In Good Position: Q&A With New Cognos and Hyperion CEOs - InformationWeek

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9/23/2004
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In Good Position: Q&A With New Cognos and Hyperion CEOs

Godfrey Sullivan, the new president and CEO of Hyperion, and Robert G. Ashe, the new president and CEO of Cognos, share their insights on the BI/Performance Management market.

Robert G. Ashe, president and CEO of Cognos, and Godfrey Sullivan, president and CEO of Hyperion, have some significant traits in common. They were both recently promoted from COO to CEO of leading BI companies. And they head two pure-play BI companies that ranked in the top three of this year's IDC study of the growing Business Performance Management (BPM) market. (The top three, in descending order, were Hyperion, SAP, and Cognos.) So, naturally, another thing they share is a bullish disposition about the performance management market.

Here are some excerpts of my recent conversations with them.

Godfrey Sullivan, President & CEO, Hyperion Solutions

Q: What do you attribute the last quarter's performance to?

Sullivan: I would just say it's good execution on behalf of the entire team. The market's working in our direction because all the key drivers around transparency and visibility of numbers and disclosure — all those macro factors — are ones that play well for our company, given that business performance management [BPM] software is all about insight. So that's working well for us.

I would say that one of the long-standing competitive advantages of Hyperion has been that we sell six-figure deployments with rapid ROI and deployment. Customers do not have a big appetite at the moment for seven- and eight-figure software transactions that take years to implement. The urgency around fast ROI is pretty high right now.

Q: IDC analyst Kathleen Wilhide attributed Hyperion's first place in the IDC study of the BPM market, with three times the BPM sales of SAP, partly to Hyperion's preexisting success with the consolidation platform — consolidation being one of the three areas IDC includes in its definition of BPM. Is that usually the entry point for your BPM sales?

Sullivan: No. It's pretty balanced. Planning is a key driver for BPM. Consolidation's a driver. Custom analytics, you know, people who want good management reporting — that's a key driver. I'd say the three major drivers are planning and budgeting, consolidation, and the third would be management reporting/dashboards.

Q: Now you have a growth strategy to get to a billion. How are you going to get there?

Sullivan: It'll be a combination of core growth and acquired growth. So we fully expect for our existing products to grow, and as we demonstrated last year, that we will have an appetite, an appropriate appetite, for acquisitions based on where we can find complementary technologies.

Q: Why did you decide to acquire QIQ?

Sullivan: The Brio tools, the performance suite tools that we acquired last year, already have a reputation as the easiest-to-use reporting tools. The QIQ acquisition just helps them get easier still. QIQ has drag-and-drop report construction tools, which puts reporting in the hands of more people and makes it easier to get started and easier to get a fast ROI. We want to fully integrate their technology into our performance suite.

Q: What other areas are you looking at for acquisitions?

Sullivan: We've been saying for the last couple of years that we have three priorities for acquisitions. Number one is adjacent applications. Number two is what I would call strengthening the platform, and then number three is pure consolidation.

So our acquisition last year of the Alcar Company, where we bought what is now known as Hyperion Strategic Finance, that's a great example of an adjacent application. It's used typically in the CFO's world. It's an app that works really nicely with our other financial applications. It's a high-level financial modeling tool that is often used by treasury, the CFO, or the business development departments to understand things like what would happen if we acquired a company? How would the two P&Ls merge? What would happen if we leveraged our balance sheet by using our cash to buy stock out of the marketplace? What would happen if we issued a bond or a debenture? So you can do all the high-level financial modeling around your company. It does income statements, balance sheets, cash flows, all that sort of thing.

It was actually written by a couple of guys out of the Kellogg School, who had taught a class, written a book, and ultimately wrote this piece of software on strategic financial modeling. It's a perfect example of an adjacent financial application that our guys could sell when they were out calling on the CFO's office.

The Brio acquisition is a better example of strengthening the platform. We needed relational reporting capabilities. We needed better dashboard technologies and the like, and so Brio is a perfect example of strengthening the platform, and the QIQ acquisition is also a platform play.

We look at pure consolidation as a distant third because those [acquisitions] are typically harder to manage.

Q: Are you concerned that Microsoft is commoditizing OLAP?

Sullivan: Yes. And we still think Essbase is the best OLAP tool in the world, and our new 7.1 version is absolutely the most important new version we've put out in the last five years. So we feel like we do OLAP a lot better than [Microsoft], both in the financial world, where we are the runaway winner, and 7.1 will help us compete very nicely...in the operational space.

Our analytics business has declined over the last couple of years, but I think that's more because of our own focus on our applications business. I'm confident that we can grow that business, but we need to pay specific attention to it, and you'll see that happen beginning with the launch of the Essbase 7.1 product in the fall of this year.

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