Gerald Cohen is the president and CEO of Information Builders Inc., a business intelligence software company he co-founded more than 30 years ago. On the eve of the New York companys Summit user conference last month, Cohen sat down with eWEEK Senior Writer Dennis Callaghan to discuss the state of the industry and Information Builders focus on the operational BI segment, open standards and service-oriented architectures, among other subjects.
I know youre a private company, but what were your revenues in the last year you reported for?
About $300 million, that was 2004.
How about license revenue? Is it growing?
Well remember, we have a funny situation. We have old products that are going down, while new products are going up. The new products are increasing around 20 to 30 percent, so theyre doing fine. The old products are going down, like 10 to 12 percent, because theyre big products. Remember our old Focus product? Thats going down. So total license revenue is relatively flat. The point is weve crossed the point where the new products are bigger than the old products. So from here on in, its up.
You have a long of history of developing software for mainframes. Is there still a hot mainframe platform in the BI space?
We have a very big initiative with IBM on mainframe Linux. Because we can read all the data on the platform. You have a big MVS box and you have a Linux partition. IBM sells a special chip called an IFL chip that gives a boost to the Linux partition. You can be in Linux and use a browser and get at everything on the mainframe. One of the problems with mainframes is that the user population using them is declining. Today, people dont have any idea how to log in to a mainframe. If you come into your browser and get everything, it moves people back to mainframe types of applications, under Linux. So we have a big initiative with IBM, and were going out to joint customers and new customers, and were putting WebFocus under Linux.
Is there anything new in Version 7 since you first announced it [in March]?
Its designed for a different class of user. BI is split into different pieces. The three pieces are tactical, strategic and operational. The tactical are the departmental apps: 20, 30, 40 people get the job done. I got some data I have to look at. Im in the human resources department and I have to look at payroll information. Thats tactical because it doesnt really affect outcomes, it just does the work in this department. You want the people to get a lot of the reports themselves. They can, because its not a high-value app. So they get their own reports done if they put some work into it. Thats where Cognos and Business Objects basically play, in the tactical app. We play there too, but thats principally where they grew up.
Strategic apps are coming along—today they renamed them performance management: Performance management is this is the company, this is how were doing, key performance indicators. Really more of the strategic kinds of applications. There you have Hyperion and Cognos and Business Objects and us, and we all have performance management frameworks.
The third area is operational BI, and there were pretty much the leaders. Thats where you layer business intelligence on top of a system thats already running. You dont necessarily have to warehouse it. Its a system used to run some company operation. By putting intelligence on top of it, youre trying to squeeze out more efficiency from that system.
So WebFocus 7 is really designed with an extra set of features to make that operational BI easier—do more of the things we do well that our customers want in operational BI. Thats an area we tend to dominate. We think we have much larger deployments than anybody in the industry and probably more operational apps than anybody in the industry.
Isnt that an area that the operational application vendors want to take control of?
No, they cant. You might go to 10, 12 data sets to get this kind of information. You need a tremendous amount of facilities.
But SAP is making a lot of investments in this area, arent they?
But thats analytics. You know, 20 people looking at the data. Were talking about 20,000. If you want to deploy [SAP] Business Warehouse information more widely, youre not going to use an SAP system. First of all, itll cost you a fortune. Theyll charge you a fortune per user. Its not Internet pricing. We have a pretty good practice working on BW data.
The trouble with BW data is its not always operational. Thats more in our tactical/strategic world. We do performance management stuff also. What SAP does is they only report off their cube, whats in their cube. They dont really do report writing. Rotating a cube or OLAP is not general report writing. You can only display whats in a cell. What if you dont want to display whats in a cell? What if you want to have more complicated questions and even connect it with other things?
Arent all of your main competitors—Business Objects, Cognos, MicroStrategy—trying to get into this large-scale operational reporting space that Information Builders has always been in?
Yes and no. MicroStrategy is very much in the heavy analytical stuff. They shot themselves in the foot, they sued a third of their customers. … I think theyre kind of marginalized. Theyve also been replaced by several of the big integrators who dont carry them anymore because they dont want anything to do with them. So theyre in trouble.
Business Objects doesnt have the scalability, doesnt have the customization. Business Objects is very good for users doing their own reports. But of the style where you know the field names, you move the fields around. For a tactical application like heres everybody in the payroll department they know the fields, they can move it around, get some of their own reports. But when you get to a larger-scale deployment, you need Internet-style self-service. The guy on the shop floor, he just wants to go click-click-click and thats it. So you have to have all the power there and all the variation right there in the click-click-click stuff. They dont do that, so thats why theyre tactical.
Cognos is moving up the chain. [with] ReportNet. Its a newer product. It lacks several things. It doesnt have the scalability at all. Youre not going to put 1,000 users on it unless youve got a gigantic machine and it becomes unwieldy. It doesnt have the customization facilities. If you want to customize, you write Java programs. They sell you a kit for $8,000, you write a JSP every time you have a special thing you have to do. With Cognos, its easy to do easy things. But as soon as you want to do more complicated things, it gets all off the chart.
Actuate is somewhat in the operational space. Different style architecture though. Different kind of system, its not a live system. Theyre not generating reports; all their reports are generated at night. They put it into a big repository. So theyre a very specialized kind of thing.
So where do you see the growth areas for your company?
