France is rarely associated with enterprise software innovation (test: name a French software company other than Business Objects) but in MDM there are two interesting vendors. I have already written about Amalto, but the more established French MDM player is Orchestra Networks. Founded in 2000, this company has been selling its wares in the French market since 2003, and has built up some solid customer references, mainly in the financial services arena but also with global names such as Sanofi Aventis and Kraft.

The great strength of their EBX technology is the elaborate support for complex business process workflow, an area neglected by most MDM vendors. For example a customer may have an international product code hierarchy, and distribute this to several regions. Each of the regional branches may make local amendments to this, so what happens when a new version of the international hierarchy is produced? EBX provides functionality to detect differences between versions or branches and to allow for merging of these versions, supporting both draft “project” master data and the production versions, keeping track of all changes and supporting the workflow rules to support the full life-cycle of master data creation and update.

Typically such functionality is delivered with only by PIM vendors (Kalido is an exception), yet EBX is fully multi-domain by design, so is not restricted to any one class of master data. This will give it an advantage in competitive situations with vendors who have historically designed their technology around one type of master data (customer or product) and are only now realising the need to support multiple domains.

So far Orchestra Networks has confined itself to France, but opens its first overseas office in London soon. The company has taken the time to build out its technology to a solid level of maturity, and has productive partnerships with Informatica (for data quality and ETL) and Software AG, who OEM EBX and sell it globally at the heart of their own MDM offering.

In my own experience of MDM projects, the handling of the business processes around creating and updating master data is a key issue, yet most hub vendors have virtually ignored it, assuming this is somehow “out of scope”. Hub vendors typically focus on system to system communication e.g. validating a new customer code by checking a repository, and perhaps suggesting possible matches if a similar name is found. This is technically demanding as it is near real-time. However human to system interaction is also important, especially outside the customer domain, where business processes can be much more complex. By providing sophisticated support for this workflow Orchestra Networks can venture into situations where CDI vendors cannot easily go, and as I have written previously there are plenty of real business problems in MDM beyond customer.

It will be interesting to see how Orchestra Networks fares as it ventures outside of France in 2008.

I came across an interesting new MDM vendor recently called Amalto, a start-up from Paris (though they already have a California office). They have only been selling their software for less than a year, but already have a good set of early customers, such as Rio Tinto, Total, SNCF and BNP Paribas. Their Xtentis product offers a generic MDM repository with data movement (EAI like) functionality, and they make heavy use of standards (Eclipse, Ajax etc). Unusually, they use an XML database rather than a relational database as their underlying storage mechanism. Given the relatively low data volumes typical in MDM applications, this approach seems interesting, since XML databases are strong at handling data with complex structures (e.g. variable depth hierarchies) that one often encounters in master data. In case you think XML databases are unproven, Berkeley DB is probably the most widely deployed DBMS in the world, being embedded in many mobile phones, for example, and most phone users don’t have deep DBA skills. On a parochial note, it is nice to see a European software company emerging for a change (another MDM vendor is Orchestra Networks, also French).

Though an early stage company, Amalto is making good progress in the French market and in 2008 will start to expand to the USA. If they can firm up their positioning (confusingly, they also have a product for B2B exchanges, a quite different market, resold by Ariba) and develop good systems integration partnerships in the US then they should be an interesting addition to the MDM space. Their technology is innovative and their early customer stories sound promising.

The recent spate of acquisitions in the BI world (Cognos by IBM, Business Objects by SAP) might cause you to assume that the area was becoming mature (for which read: nothing much new to do). However there is still innovation going on. A company called Tableau, formed mainly by some ex-Stanford University people (including one who was an early employee at Pixar and who has two Oscars to his name!) has neatly combined BI software with clever use of visualisation technology. I have written before how visualisation has struggled to break out of a small niche, though there are certainly some clever technologies out there (e.g. Fractal Edge). One thing that Tableau has done well is to make a very well thought out demo of their software. Product demos are often dull affairs, but this one is very engaging (if a little frenetic), with some real thought put into the underlying data in order to show off the tool to good effect.

I still firmly believe that only a limited proportion of end users actually need a sophisticated analysis tool of any kind. In my experience of BI projects, end users generally find the leading BI tools a lot less intuitive than the vendors would like to think they are, often resorting to Excel once they have found the data they need. The type of technology that Tableau is developing provides an interesting alternative to the established players and has the potential to engage a certain subset of users more. I will follow their progress with interest.

It is interesting to see Kognitio launching a data warehouse on demand service. Traditionally data warehouses are built in-house, partly because they are mostly “built” rather than bought even today, and partly because of the data-intensive nature of them, by definition involving links to multiple in-house systems. However there is no real reason why the service cannot be provided remotely. In my days at Shell my team used to provide a similar internal service to small business units who did not want to build up in-house capability. We implemented a warehouse, built the interfaces and then managed the operational service. Kognitio is well placed to provide such a service because they have good data migration experience, and they conveniently have a powerful warehouse appliance, which is much more mature than many others, even if it has been, until recently, not very successfully marketed. Hence this seems an astute move to me.

I would not expect this to be the last such offering. Given some clear advantages that software as a service brings to customers (less installed software footprint, typically a smoother pricing model) it will be interesting to see whether these advantages outweigh the fear in customer minds about allowing their key data outside the firewall.

