BI is still riding that wave. Business Objects’ acquisition of Crystal Decisions in December 2003 was the biggest in BI history at $820 million and Forrester predicted the deal would catapult the company to the front of the market, guaranteeing gains in market share. “The combination of Crystal Decisions and Business Objects represents the new No. 1 vendor in business intelligence, rocketing past Cognos and Hyperion in revenue, licences, customers and OEM partnerships – a coup d’etat for Business Objects,” gushed Forrester’s Keith Gile when the deal was first announced.
Nearly a year on, and the analysis from Meta Group does not exactly echo that. It puts Cognos as leader in performance (and to a lesser extent presence), with Business Objects just short in second place. It’s not a bad position, but the feeling that Business Objects has so far failed to make the most of its acquisition can also be seen in its first quarter results. Revenue grew to $217.2 million, up 20% on the combined revenues of the two companies a year ago. However, sales of new licences rose just 12%.
Clearly, many analysts expected something better, especially when rival Cognos posted a 23% increase in revenue for its fourth quarter ending February 2004. Difficulties with integration have been suggested, but Business Objects’ ‘roadmap’ only planned for product alignment around now, with full assimilation not expected until 2005.
Forrester suggests the big mergers of last year, which also included Hyperion’s acquisition of Brio, have left “tier-two” vendors such as Actuate and MicroStrategy in a “precarious” position.
Analytical software vendor MicroStrategy, at least, seems to be defying such predictions with a strong showing in its first quarter that saw a sharp rise in profits. Year-on-year licence revenue increased for the sixth consecutive quarter, up 14% to $18.8 million – one-fifth of which came from a single international deal. Overall revenues grew 31% to $49.1 million, a faster pace than in any quarter during its past two years.
In the nearby niche of reporting software, Actuate is faring less well. Revenues for its first quarter of 2004 grew just 2% on the year-ago period to $25.7 million. A licence revenue increase of 6% to $11.5 million was modest but still the company’s largest in two years. Analysts predict that the recent acquisition of Nimble, which makes XML-based systems for information integration, will do little to help Actuate challenge the BI market leaders which have blunted its once-substantial competitive edge.
CIOs might have been happy to invest in systems management software ahead of most other technologies in recent years, but as optimists speak of a spending revival, the latest results suggest this sector may no longer be profiting from customers’ focus on the optimisation of existing systems.
BMC’s quarterly revenues, which grew 5% to $400.2 million, were composed almost equally of new licences and maintenance. But maintenance has now overtaken licence revenue and is growing more rapidly, at 10%, compared to an anaemic 1% growth in licence revenues. Of the $182.5 million in new licences, enterprise systems management software led the way at $74.5 million, with enterprise data management gaining ground to reach $69.3 million and security product sales on $2.4 million. Licence revenue from Remedy, the helpdesk software company BMC bought from Peregrine for $355 million in November 2002, made up the remaining $36.3 million.
At BMC rival Compuware, the revenue breakdown was quite the reverse. Its fourth-quarter licence fees grew by 30% to $101.3 million, while maintenance held steady at $104.3 million, up 1%. But professional services was still larger than both at $132.2 million, a drop of around 15%, meaning total quarterly revenue grew less than half a percent to end the quarter at $337.7 million. Full year revenue dropped from $1.38 billion in 2003 to $1.26 billion in 2004.
The upshot is that BMC and Compuware’s rival, Computer Associates, is outdoing both, despite a continuing Securities and Exchange Commission inquiry into accounting misconduct and the forced departure of most of its senior management in the US. It may not be doing as well as rivals HP and IBM, which along with CA and BMC make up the four leaders of the systems management market, but for the closing quarter of its fiscal 2004, CA’s revenues showed healthy growth of 10% to $850 million, with interim CEO Ken Cron citing “solid results across all product lines and geographies, particularly in Europe”. Security and enterprise management sold particularly well. It also turned around a net loss of $106 million last year to make a profit of $29 million.
Full-year results for the year were also encouraging. Revenue was up 8% to $3.28 billion. Net income reached $25 million, taking into account around $100 million gained from the sale of its accounting applications division ACCPAC to Sage, but still a vast improvement on 2003’s losses of $267 million.
CA increased new contract bookings by 33% in this quarter and analysts at Credit Suisse First Boston suggest it is in a good position to sustain this momentum for the rest of the year – assuming the financial scandal does not precipitate the breaking up and sale of the company.