the case that you would expect him to make from one of the market leaders regarding the importance of BI standardization.

Timo's column is well written as usual, but unfortunately, I'm not sure that his own words support his claim. I quote, from the later part of the entry:

"Note that most organizations will never reach their standard, because there are inevitable trade-offs between efficiency and local flexibility -- but heading for a standard is obviously better than accepting chaos."

Which is pretty much my point exactly. With BI capabilities residing in so many places within an organization--on the desktop, in the ERP system, in a BI tool, in a spreadsheet, there is no one system that has all the capabilities that you need to effectively do all your BI in a single environment--so there's no such thing as a "standard" in business intelligence. Of course it's going to be less costly to have fewer tools than more, from an administration, training and education, implementation, customization standpoint; in fact, across a lot of factors. But that's rationalization--not standardization.

I will stipulate that if we want to narrow the scope of the standardization claim to "structured BI tool standardization for business analysts," then yes, there are certainly organizations that "standardize" on a single tool (that is, until they download the pivot table into Excel to do "real" analysis, but I digress). But again, if the BI tool is only one place I go to get the answers to my questions, then being the "standard" is a pyrrhic victory at best--not unlike Farmer Ted and Samantha in the body shop in the movie "Sixteen Candles" as he talks about how he wants to be the coolest Freshman in the class, to which Samantha replies that's that's kind of like being "King of the Dipshits."

Now c'mon, you know I'm by no means calling Business Objects or BI vendors "dipshits"--far from it. My point is that to say you're the BI "standard" is great, but ultimately you're not providing, nor are you able to provide, a full spectrum of information to solve a business problem. So what are you really the standard of?

Actually, the recent Business Objects acquisition of Inxight further proves my point. They too realize that all the information you need is not in the Universe--you need to be able to search text, get to unstructured data, and aggregate information to find a trend and make a more informed decision.

So let's continue the discussion! BI standardization is an admirable goal. But I remain unmoved that it actually exists.

Monday, September 24, 2007

Process is the New BI

Is BI growing up, getting paid up, or maybe just getting passed up? Depends on who you ask, and what seat they occupy. At a minimum, there is activity on all fronts.

BI is all grows up? You know you are a full adult when Microsoft decides you are a real market. All the cycles around Performance Point signal that the Redmond death star is now fully operational and now focused on market share. If you have a market cap like MSFT, everyone not named you in any chosen category has a market cap the size of the resistance organization. They are big, but nobody seems to be going home. In fact, there are multiple pockets of resistance. Do not be surprised if the Redmond BI team enlists the Master Chief, available tomorrow, to counter the resistance. Can't wait to get in on the road show. Other notes of interest...

Item #1, the fact that the upstart is getting press in your father's newspaper. On demand BI with LucidEra is validated in the Wall Street Journal Technology section. Check this article that talks about the value of BI and mentions Cognos, Business Objects and LucidEra. Note to LucidEra - forward the article back to VCs that funded the new round and declare mission accomplished. New money to fund marketing, new WSJ article. You do the math. It took Business Objects about 10 years to get in the Journal. Guess the new guys are on to something.

Item #2. Business Objects and Goldman - Let's make a deal. Are they for sale? If you ask executives at the company, probably not. At least not publicly. However, when someone shows up with an offer, you either take it, or your hire a firm to conduct a process. Just because nobody is shopping does not mean nobody is buying. Do not be surprised if they get bought. By the same token, do not be surprised if nothing happens. I heard a couple times last year that multiple people had it on good authority that Oracle tried to buy BOBJ when the stock was trading in the low 30s. I heard that got punted when Business Objects said the price started at $40 per share. Looks like a good position, especially considering the current cycles. This could go either way this year.

Item #3. Unsolicited offer for SAS. My understanding from a good source is that a player that matters showed up with an offer. The response back from SAS was, "Bidding starts at $20 Billion." $20 Billion?!? 10X+ trailing twelve month revenues? Goodnight indeed. If you spend 20 years building the company in your own image, hold the controlling shares, and live in a hot market, would you sell? File this one under the simulation scenarios you wish you had. My money is on team North Carolina holding firm and staying private.

