The Village View

Wednesday, November 08, 2006

Cognos CEO Rob Ashe speaks

I spent some time at the Goldman Sachs Software & IT Services Retreat yesterday and today. We've been having some BI-related discussions among the Enterprise Irregulars so I attended the breakout session with Cognos CEO Rob Ashe. I'm no where near a BI expert, but here are a few things that I recall that Ashe said that I took note of:

· It's a good market for BI, although it's been a confusing time for customers over the last 18 months. In its market of large mid size and enterprise customers, Cognos has been moving to an enterprise wide sale from a departmental sale. CIOs are starting to look at BI across the entire enterprise

· Result has been longer sales cycles and bigger deals

· Lots of noise from infrastructure players. This makes the sales process more complex. However, it's been mostly noise so far and has not really changed competitive dynamics

· BI customers: 1/3 always buy from ERP vendors, 1/3 never buy from ERP vendors, and 1/3 are competitive

· See mainly Oracle and SAP at the high end (SAP a bit more)

· Microsoft at the deparmental level

· SAP exerts a bit more influence than Oracle

· Business is becoming more seasonal with larger deals becoming more important

· IBM relationship has helped a lot

· Question: How do you backfill and seed pipeline?

· Segment the market and set up Global major accounts

· Average deal - $70K - 100K; good deal - $200-250k; enterprise deals fall in the middle

· Sales reps are compensated not only to bring in the largest deals

· Cognos Series 7 - last in a road of product development

· Cognos 8 - takes us back to the first step in a new multi-year architecture

· SOA from ground up

· Workplace performance application is built off of Cognos 8 backbone

· Will ship a Finance app built on Cognos 8 next year

· Question: is there an On Demand opportunity?

· Big opportunity, with caveats

· If BI were as simple as problems that Salesforce.com solves, Cognos wouldn't be here

· BI is very specific to each company

· Not as simple as data collection

· Planning is a good candidate for SaaS

· Two part SaaS strategy

· Partners - 40 OEMs with SaaS solutions

· Cognos 8 can operate in multi-tenant environment

· Bring more traditional On Demand market

· Cognos not currently architected for SaaS (I'm unclear how this reconciles with the above statement that Cognos 8 can operate in multi-tenant environment)

· Question: what can you tell us about the recent cost cutting efforts

· The "action" was executed in a single day

· Targeted at management - 20% of VPs eliminated - goal was to speed decision making

· Teams responded well

· Field didn't miss a beat

· We continue to hire sales reps

· Corporate staff took a little longer to get over it

· Currently 366 sales reps - will be hiring 20-25 in Q4 (unclear if this is a net new number)

· Question: Consolidation in the industry?

· See more tuck-in type of acquisitions instead of major acquisitions

· Big believer in independent BI space

· Specialized

· Diversity of IT infrastructure

· For core ETL Cognos prefers to partner. Doesn't want to go down the stack, but rather "out" - where we can creat value

· Question: how has the deal between Business Objects and IBM affected you?

· Doesn't change our relationship with IBM

· IBM has tried to be neutral

· We knew it was coming

· We are in better position than BOBJ because we have been more focused on IBM software

· SMB

· 1000 mid-market channel partners

· Reasonable amount of revenue

· Strong interest

· CIOs of SMBs ofter work for CFOs which bodes well for Cognos

· Resources over the last 24 months have been put in Large Enterprise, not SMB

· See Cognos architecture having more of an influence on the high end

· Definition of mid market: $100-500M revenue

· Question: What is the opportunity for independent BI vendors?

· There is such a varied infrastructure that there are companies that want BI from independent vendors

· It's easy to rip BI out, but not to replace. It's reasonably sticky

· Customers will look at new BI vendor when there is an event e.g., upgrade to XI

· When will Cognos end support of older versions?

· Typically end support after 2 years

· Difference between BOBJ and Cognos is that more Cognos customers are on a modern release (Series 7). No big rush to upgrade them because they generate good maintenance revenue

· Discontinue Series 7 in 2010

· Question: How easy is it to recruit sales people?

· Good pipeline of recruiting candidates. Not hard to recruit. Cognos is a very nice sized company and there are plenty of peoplw who want to work for a company of this size.

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