Cognos
Thirty-year-old Cognos is a data-management and analysis veteran, but the company saw net income fall 6% for the 12 months ending Nov. 30 to $54.7 million while its younger rivals enjoyed double- and triple-digit growth. Cognos' sales rose 24% during the period to $354 million and were up 28% to $98 million for its third fiscal quarter ended Nov. 30 compared with the third quarter a year earlier. Net income for the quarter was down 13% to $14 million.

Cognos attributes the poor results to a higher tax rate--as a result of using up a backlog of research investment tax credits--and to a major investment in marketing and sales. Investors seemed to have endorsed Cognos' strategy of investing in marketing, which it announced in September, sending the company's share price from a 52-week low of $19.38 on Sept. 22 to more that $70 in early February. Cognos officials say business-intelligence revenue was up 41% for the quarter ended Nov. 30 and is continuing to grow in importance for the company. Business-intelligence sales made up 86% of total revenue for the most-recent quarter.

VP Camps says more than half of Cognos' business-intelligence sales come from its Web products, and a quarter of the companies it works with use Cognos' tools for E-business, sharing the data with their customers and suppliers. Late last month, the vendor formed a business unit to create packaged applications to analyze information from ERP, CRM, and supply-chain management systems.

Cognos' products for desktop online analysis and reports face stiff competition, primarily from Business Objects and Brio Technology Inc., says Lou Agosta, an analyst at Giga Information Group. Agosta says that while all three are benefiting from a growing market, their products are similar enough that pricing and marketing will be increasingly important. "It's a crowded market," Agosta says. "The competition isn't getting any easier."

Hyperion Solutions
Hyperion Solutions Corp. had just 3% sales and income growth in 1999, but CEO and chairman Jeffrey Rodek, who joined the company in early October, prefers to focus on a more upbeat trend: Revenue for the last three months of 1999 (the company's fiscal 2000 second quarter, ended Dec. 31) grew 8%, compared with 2% growth the previous quarter and a 10% sales decline the quarter before that. Hyperion's revenue reached $436 million for 1999 and $116 million for its fiscal 2000 second quarter. Income for the quarter slipped 18% to $7 million. "We're coming out of a period where we weren't growing at all, and we're making progress," Rodek says. "We're focusing on growing our licensing revenue. If we do that, the maintenance and service revenue will follow."

Rich Clayton, Hyperion's VP of product marketing, says there's no greater priority for the vendor's customers than integrating their business-intelligence systems. Executives who once envisioned one or two platforms funneling all their companies' E-business data are realizing that there are dozens of sources, including Web sites, E-mail, auctions, and advertising-management systems, that need to be accommodated.

Hyperion's historical strength has been providing deep analysis of a company's financials, and its 1998 merger with Arbor Software was intended to extend that analytical ability throughout the companies it serves. Wayne Eckerson, business-intelligence analyst at Patricia Seybold Group, says not only was that merger of cultures more difficult than the companies expected, but selling the broader, more complicated product line is more difficult as well.

"It's a little more complicated sale, but it's potentially more lucrative," Eckerson says. "Their goal is to be the SAP of analytical applications, and that's a big goal."

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Photo by Shelley Harrison