Item #4. Forrester reminds people that BI needs to get actionable and mentions TIBCO as a thought leader. You have that right, TIBCO runs BI. Boris Evelson and Colin Teubner from Forrester put out a report last week titled, From BPM to Optimization. The subtitle notes that while "BI vendors fiddle while TIBCO burnishes its BPM offering with Spotfire." This is essentially like calling out BI vendors as unfit to parent, much like Brittany Spears. This makes TIBCO out to be K-FED. Nobody has seen them parent, but sometimes proximity wins you points by association. I happened to speak to someone in product management last week from Cognos who indicated that Spotfire was last seen on the street about 20 seconds before TIBCO purchased them. This makes them an excellent candidate for Cold Case, assuming anyone was interested and wanted to tune in to another Law and Order knock off on visualization and analytics purchased by a platform wanna be. Which begs the question, do BPM analysts at Forrester not get BI inquiries, so believe their own press? Or, is the BI market turning into process management market and the BI players are asleep at the switch? Note to Ottawa, Cary and San Jose - check your dashboards!

Regardless of how you score, BI is hot. Looks like we are in for an exciting end of year finish.

The Need for Lower Cost Business Intelligence

I’m stealing shamelessly from Darren Cunningham in his reference to Colin White’s latest posting on the B-Eye Network (linked over on the right hand side on this page), but hope that I would have run across this article as well, since it’s incredibly timely in terms of the issues being discussed not just on this blog, but amongst analysts, the market, and customers right now.

Colin’s a great source for new ideas and trends he’s seeing in the BI marketplace, and while not breaking any new ground with his assertion that the traditional BI vendors need to watch out for new and disruptive technologies and vendors, it’s instructive to see where he thinks this cost disruption might occur. Here’s my take on what we’re seeing today:

It is coming in technology. New innovations are occurring every day, and processes and data that once were disparate and unconnected are increasingly being cobbled together (at least on the front end) that enable accelerated analysis by end users. The BI vendors are starting to understand that getting beyond their traditional 15% penetration will not come in more features within the same product, but through the ability to work cross products in the manner in which people conduct their daily routines. And technology can lead this charge.

It is coming through new business and pricing models. Colin mentions Microsoft as an example, and it’s true, in areas like performance management, it’s not assured that you need to spend $500k on something that might get you 80% of the way there at a fraction of the cost. But it’s not just MSFT—open source, SaaS and pay-as-you-go, subscriptions—all these business models challenge the norm of the marketplace today and turn traditional licensing models on their heads.

It is coming through new vendors. Ever since I first used Google analytics to power a website, I’ve thought they had the potential to be the BI leader. They already have all the public information catalogued in their search engines; add that to Google desktop, and you’ve probably got the makings of a great BI tool right there. But non-traditional vendors (i.e. not the pure plays, not ERP, etc.) that want in on the potential market opportunity have a great shot at providing the most disruption to the market as it stands today, primarily due to their size and scope. While it may stand that a small vendor with a new business model might catch on fire, it’s just as, if not more likely that some like a Google decides this is a market they can make money on and they come in and start to make havoc.

No matter where you look, it’s definitely coming. It will be interesting to see if the impact continues to be at the fringes of the main BI market, or if one someone or something gets right in the middle of things and changes the mainstream. The coast is clear thus far--all the established leaders are doing well. But it doesn’t take much for things to change, and we’ll be keeping on the front lines of reporting what we see and when we see it.

Friday, September 21, 2007

Where is the Biggest BI Opportunity?

With so many companies and products talking about business intelligence and performance management these days, it's hard to differentiate the key target audiences and markets for which the tools and applications are aimed. And while it's possible to have mutliple uses of tools for many different types of issues and people, tools are generally made to solve a specific business problem or technology need.

In triangulating the results from a couple of reports just out from two leading analyst firms, we can get a fairly clear picture of the size of the BI market as it exists today by product type, year over year growth for these categories , and total % of the BI spend. Let's take a look at some of the key areas of growth and opportunity, with the disclaimer up front that as with most problems looking for a BI solution, your numbers may vary...

Biggest categories: There are three that are pretty close in size when you aggregate the numbers--BI tools (including query, reporting, and analysis), dashboards and scorecards, and planning, budgeting, and forecasting. All three are a +$1B market right now. Categories like analytic applictions and data infrastructure are north of $750M, and other categories are smaller.

Biggest growth: In the studies, the categories listed as those with the biggest growth, in order, where analytic applications, followed by dashboards and scorecards, then BI tools. Data infrastructure was almost flat, as was the planning category.

