Cognos-Applix Deal Shows Business Intelligence Software Getting Job SpecificCognos-Applix Deal Shows Business Intelligence Software Getting Job Specific

As analytics becomes an increasingly important cornerstone of business man-agement, companies are looking for business intelligence software tuned to the needs of their finance, sales, and marketing departments. To meet that demand, vendors are snatching up smaller purveyors of these performance management tools.

The latest to make a grab is Cognos. It said last week it would pay $339 million for Applix, a maker of financial performance management software. Applix, which says it's on target to grow more than 30% this year to about $70 million in revenue, was itself part of the buying binge, having acquired budgeting and forecasting software company Temtec in June of last year.

The Cognos-Applix deal follows on Oracle's $3.3 billion acquisition in March of Hyperion, the financial performance management market leader; Business Objects' $300 million Cartesis buy in April; and SAP's purchase of OutlookSoft in May. Business Objects this week is releasing BusinessObjects EPM XI, a suite that includes its own technology, that of Cartesis, and ALG Software, a company it acquired last September for $56 million.

FINANCIAL THINKING
The old way of doing BI was to have IT take generic reporting and query software, dashboards, and other tools and either customize them for specific users, or make the best of them as is. Now, performance management tools are prepackaged with features designed for specific job functions. One of the biggest demands is for software that helps CFOs and their finance departments plan, budget, analyze, and monitor profits and sales, as well as comply with government regulations.

Applix, for example, brings Cognos a set of tools for analysis in areas such as profitability and price-volume variance--"complex areas we haven't been addressing for our customers," says Mychelle Mollot, Cognos' VP of market strategy. Applix has 3,000 customers, and Cognos has 3,500 for its financial performance management software, called Cognos 8 Planning, Controller, and Business Intelligence Applications.

Besides getting Applix's customer base, Cognos plans to capitalize on Applix's in-memory technology, a fledgling approach to BI that's gaining acceptance. That technology uses 64-bit servers that let the software perform analysis within a server's memory. The conventional approach to BI calls for the IT department to build online analytical processing cubes to analyze data. But lower memory costs make in-memory analytics more feasible, letting users bypass IT and get faster answers to queries.

In-memory analysis is more appropriate for determining future outcomes, because it lets people make changes on the fly, Mollot says. "It can be done at the speed of thought," she says. Traditional online analytical processing remains more appropriate for analyzing historical information.

QlikTech, a startup that's been the fastest-growing BI company the past year, with sales that nearly doubled last year to $44 million, has grown largely on the strength of its in-memory analytics platform.

Despite the consolidation that's gone on lately, the business intelligence market remains fragmented among many vendors. Cognos, with 10% of the BI market, trails only Business Objects (14%) and SAS (11%) in market share. It grew 9.8% last year, just under the industry average of 11.5%, according to IDC. The performance management segment of the market is growing a bit faster, at 13.5%. Business Objects grew 7%, while SAS grew nearly 17%. Hyperion, Microsoft, and Oracle had growth rates above the industry average.