What will happen to business intelligence (BI) software vendor Cognos when customers realise that, on average, 62 of every 100 seats bought are not even being used? That is a question vexing BI authority Nigel Pendse. "I think Cognos's sales team is trained to oversell," he says.
That picture emerged from an annual survey of BI vendors conducted by Pendse. Although Cognos was the worst offender, a number of its competitors also attracted criticism for encouraging customers to buy more software licences than they realistically plan to deploy.
With the emphasis within organisations now firmly on getting a return on the investments they have already made, elements of BI such as analytics, reporting and alerting are increasingly vital to maintain visibility of how different aspects of an organisation are performing.
Pendse believes that as organisations realised this, vendors were quick to sell them ever-larger numbers of licences, claiming that the more people who had access to business critical information, the quicker and higher their return on investment would be.
Yet in most organisations, it is still only a small group that uses these reporting and analysis functions as part of their day-to-day work. As a result, the thesis put forward by some analysts that the BI sector would remain largely immune from the recession is coming under pressure.
Cognos's financial performance could be used to support either argument. In the third quarter to the end of November 2001, licence sales rose by 17% compared to the previous quarter, but overall revenue growth was flat at $124.2 million – a reasonable result in the current climate.
CEO Ron Zambonini hopes that the January 2002 release of its new Series 7 applications suite – six months behind schedule – will help propel revenue growth during 2002, particularly after the capture of six multi-million dollar contracts in the third quarter.
But Zambonini roundly rejects Pendse's claims. "These [seven-figure] deals came from organisations that had already bought Cognos," he says. "We never sign the 10,000 seat deals first time. It tends to be 100 seats, then 1,000 and then an enterprise-wide roll-out. If you can show companies that they can get more out of their workforce, they'll quite happily buy into that," he says.
Car maker DaimlerChrysler has bought into this approach in a big way. It has acquired a licence for every employee and is now planning to extend its use of Cognos to its dealerships as well.
With the release of Series 7, organisations will be able to derive greater value from these enterprise-wide deployments, says Zambonini. Cognos has historically been criticised for the lack of integration between its broad range of products – which include querying, online analytical processing (OLAP), reporting and data visualisation tools.
The new suite is based on a single, unified data framework that will allow these different products to interoperate more easily, explains Peter Griffiths, Cognos's vice president of research and development.
"[Series 7] represents a change in the way Cognos is organised as a company," he says. "We've consolidated all our R&D from satellite units around our headquarters into one organisation. Before, R&D tended to work independently, focusing on various functional groups."
The idea is that if an organisation buys any piece of Series 7 for a specific aspect of BI, they buy into the underlying framework – so when they buy another module they're not adding any code, they are simply adding a new service, he says. Organisations can therefore see how certain aspects of their business inter-relate because all the tools feed off the same metadata layer.
The key issue here is context, says Griffiths. "If you can place dimensional information around the raw data, you can see the numbers in a way that makes sense across your organisation. It's about getting the story straight, knowing what you are measuring. This is what senior management worries about," he explains.
This should also enable organisations to share business intelligence data more easily with suppliers and partners, either by deploying further licences to these organisations or by allowing them access to this data via extranets.
Enfield, UK-based logistics company Tibbet and Britten plans to do this during 2002, so that it can share performance data with customers, such as retailer Marks & Spencer. The company has already rolled out a number of specific modules of Cognos software and plans to upgrade to the new release in due course.
Without doubt, Series 7 can boast functions of genuine benefit to customers. However, it needs to reassure users that they will be getting full use from their Cognos investments if the company's momentum is not to stall.