Biggest 2007 % spend: The BI tools category was the only category >25% growth. Dashboards were just under 25%, and data infrastructure and planning were in the high teens in terms of their growth rates.

So putting this infomation all together doesn't tell us a single product that will be the one to carry the day in the coming years, but does give some color in terms of where we might expect new products, new acquisitions, and new feature prioritization from the vendors. Again, this is only a snapshot, but a useful one given the detailed field level data collected by these two firms.

What jumps out: The flatlining of the planning and budgeting market, for one. With all the performance management acquisitions this year, one might expect that category to be growing like a weed. Instead it's less than 2% growth in these studies, although a solid 17% percent of the 2007 spend.

What this means: Not a lot of movement in terms of vendor replacements likely on the horizon. Companies may be satisfied with what they have, and may be spending money to upgrade their current implementation, but not to rip out and start all over. Which means a dogfight for bigger deals since they may be fewer and farther in between.

What else jumps out: Dashboards and scorecards continue to roll. For a category that is seemingly now a "commodity" and being relegated to the platform level feature set of some BI vendors, there sure does seem to be a good market for these products. It's the 2nd biggest slice of the BI market pie, has the 2nd highest growth rate (4.5%) next to analytic apps in the market, who are growing faster but on a smaller base; and has the 2nd biggest spend this year next to BI tools. Microsoft must be salivating at these facts--wonder how many companies are using SQL Server and looking for a front-end dashboard solution right now...

What this means: Look for new features and fuctionality from all the major vendors on this front in coming releases. Business Objects recently talked about an initiative with Accenture around Objectives Management, which is a role-based scorecard; Cognos continues to upgrade Metrics Manager, and even the on-demand guys are getting into the picture on this front, not to mention the boys up in Redmond. So all in all, great news for customers out there, there will be lots of options to choose from.

Other miscellanee-i: BI tools is still the king--biggest slice of the market, biggest spend this year. See previous post on standardization myths--I'd submit we're not near the mid-point of the BI revolution. There's a great market to make better sense of the information out there, and even as the big guys contract and merge, like every market, there are new and exciting offerings from companies like LucidEra, Pentaho, QlikTek, Adaptive Planning, and many others, that continue to fill in the gaps--Free markets win again!

Stay away from: Nothing really--no red flags in the studies, which is good news for our blog, and OK, the industry I guess if you want to be all magnanimous and all.

Thursday, September 20, 2007

They Myth of BI Standardization

BI standardization is a topic that vendors have been pushing on their customers for years. There are no shortage of press releases, case studies, and customer references that talk about X company "standardizing" on "so and so's" BI platform. And from a vendor perspective, it's a good course to take. Everyone wants to become the standard. It's the corner square, the top of the hill, and and defensible position whereby you get to dictate the other technology that your product interacts with in the client IT environment. The nirvana catch-phrase of "we can't use them, they're not the standard" is the dream of every vendor who attains such lofty status, and the big 7-figure deals that BI and EPM companies tout in their quarterly calls are often predicated on the issue of "standardization."

The only problem is that it's not true.

At least not in the way that the vendors would have you believe it to be true. And we all know it. First, just look at the customer logs of all the big vendors. If company X was the standard, with 85% of the Fortune 500, wouldn't it stand that company Y could only say they had 15% of the same list at most? Why then is it that every vendor counts 7 out of the Top 10 pharmaceutical companies, the top 30 retailers, the largest of the global 1000--whatever your measure--amongst their customer base? It's because there is no standard. It's all about departmentalization.

Truth be told (I've always wanted to type that phrase), there are actually very few mainstream technology "standards" in companies today. Microsoft Office is one--or more broadly--Windows. But even there the free-apps crowd is starting to encroach in a few organizations. Still, let's give Redmond that one. ERP as a standard gets muddled when you've standardized, say on SAP, only to acquire a company running Lawson that's so customized that your SAP system can't do the things this other system does, so you keep that system and interface it to SAP. Is SAP still the standard? Maybe. But I think you get the point. Bigger companies have multiple ERP systems in play. Sure, SAP may be the "standard," but they're paying maintenance to three other vendors as well. The pure-play BI vendors for years have feasted on "heterogeneous" environments, data sources, etc. as the arbiter of all data. "Sure, you can have as many data sources as you want," they'll say, "but you need one BI standard if you REALLY want to get the benefit from business intelligence or performance management. So use us."

But do we actually need a BI standard?

