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« BI, BPM, SOA -- and USERS! | Main | To 'Compete on Analytics,' Intelligence Has to be Shared » July 09, 2007BI Bellwether Cracks?
The hidden pun in the title of this blog entry is perhaps appropriate as it's written around US July 4th holiday – though the ringing of the famous Liberty Bell in 1776 to summon the good citizens of Philadelphia to the reading of the Declaration of Independence, actually occurred four days later on July 8th. What's less certain though is how and when the famous crack appeared – some say it happened while sounding for a fire in 1825. But enough of the history lesson and back to the matter at hand. What's up with Cognos these days? Not so long ago the high-flying Canadian software company was considered to be the undisputed and consistent bellwether for the growth of the business intelligence software market. But since a CEO handover three years ago (Zambonini to Ashe), it seems to have lost its ringer. Cognos' most recent quarterly (first quarter) results were as flat as a bottle of Coke left open for two days. Most worrying of all was software license revenue growth – up a paltry 3% in the quarter – though revenue remained respectable enough at $327m driven largely from maintenance and support and services. That's not an ideal balance for a company that is supposed to be a software business. The lack of big-ticket BI standardization deals around its Cognos 8 BI platform also seems to be coming back to haunt the company. CEO Ashe had taken steps last year to address this, by restructuring field and executive sales. But in the most recent quarter it only managed to notch up nearly half of the million dollar deals it did in the same quarter a year ago - 7 compared to 13. Nor does Cognos expect things to get better soon, issuing some disappointing projections for the rest of the year that fall short of Wall Street expectations. Of course the strength of the Canadian dollar isn't doing Cognos any favors at the moment as well. On the product mix front, Cognos' focus on high-end financial analytics – under the guise of corporate performance management – seems to be doing better than Cognos' bread-and-butter BI tools business, which many believe is shrinking. Don't get me wrong. Cognos' first-quarter doesn't spell doom and gloom. But they hardly flatter in what seems to be a strong BI market. Worse still is that Cognos luster dulls even more when compared to recent results of arch-rival Business Objects. Business Objects doesn't care much to be labeled as a BI bellwether. But it's now reluctantly taking over that mantle from Cognos. The company's most recent quarterly earnings point to a healthy and thriving business with revenue up 20% to $334m (like Cognos license growth was modest though at 9%). The company seems to be on a high. It's in the midst of an aggressive acquisition roll – recently snapping up Cartesis and Inxight to strengthen its performance management portfolio and to put an early stake into a nascent, but rapidly evolving, market for unstructured data analytics. The company has also benefited from several analyst upgrades in the past several months that might ironically work to Cognos' advantage in the short-term at least by taking it out of the acquisition spotlight. That's because right now Business Objects, on paper at least, seems like a much better business to takeover, than Cognos. So when Business Objects reports its second quarter figures later this month it's very likely that many investors will be re-sighting the company as the new bellwether for growth. That said we could be talking about Oracle, SAP, Microsoft, and IBM as the new bellwethers of BI growth in several years time – especially if the latest IDC figures are to be believed. Here's a quick lowdown of IDC's latest market number crunch: • Pure-plays like Cognos and Business Objects are slowly but surely losing ground in BI to these larger, less-specialized software vendors. • Microsoft increased its share by a percentage point to 7.7% in 2006; Oracle, buoyed by its $3.3bn acquisition of Hyperion Solutions earlier this year, now has a combined 8.5% share and IBM also reversed a decline in market share in 2005, with BI revenue up 12.2% to $71.9m last year. • In contrast Business Object saw its share sliced from 15% to 14.3% while Cognos had a more or less flat share growth at 10%. Other BI specialists also failed to keep pace with the industry average growth rate. Information Builders (7%) and Actuate (9.8%). • Reflecting the recent consolidation in the market the market share of "others" in the BI market dropped from 33.5% to 30.6% in the past couple of years, with revenue growth averaging just 6.6% in 2006. Posted by madansheina in Business Intelligence • Business Intelligence | Digg This | Add to del.icio.us Trackback Pings TrackBack URL for this entry: |
