Investor's Business Daily
By J. Bonasia
April 30, 2003
Business Intelligence is Goal, Also Name,
of a Software Niche
Despite the prolonged slowdown in tech spending, interest is growing for business intelligence and analytics software.
That's good news for Bernard Liautaud, founder and chief executive of Business Objects SA (NasdaqNM:BOBJ - News).
Paris-based Business Objects is one of the top business intelligence software makers. AMR Research projects a 17% annual growth rate for the BI market through 2006, when sales should top $12 billion.
BI programs help managers query and report on information about customers and transactions. Related analytics software analyzes all the data to improve corporate performance.
Liautaud is having a busy spring. Last week, his firm announced earnings of 14 cents per share on sales of $118.5 million for the first quarter, beating Wall Street expectations.
That same day, his firm released an update to its entire product line, dubbed BusinessObjects Enterprise 6.
Liautaud recently chatted with IBD from his San Jose, Calif., office.
IBD: With BusinessObjects Enterprise 6, what's different from past versions?
Liautaud: This is a new release of our entire product line. It offers a new version of WebIntelligence, which is the Web-based version of our query, reporting and analysis product.
We also have a new version of our business intelligence portal called InfoView.
We have a brand-new product called BusinessObjects Warehouse. This is an enterprise data warehouse that covers all functional and analytical needs. It provides business intelligence for all data on customers, supply chains, products, services and finances.
IBD: What else is new with this version?
Liautaud: Part of our overall product line normally involves business intelligence tools that enable users to query and report on data. We also let organizations automatically move data from big (back-office and front-office) systems into data marts and data warehouses.
Also, we've increased the scalability and performance of our software compared with previous versions. That's important to customers as they contemplate larger, enterprise-wide deployments.
IBD: What was the extent of your staff commitment to this rewrite?
Liautaud: This took us close to 1,500 man-years to develop. We had 500 people working on it for the last three years. As a result, it has much stronger integration with Microsoft Office products, specifically Excel spreadsheets.
We've also improved our administration features. It takes a lot of administration to do software configuration, security and development. We've made it much cheaper and easier to deploy our software.
IBD: How does this update improve your competitive stance against other business intelligence vendors such as Cognos, Hyperion and SAS?
Liautaud: With the new release, we're clearly leading in terms of functions in our product portfolio. We believe we have a much more focused strategy, with one core product that delivers all functions for both reporting and analysis. That's a big advantage.
Our analytical application strategy is also much more broad. We have a portfolio of analytics for customer relationship management, supply chain management and finance. Cognos has mostly gone after finance, and now they're embedding budgeting systems into their portfolio. But that makes them go away from their core business. We stick to our core business and partner with Hyperion,PeopleSoft and others for financial planning and budgeting.
IBD: How will the pure-play business intelligence vendors fend off pressure from the big business software firms such as PeopleSoft, Oracle and SAP?
Liautaud: In order to have answers to real strategic questions - like what's my profit by product - you need access to sales systems for customer data, financial systems for finance data, and manufacturing and supply chain systems for cost data. So the ability to extract and aggregate information from any source is critical. If customers are forced to pick one BI tool for each system, they'll end up having as many tools as they do systems.
IBD: Some critics say Business Objects is strong in software for accessing data, but it lags in terms of analytics. How do you respond?
Liautaud: We would disagree with that. Over the course of the past year, we've expanded our analytics suite tremendously, from a few modules to 14 modules covering the whole enterprise.
In the last year, our analytics business has grown 160%. That's probably better than (our rivals). And in the recent first quarter, our analytics sales grew 100% from the previous year, to $7.1 million. That was a highlight for our quarter.
IBD: The first quarter was tough for many big software makers, including Siebel Systems and PeopleSoft. How did you manage year-over-year growth?
Liautaud: Partly it's due to the strength of business intelligence in general. Even in tough times, companies need more visibility into their business (results). Therefore they're acquiring the software capability to do so.
Another reason is that our average deal size is less than $50,000. We've been able to build a profitable business through much smaller deal sizes, which pleases our customers. Large enterprise software makers that depend on $20 million transactions have been much harder hit.