The oft unspoken truth is that the bulk of the deals done by BI vendors are at the individual, or even departmental level, and they'll likely stay that way. Even the "global accounts" teams in these companies are usually in with only part of the account, or at most a few business units or geographies. GE for example, owns every product under the sun in their organization, and yet multiple vendors tout "standardization" by GE on their products left and right.

And we know why they all do it--it's for credibility. If you can say that "GE" has standardized on your products (vs. the competition), and people look at GE as a company they'd like to emulate, then that may be worth something in a sales cycle. There's just one problem--it's not true, and more importantly, it shouldn't be.

Here's why. Just like the iconic Apple 1984 ads that have evolved over time to encourage us all to "think different," the needs and uses and sources for information that people use to make decisions and solve business problems are not and cannot hope to be addressed by one tool or set of applications. There are too many use cases, too many data sources, too many new ways to use and share and analyze the myriad of information that bombards a typical worker on a daily basis. Do we really think that a typical project manager is going to use just structured report data to address all the issues they have in front of them? Are we to expect that everyone will access the same universe and metadata to query the database and get the answers to the questions in front of them? It's just not going to happen.

And why is that? Well, usability for one. Say I have to put together an analysis of the potential revenue associated with a new product launch. Now accessing my "standardized" BI tool for historical reports and forecasts is one place I'd go for information. But what about information that's not in that system? Past launch plans. Ad hoc analysis on a spreadsheet. Third party research data. Am I going to use the same BI tool to get this information? Probably not. First, the tool doesn't support getting me that kind of data. And second, even if it could, it would have to be a highly customized pre-set query that would let me get just what I need (not to mention helli-smart to know where to get it within the vast wasteland of both my hard drive and the company network).

So what do I to do get all the information I need? I use not just the reports from my BI system, but also things like spreadsheets, business process tools, files on the share drive, IDC or AC Nielsen data--whatever I need to accumulate enough information to put the plan together and send it around for review.

And all these tools also comprise my business intelligence environment.

As a manager, I WANT my people using all the available data and tools at their disposal to help make the right decision. The thing is, is that all the available data is not just in the tool we've "standardized" on, it's in a lot of places, and I'm likely to use not just a report I build from the BI system, but a lot of different BI tools in order to come to my conclusions. That's hardly standardization, and yet, that's the reality of business today. The goal of "business intelligence" is to help people make better decisions with the information at hand. But there's no one "standard" for how that should be done. There are lots of them. And they're going to be different based on how I work individually, how my team works, our industry, our company size, our technology model--all of which could be wholly different than the person and the team on the floor above me.

So when you see the next press release come out, the next huge client that's "standardized" on one product or another, keep in mind that they've done no such thing. They may be "officially" declaring that they'll use only that BI tool vs. any others, but there will always be a multitude of tools and applications at their disposal to ensure that their people solve the problem in the fastest way possible. That's when you see business intelligence achieving its promise. And as our close friend Martha Stewart* would no doubt say, "that's a good thing."

*This statement is a lie. We don't know Ms. Stewart and hope she doesn't sue us for stealing her catchphrase.

Tuesday, September 18, 2007

“The Five Possible Suitors”

So by now everyone has heard about the now infamous “Le Figaro Leak” from over the weekend, where some enterprising young reporter/disgruntled employee/cash poor intern, whoever—got hold of news that Business Objects has retained Goldman Sachs to help them find a buyer.

Couple of important markers to tell you this has some legs to it—first, multiple emails going out to employees to not discuss the matter externally, or even with each other. The old “loose lips sink ships” mantra is in full force in the halls of San Jose and Paris. Second, however, no statements of outrage, denial, or any sort of righteous indignation came out yesterday, and with the crack PR staff of Hill and Knowlton on speed dial over there, one would think that something would have been said to squash the rumors before they gained legs. So lets assume that there’s some smoke here.

Importantly, this smoke is really not new. For months before Oracle acquired Hyperion, there were rumors that an announcement was imminent—the “safe” room had been set up, documents were being exchanged—it just came down to a price issue. Now whether or not that’s the truth, I have absolutely no idea, but the point is that amongst the employees, they’ve been down this road once already this year.

