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February 14, 2000

The Drive To Analyze
Business intelligence provides analysis needed for success

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ompanies last year realized just how critical business intelligence is to running a successful E-business--and Wall Street quickly caught on. Now, business-intelligence software vendors have to deliver on that promise.

Buying and selling online makes managers throughout a company more dependent on analyzing information rather than on face-to-face relationships--and that's moving business-intelligence systems to the front lines. The increased importance of these applications, which make it easier for users to query and analyze large databases and pull out only the information they need, helps explain why investors drove up the market capitalizations of some vendors as much as eight times in the past five months. Tom Camps, VP of marketing at vendor Cognos Inc., says 2000 will be the year of business intelligence. "People are scrambling to implement E-business solutions," he says. "It's replacing the old [face-to-face] relationship model."

Life on the leading edge can mean glory or disaster. As business-intelligence vendors pump up sales by convincing companies their products are critical to running an E-business, they'll face more pressure to make good on grand promises to deliver relevant information to users throughout a company.

MicroStrategy
No company in the business-intelligence market is hotter than MicroStrategy Inc, whose share price has risen from around $20 in September to a 52-week high of $160 in early February. Though its $205 million in sales last year is just half that of more-established data-analysis companies, MicroStrategy has big ambitions: During the Super Bowl, the company ran an ad touting the idea that business intelligence will change our world--and it wants to be the vendor behind the revolution.

MicroStrategy increased its revenue by 93% last year compared with 1998, and increased net income by 103% to $13 million. For the quarter ended Dec. 31, revenue reached $69 million and net income was $4 million, a 36% increase over the same period a year ago. MicroStrategy is focused on creating and delivering customer-centric business intelligence--pulling information from databases to deliver information to a single user that is customized to that person's preferences.

Sanju Bansal, MicroStrategy's chief operating officer, says E-business is driving companies to spend more on business-intelligence technology. And as these systems become critical to running a company, companies are willing to invest more to ensure that the systems work. "If there are 50 guys in the back room accessing the information, you'll get a lot of pressure about cost," Bansal says. "If 300 suppliers and 50,000 customers are looking at it, it becomes a different situation."

Despite MicroStrategy's success, says Mark Smith, a business-intelligence analyst at Meta Group, the real test will be whether the vendor's next round of products, due this fall, can deliver the kind of collaborative analysis the company's high-profile marketing promises.

Business Objects
While MicroStrategy was the biggest growth story last year, Business Objects SA wasn't far behind. Its sales grew 45% to $241.6 million, and net income increased 130% to $23.8 million.

Smith says Business Objects' success has been driven by its WebIntelligence product, which lets users make queries, perform analysis, and build reports using a Web browser. Late last month, the French company rolled out the extranet version of WebIntelligence, designed to make it easier for companies to give suppliers and customers the same analysis tools as internal users.

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