What is up at Cognos Inc? The Ottawa, Ontario company looks as if it is beginning to falter by reporting second quarter losses of $1.1m on turnover down by 2% at $30m. Company chairman Michael Potter blamed the slip on European performance and the Desktop Products division. Rob Engels, UK managing director, referred to the loss as minor and said the blame could not be laid at the UK’s door as this subsidiary has exceeded its targets; rather it is continental Europe that is down on its figures. Engels attributes there to there being too many chiefs and not enough indians in the European operation. A restructuring is under way – John McIntyre, vice-president of European Operations has gone, and Europe is now being split into two: the UK, where Engels has recently been appointed managing director, and the continent, where Terry Hall is coming in from the Australian operation to take charge. To date chief executive Papows has managed to stop Cognos going into a terminal decline, but has yet to prove that he can lead the company into a higher growth pattern. Instrumental to that type of growth is the company’s penetration of the AS/400 and Unix markets.
Blaze of publicity
The company launched PowerHouse for the AS/400 in a blaze of publicity a couple of years ago, but has encountered problems that will be familiar to many software companies attempting to break into this market. Firstly, the AS/400 is a pig of a machine for C-based tools vendors to work with, even with IBM’s help, and performance has been a problem with the product. This is being redressed in version 5.87, which has a complete new expression engine inside and is scheduled for release next month. Secondly, the IBM Agent market does not welcome untried and untested (new) products with open arms, and Cognos has been attempting to prove itself in this market. Its tactics to date lie in direct sales and in bringing existing value-added resellers (typically Hewlett-Packard Co, Digital Equipment Corp and Data General Corp channels) into the AS/400 market. The slog, however, is slow and the ghost of RPG is proving hard to lay to rest. As Engels puts it, despite having had a product for nearly two years, Cognos is still at the toe in the water stage with the AS/400 market. As for Unix, here Cognos has been able to make use of third parties (it has no direct sales force for Unix products) but says the going has been tough because of the recession as a PowerHouse Unix sale tends to occur with the new purchase of a Unix box with applications. To try and address these problems, the New Business sales team, which has hitherto been organised around operating system environments, is to refocus on the requirements of specific industry sectors. One slight problem that Cognos has created for itself with Unix in Europe is its failure to recognise those lucrative government markets where the national champion is often the favourite – to date Cognos has declined to serve the ICL Plc, Compagnie des Machines Bull SA and Siemens AG environments. Engels says that Cognos is now in the early stages of negotiation with ICL and Bull and the company is engineering a Unix System V.4-compliant product that will make it economically more reasonable to appear on a wider variety of Unix environments. Meanwhile, the problem with the Desktop Division, according to Engels, is that its targets were unrealistic for products that have not yet achieved critical mass. This is being solved by getting the third-party channels to sell PowerPlay and Impromptu on a straight distribution basis rather than on a value-added basis. All in all, the company believes it is in good shape and is positioned for growth. At least it seems aware of where its problems lie, and that is a good start. – Katy Ring
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