Marketwatch mentions five possible suitors for the company, and since none of the Performance Guys work at Business Objects at this point in time, and all my options have cleared, let’s look into our EPM Magic 8-ball and see who might be contacted to see if there’s an “expression of interest” on their part…

SAP: “Outlook seems clear.” This is the one “name” that’s out there in terms of who would likely be most interested. Becoming more acquisition-friendly with recent purchases of Pilot and OutlookSoft, but far less of a partner and far more of a competitor to Business Objects in recent years. Also, OutlookSoft acquisition is a direct overlap to BOBJ Cartesis/SRC/ALG acquisitions—so do they take it for the BI side? Two European companies—might be easier to bring together culturally—wait what am I saying—SAP and culture? Sorry about that…

HP: “Intriguing—hadn’t thought of them, wait to shake again.” They have been making noise for some time about getting into the BI space, and with the business humming along all fronts, this would be a bold move in an area in which they have little experience or mind share. However, they have the deep pockets, and as the server and printer businesses continue to mature, the higher-growth apps business may beckon, and this may be an easy, less threatening way to get into the game. Local as well with the San Jose/American side of Business Objects, would afford good integration at the corporate level.

IBM: “Maybe, but not sure this works for them, hold still a minute. Yep, makes sense.” They keep making inroads into the BI space with EIM and ETL acquisitions, but also have deep partnerships with Cognos and others that would be sacrificed to bet everything on Business Objects. Great services opportunity for Big Blue (are we still allowed to call them that?) here, and if they want to make a play against the big apps vendors, this would certainly be that stake in the ground. Culturally, way different than Business Objects, but it would be an easy integration for most of the product line. The key is the services arm—do they want an exclusive with one vendor?

Adobe: “Just how hard are you shaking me?” Just announced stellar earnings, doing more with Business Objects, have a contrary technology to Microsoft around documents and reports, have the #1 product in Acrobat around document sharing—what’s not to like here? The companies are reportedly working on an announcement around business process management, might this be a precursor to something bigger? This is an intriguing combination, one that will require further watching...

Oracle: “Are you insane?—shake again.” As mentioned above, this was the assumption earlier in the year before the Hyperion announcement, and in the words of O.J., “if they did it,” they’d likely be doing it for the BI and EIM business, not the EPM business which is now well served by Hyperion. Boy talk about technology overlaps—but—to keep it out of SAP’s hands, might that be enough of a carrot for the Oracle folks to grab onto?

Monday, September 17, 2007

How Lucid is the Business Objects On-Demand Strategy?

With apologies to our friend/choreographer Darren Cunningham, still on a roll over at the Lucid Era blog, his world just got a whole lot more interesting today with the announcement by Business Objects that yes, they really ARE serious about On-Demand business intelligence, and dammit they’ve got the hoppin after-party to prove it!

After some small foray’s into the on-demand market through crystalreports.com and the purchase of their FIRST “Insight” named company, the company had gone largely dark in terms of its strategy and direction in this area. Mysterious blog entries by internal luminaries like Timo Elliott told us something was up, since Timo tends to be somewhat of an Oracle on these things, as the company’s semi-official blogmaster (so look for his next posting on how cool SAP, IBM, HP, and Adobe would be to work for at “some point” of his career given today’s “other” news…).

The Business Objects strategy is both sound and comprehensive, and includes some sizzle as well, with the introduction of their external “Information OnDemand” site, which allows users to buy or rent access to prepackaged industry information that can be used in a dashboard to facilitate analysis with internal data.

But sizzle aside, by partnering with “The end of software” leader salesforce.com, and using as its tagline “BI with no servers and no software,” they are clearly going to continue to pay attention to this space and may roll out future offerings tied to other parts of the business, like performance management and analysis to end up with a parallel product offering of license and on-demand offerings.

One key will be pricing. This represents a miniscule portion of the Business Objects revenue. Will they be competitive with companies like Lucid Era and Adaptive Planning? Do they need to be? Do they just want more customers? Another key will be the friction of the revenue model from 600+ sales people who want big license deals. When it gets to, say, mid-September with two weeks to go, will they steer the customer towards the annuity payments, or the big up-front license costs? Just two of probably 102 questions that the on-demand vendors will have as FUD in the coming weeks.

In any case, I think I have the song that Darren might want to parody next—“Don’t you want me baby?”

