In the early 1990s Cognos, the Ottawa-based software supplier, was just another struggling application development tools company. Today, it is the leading player in the burgeoning market for business intelligence (BI) tools – software designed to help users extract business knowledge from data repositories. At least some of the credit for that turnaround can be taken by household products giant Proctor and Gamble. It was a project designed to help overhaul Proctor and Gamble’s data analysis and access methods in the late 1980s that led to the creation of PowerPlay, Cognos’ multi-dimensional online analytical processing suite, and Impromptu, its enterprise database query and reporting tool. The revenues generated by those products now account for more than 70% of Cognos’ overall revenues, and have helped it amass a 38% share of the BI market compared to 30% for its closest competitor, Business Objects of France. Ron Zambonini, chief executive of Cognos, says his aim now is to turn Cognos into a C$1,000m ($718,000) company by 2002, up from an estimated C$350m ($250m) this year. But that looks set to be a stiff challenge. Although Cognos’ BI related revenues have been growing at a rate in excess of 50%, the buoyancy of the market means it is starting to attract the attention of software heavyweights such as Oracle and Microsoft. But although analysts forecast that the BI tools market is set to grow by 140% over the next two years, they predict mass consolidation. Cognos’ answer to that threat has been to hit the acquisition trail in a bid to flesh out its BI product line.

Cash in the bank

The first acquisition, an $8m deal carried out in April this year, was of Right Information Systems, a UK-based supplier of business forecasting software. Cognos is now busy integrating RIS’s 4Thought product with its own statistical data mining tool Scenario. In late September, Cognos then sought to bolster the strength of its core products, PowerPlay and Impromptu, with the $13m acquisition of Interweave Software, a US-based Web-information access specialist in late September. The importance of Web functionality to BI vendors cannot be overstated. By early next decade, say analysts, the majority of BI tools will be accessed over the Internet and internal intranets. Cognos had been viewed as lagging Business Objects in this area, a position that the Interweave take-over should rectify. Another issue which the company is currently trying to tackle is how to scale up the size of its software implementations. Currently, the average Cognos user has perhaps tens or at the most hundreds of licenses. The aim, says Zambonini, is to turn that into thousands. To help with that goal, Cognos has recruited an impressive third-party channel, encompassing a wide range of partners. For example, leading business applications vendor PeopleSoft now bundles Cognos PowerPlay tools with its application software suites. But if Cognos is to be assured of long-term success, it has to keep growing and gaining share. With $100m cash in the bank, more acquisitions are expected.

This article originally appeared in Computer Business Review.