Operational. Operational BI is huge because its real Internet stuff. This tactical stuff has been going on since the client/server days. Everybody does tactical. The performance management areas a nice area, its growing, it gets a lot of interest. Cognos bought a company to get into it, Hyperions in it, [Business Objects] is in it. I think theres value in that, and we have some performance management [technology]. But I think the operational apps is the untapped area because thats where people have huge returns on investment. If Im putting BI on a system thats really valuable, you have a chance of saving money.
With all the enterprise application vendors talking about embracing service-oriented architectures to the point that were not talking about packaged application vendors anymore, in a few years, its all going to be business process management platforms, where does that leave Information Builders?
Are you kidding? Were the guys beating the drum for SOA. If you read our iWay Web site, its SOA this, SOA that. Were going , “Hey, go SOA. Were leaders in that area.”
I personally think its a lot of hype. Its nice to have and eventually itll come down the hype curve as one of many ways of architecting things. But as long as people think they want to go SOA, were aware of it, were going to be it. Two years ago, we were Java, J2EE, then we were JCA. .Net has its own little constituency, separate world. So lots of worlds out there. Right now, were doing very well with SOA. We have a terrific product; it works great. All of our adapters are hooked up to the SOA world, whats called [the] Enterprise Service Bus world. But were just noisemakers like the rest of the guys.
Other BI vendors talk about customers wanting to standardize on their product set. Are you seeing that as a trend among your customer base?
Yes and no. Its spoken about more than it happens. Its whats called motherhood. Hey, if we could have less vendors, wouldnt it be better for us. Every vendors been saying that for the last 40 years.
Its motherhood. Who would say Im not for motherhood? Of course you want to have less vendors its better for you. Now people are waking up and saying, “We have too many BI vendors, we really have to knock them down.” Will they get one? Its unlikely. Its much more likely theyll end up with maybe two or three. Because they do different things.
If truly you have 10 vendors doing BI types of things, then you really are wasting a lot of money. But if you can cut it back to a few, thats a value. And we do see RFPs coming out, people looking for enterprise standards, and we have won quite a number of them, very large-scale companies. But they have their difficulties, I will tell you that. We loved winning them. But unless the company is prepared to really implement the standard, it doesnt work well.
What happens is, unless they put in like a competency center, you go in, you do an app to help you do something. Usually in these enterprise deals everybody in the company gets the software free or cheap. What happens is somebody says, “Oh, I think I use that product,” takes it, downloads the product, puts up an app or tries to put up an app, it doesnt work, we dont even know about it and the company doesnt have the resources, doesnt have a central place to help them because they didnt build the competency center.
I like the idea of enterprise software and I like it better when the company is prepared to support it. Otherwise its very difficult for us Ive discovered.
Have you noticed that your user counts have gone up? Are you selling more seats?
No, were not a seat seller. Were not like Business Objects. Oh, we have X thousand seats. They basically sell an OLAP thing where you have to know the user. Were selling a server type of thing where it says, I dont care if youre 100,000 users or 10,000 users, you can have unlimited users. I dont have to sell it on a named user basis. So we never talk named users. Although we do sell named users because we have a set of additional services you can buy. If you want to buy those services, just buy the servers. So well sell it on the power of the machine, well sell it on users, current users, subscription, whatever you want.
Are you participating in any open-source initiatives like the whole Eclipse initiative around reporting?
Yes, by the end of this year, iWay will be totally Eclipse-compatible. We think thats a very valuable thing. We have our own GUIs now, and were changing them all to be Eclipse plug-ins. We think thats a fabulous idea. We love Eclipse. So that were going to do. You said open source, we have a big initiative around Linux. WebFocus on Linux is one of our fastest-growing products. We have a fabulous Linux version. So thats going very well.
A lot of our competitors came out of the Microsoft desktop world. And theyre fine on the desktop, and so are we. But they have very poor Linux and Unix skills. So theyre just starting to get into Linux. Weve been in it for years. Weve already perfected writing stuff. We even run Linux on the IBM mainframe.
To be an enterprise vendor, we have to say to our customer, “Well run on any machine you have. Whatever youre into, well run eventually.”
Theres been a lot of issues around patent infringement in the BI space. What do you think of the lawsuits that have been traded back and forth among many of your competitors?
About a dozen years ago, I was at a national conference and one of the topics was the future problems with software patents, which nobody could have given a rats ass about, as they say, in those days. It was so obvious that computer patents are going to be the biggest problem in the industry we could possibly have.
Theres a law thats in Congress now and theyre changing patents on software. Theyre not removing them, theyre capping the penalties. Part of the problems you have, patents take 18 months before it becomes a patent. So you dont even know its patented when you do it, youre doing it on your own and all of a sudden you just go, “Oh, somebody got to it first, they patented it.” What are you going to do?
The second part of the problem is theres law firms that sprung up whose only business is getting a lot of peoples patents and finding out who violated them. Theyre blood-sucking law firms. Thats all they do is look for patent violators. And weve had one of those guys come along and try to nab us, and I can see how tough they are.
I think its a scourge on the industry.
With regulatory pressure from the Sarbanes-Oxley Act and companies being acquired, are you glad youve kept Information Builders private?
I think the private companies are having a ball, SAS and us and a few new ones. The public companies are really under the gun. Theyve got to make earnings. Some analyst who doesnt know anything says, “I think theyll earn 25 cents a share.” If they earn 24, their stock takes a dive. Thats dopey. I think its very unhealthy for the software industry to be so shackled to the public markets.
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