Business Objects sharpens up their act to impress the market

Back in November 2006 I wrote an article entitled The King of BI: Business Objects vs Cognos which sparked some interesting debate. At that date I felt Cognos was nosing just ahead of Business Objects on points.

Since then Business Objects’ share price has increased by 15%. In contrast, Cognos’ is down 4%, and poor old MicroStrategy’s share price is down 47%. Business Objects has turned in three consecutive quarters of excellent revenue growth (22% in Q4 2006; 20% in Q1; 23% in Q2 2007) featuring strong sales of their new products lines, Enterprise Performance Management (EPM), Enterprise Information Management (EIM), and Information Discovery and Delivery (IDD). Profits and margins are up, and licence revenue is growing. So what is Business Objects doing right?

Firstly, Business Objects has made some astute acquisitions. Nsite Software provided an on-demand (SaaS) application platform and 27,000 Nsite subscribers to augment the success of crystalreports.com. Cartesis provided a powerful financial consolidation engine as well as 200+ experienced financial systems consultants who could talk the language of the CFO. Inxight Software provided software for unstructured information discovery, including text analytics, federated search, and data visualization. This gives Business Objects the opportunity to offer intelligent insights into both structured and unstructured data, the latter including text, video, and web content.

Secondly, Business Objects has executed in terms of introducing its own new products to market. For example, the BusinessObjects XI Release 2 Productivity Suite includes new BI search features, an OLAP interface for viewing OLAP data from multiple sources, a new version of Live Office for use of BI within Microsoft Office applications, a new Query as a Web Service, and Mobile BI. In addition, Business Objects’ Crystal Decisions Standard Edition was launched targeted specifically at the growth mid-market segment, to companies with less than $1Bn annual revenues.

Many of these new products are sourced from the newly formed Business Objects Labs. Business Objects Labs was formed to work collaboratively with customers, partners and developers to develop new technologies in 5 areas: user experience, the community, the network, the applications, and the platform. “Mashups” are an example of new in-house designed technologies sourced from Business Objects Labs.

The Business Objects product line now has a far more robust and rounded out feel to it than in 2006. For example, they have now delivered a roadmap for EPM that includes Cartesis’ acquired products, and ALG’s profitability management and activity based costing products are now embedded within their EPM suite. Business Objects can now justifiably claim to be the end-to-end BI solutions provider which is their strategic goal.

CEO John Schwarz has built a completely new look senior management team, most recently enhanced with Marge Breya who joined from BEA as CMO, and an internal promotion for Greg Wolfe who becomes Executive VP of Operations. This team is performing and Business Objects is now moving from strength to strength, as reflected by their share price.

Expect more in-house product innovation, tactical acquisitions and strong execution going forward. Currently their key strategic competitive advantage is speed—they are more nimble and more focused than other BI vendors. They will need this as the next level up of competition is Oracle, SAP and Microsoft who are also increasing their strategic focus on the BI market. However, on current standing, Business Objects will be well placed to meet this challenge and to continue their excellent recent progress.