Thursday, September 13, 2007

BI Virtual Appliance

An notable announcement was made in the BI space yesterday as Business Objects introduced its first BI virtual appliance, a flexible and high-value solution designed to radically change how companies evaluate, deploy and manage their business intelligence solutions, making it even faster and easier to transform their businesses through intelligent information. The company is leveraging its relationship with VMware to offer the virtual BI appliance, which is planned to be available in the VMware Virtual Appliance Marketplace, as well as directly from Business Objects. This solution could be seen as a step in the direction of on-demand software as this solution delivers a pre-installed and pre-configured solution that dramatically reduces installation, configuration, and deployment time. The other foot is firmly rooted on providing the lowering the total cost of ownership, the virtual appliance is an interesting way to offer more flexibility to the customers BI purchase. This is certainly a trend we could continue to see as the strong growth of the virtualization market continues, just take a look at the last 30 days of stock performance by VMware, Jim Cramer must be screaming “Buo-Yah” somewhere.

Wednesday, September 12, 2007

Cognos stays on offense

Someone or something seems to have lit a fire under Cognos in the past month or so. Word on the street (and in this blog, truth be told), was that they were starting to get passed by in the performance management and BI market by the aggressive moves of Business Objects, as well as SAP, Oracle, and Microsoft. Even in analyst notes, the sense was that Cognos was getting left behind while others were charging forward, whether it be with new branding, new acquisitions, or catchy new Flight of the Conchord's song parodies...

But clearly this is not the case. On the heels of a huge BI win with Nestle' , as well as the announcement of the Applix acquisition, they’ve also announced a deeper strategic partnership with Informatica to resell their data integration and data quality tools within their performance management offering.

Now, Cognos partnering with INFA is not new—the companies have worked together for years. But based on the the moves by Business Objects in this space, as well as the overall success of the Business Objects Enterprise Information Management products in the market, this move makes sense.

Having an integrated data quality and integration story is key to enhancing overall performance, and it's a topic that business audiences and CFO's alike are more than comfortable in both talking about and evaluating in terms of the technology out there. So this agreement should clearly shore up an issue likely being raised in the field around Cognos’ capabilities in this area.

What may be more surprising is that Cognos has never outright purchased INFA, although it’s one of those “logical” acquisitions that people have been talking about for years. Perhaps this is “step 1” down the path, or perhaps Cognos feels that this is not technology that is costing them deals by not having it native to their own applications.

Whatever the reason, they’re clearly ratcheting up the activity in the market as of late, which is good for customers all around.

Tuesday, September 11, 2007

Get ready for a whole lotta lauchin’!

Big week coming up in the world of BI and performance management, as both Business Objects and Microsoft get ready for their respective product launches.

Business Objects is first up tomorrow, with their EPM XI launch webcast, touting the integration of the former Cartesis products being rapidly integrated onto the XI platform. We’ll leave it to them to explain what this actually means, since they’ve previously announced a year-long roadmap to integrate the products. But this should help some with current XI customers and with the bulk of the sales force who are selling XI to the IT function make a clearer case why they should consider Business Objects for performance management.

Microsoft is up next week, as they kick-off the PerformancePoint Server launch with a big soiree in New York City, and later next month in London. Seeing as how they’ve been talking about the product for the past two years, it’s about time! But in the wake of the hype in the market, the glowing analyst reports from the tier 1 firms, and the momentum within the Microsoft customer base (their first BI conference in May was 40% larger than the 2006 Business Objects Americas conference, now in its 11th year), it should be interesting to see how this product takes hold in the market.

Monday, September 10, 2007

It's Business, It's Business Time

First of all, you gotta check out this Flight of the Conchords - Business Time vid on youtube.

Then check out Darren's rendition of this for On-Demand Business Intelligence Time, ooooh yeah baby!

Sunday, September 09, 2007

Gettin Fuzzy with IT

Business Objects went and did it again with the acquisition of FUZZY! Informatik. Yet another data quality acquisition for the French based software company, in 2006 Business Objects acquired First Logic, a data cleansing, data quality software company with a history routed in helping organization cleanse their mail data to avoid duplicates and data falsities. This is another technology addition to their EIM (Enterprise Information Management) product portfolio and although this could be seen as more technology overlap, it’s continues to put the French based software company in an interesting position vs the big players.
Here’s some background. Fuzzy Informatik; established in 1994, with 50 employees, revenue is between $5M and $10M Euro with 350 customers. They have solutions for data analysis and “fuzzy searches.” Details on their products can be found here. They focus mainly on CRM implementations (name address profiling and correction). They have partnerships with universities in Germany and the US, and are part of the board of the German Data Quality Association. Here’s the press

Wednesday, September 05, 2007

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.