Business Objects is unusual in the BI market in that its a European company that has successfully set up in the US. The company now maintains dual headquarters in Paris, France and San Jose, California.
Like German business applications giant SAG AG, Business Objects already boasts the strongest local presence in Europe by a BI vendor. Around half of its $560.8m revenues last year was derived from Europe. And in its last reported quarter, European (EMEA) revenue was up 11% year-over-year.
Cognos signaled its intent to focus on the corporate performance management software market in December 2002 when it announced it was buying Adaytum Inc, a budgeting and financial planning software vendor for $157.1m. Recent acquisitions continue Cognos’ laser focus on this sector, but with a definite slant towards Europe.
Last month Cognos bought Spanish financial performance management software distributor Optima Analytical Solutions from its parent Sage Finance SA, for an undisclosed sum. Madrid-based Optima gives Cognos an immediate foothold in the Spanish market.
Last October Cognos swooped for Swedish financial consolidation and reporting tools vendor Frango AB for $53.1m. Interestingly, Optima was the Spanish distribution partner of Frango, which gives Cognos complete control over Frango product distribution in Spain.
Earlier in March Cognos also acquired UK-based Softa Group Ltd, a performance management consulting firm for an undisclosed sum.
Cognos is hoping these three acquisitions will bolster its direct sales, support and distribution capabilities in Europe. It will also bring in a sizeable customer base to cross- and up-sell into. For example, Frango’s European installed base totals an impressive 1,300 customers, largely in the Nordic region. Optima has Spain’s largest 15 companies on its books.
Analysts believe that Europe is set to become the next battleground for the leading BI and corporate performance management software vendors like Cognos.
In its last reported quarter around 33% ($69.3m) of Cognos’ revenue came from European business. This represents a year-on-year quarterly growth of 18%. Quarterly European revenue percentages have however remained relatively flat for the past year.
There’s still lots of opportunity for us in Europe, insisted Neil Hill, senior vice president of corporate development at Cognos, in an interview with ComputerWire this week,
Hill said Cognos’ recent acquisitions will help the company broaden its European footprint. We’ve traditionally had a Northern European focus [meaning UK, Germany, France and Benelux].
Hill admitted that right now Cognos’ North American business continues to grow at a fairer clip than Europe. But he sees this as being a temporary thing.
Europe has constantly accounted for one-third of our revenue…and hasn’t moved much over the past year. This is probably because the BI standardization wave hit North America sooner.
Over the next two or three years however we expect the European economy to steadily recover and we want to be well-positioned to ride that.
But its not necessarily Cognos’ corporate performance management strengths that Hill believes will drive Cognos’ European business in the immediate term.
In Europe its still largely a pure BI discussion… even though we have pockets of performance management strengths in the UK and Benelux and, with our recent Frango acquisition, Nordic countries.
Hill cites the local strengths of SAP as one possible reason why some independent performance management vendors have found it tough going in Europe.
SAP has been sounding off the corporate performance management theme a lot louder in Europe than North America. They will be a first port of call for many SAP shops.
However Hill says Cognos will continue to target SAP customers with what he believes to be a better best-of-breed performance management solution.
Nor is Hill overly concerned about battleing it out head-to-head with arch-rival Business Objects on its home turf. He even claims that Cognos has consistently been gaining ground across Europe as a whole.
Its somewhat of a different ball game between us now. We’ve veered towards a broader vision of performance management while they’ve stuck to their BI knitting.
However Hill admits that in France at least its sometimes tough to compete with the hometown hero.
Of course buying local sales and support channels and customers is only half the story. Cognos still has its work cut out to integrate the various technologies as part of a cohesive performance management suite. With four performance management-related acquisitions in half as many years it will be a busy year ahead for Cognos’ developers.
The company has started to make some progress. At the end of last year it rolled-out a new financial consolidation product called Cognos Controller that is built on Frango’s core technology.
But this year all eyes, European and North American, will firmly be on Series 8, Cognos’ next generation BI platform which is expected to be unveiled this summer.