Back in the late 1990s companies filed for IPOs even though they had modest revenues and were losing money. Due to the tulip mentality of the time investors suspended disbelief and bought in anyway, giving way to the crash of 2001. A couple of years after that bankers were telling me that in order to have an IPO you would need “at least a couple of years of solid trading profits”, quarterly revenues of at least $25 million and preferably more, as well as strong growth. Those heady days of the late 1990s were a freak occurrence, like the South Sea Bubble. Certainly technology IPOs dried up almost entirely.

With the recent gloom on Wall Street I was therefore surprised to see Initiate Systems filing for an IPO. They are growing quite rapidly but not only have never made a cent of profit, but their losses appear to be, if anything, widening slightly at about a third of their revenues. Throw in an admitted financial misstatement and does this start to feel to you like the late 1990s again? No doubt Initiate is expertly and expensively advised, but this will certainly be one to watch, as if the IPO goes ahead and well then it will change perceptions of exit strategies for high tech companies.

The ink is barely dry on the agreement selling Business Objects to SAP, but today a long-rumoured takeover was announced: IBM snapping up Cognos for USD 5 billion, a modest premium to its stock market valuation, at 3.5 times revenues (8 times maintenance revenues). As I wrote well over a year ago, this acquisition makes better sense than most. In particular, IBM has no proprietary application stack to defend (unlike Oracle or SAP) and so in buying Cognos it does not make things difficult for its sales force by casting doubt on application independence, in the way that the Business Objects purchase by SAP does.

I suspect there was a defensive element here too. Oracle purchased Hyperion and hence Brio, but given their acquisitive nature in recent years it was by no means clear that a another big BI purchase was out of the question. Hence IBM may have swooped quickly partly to keep Cognos out of Oracle’s hands. IBM has a superb sales channel, and so the deal is likely to be a good one for Cognos sales (and hence Cognos customers). Cognos and IBM have worked together for years, so there are no obvious technical concenrs, and the main concern will be whether Cognos staff will fit into IBM’s notorious bureaucracy.

This leaves few independent major BI vendors. SAS is privately held (most of the shares are held by one man) and so until Jim Goodnight says good night to his career, ownership of SAS is going nowhere. The same is probably true of Microstrategy, who although notionally public have a peculiar share structure making a takeover difficult. Actuate is perhaps the largest one left. However there is plenty of room out there, as shown by the vibrant performance of Qliktech.

Purisma has been acquired by Dun & Bradstreet, the business information company that provide, amongst other things, assessment of credit risk of companies and company statistics. On the face of it this is a somewhat peculiar acquisition, since D&B is not a pure provider of enterprise software solutions in the way that, say Oracle, is. However D&B did have its own data quality offering (clearly data quality is a big issue for an information supplier) and Pursima’s customer hub technology is certainly complementary to this data quality offering. It seems possible that D&B has bought Purisma primarily for its own internal purposes, and at this point it is unclear whether Purisma will even continue to be sold as a product in its current form. Rather ironically, Purisma had a product offering allowing integration of D&B into its CDI application. I guess that will come in handy now.

Purisma does not publish public financial data, so it is tricky to tell whether how good or bad the price paid of USD 48 million for the company was. I believe that Purisma had less than 50 employees and I would speculate that its revenues were in the USD 15-20M range. In general it is known that stand-alone CDI and PIM players have been struggling somewhat in the market. This is part due to a gradual dawning on customers that master data management is a broader topic than just “customer” or “product”, a long term theme of this blog. When customers ask “ah, but what about other kinds of master data” (asset, location, employee etc) then specialist CDI and PIM vendors do not have good answers, however good their offerings in their particular domains are. Even IBM has done an about turn on this topic recently, laying out a roadmap for a single MDM Server that will eventually bring together its menagerie of acquired technologies into a platform that will handle multiple master data domains consistently. For this reason I suspect that D&B did not pay over the odds for Purisma.

D&B has had phases in the past of buying software companies, and then moving away from this business e.g. those with long memories will recall the 4GL Nomad, which it sold off after some years. The press release that is tucked away on the Purisma web site today is not giving anything away. If press releases played poker, this one would be a tough player. Purisma customers need to seek guidance from D&B about its future intentions, and consider their alternatives.

Business Objects Q3 results were rather soft, showing license revenue (USD 139M) just 2% up year over year. There were eight deals over USD 1 million, broadly similar to recent quarters. The business line called “information discovery and delivery” i.e. the classic reporting tools, did least well, while enterprise performance management was somewhat healthier.

However overall this is rather feeble growth (by contrast Informatica had a fine quarter, so the excuses offered by management about weak markets seem pretty lame). Perhaps there have been too many acquisitions to digest, and of course now the swallower has itself been gulped up by the much bigger fish of SAP. The price tag SAP paid look like a fairly high premium to the underlying Business of Business Objects, as reflected in its share price dip on announcement, but these results suggest that Business Objects shareholders at least can be very satisfied indeed with the price they got.

The quarterly results of Business Objects reflect the generally fairly robust health of the business intelligence sector, displayed by several other vendors in recent months. Revenues in Q2 2007 were USD 350 million, and profits were up 26% on last year. License revenue, always a key measure for a software company, was up 19% (ignoring currency variations) which is a strong positive sign. On the downside, the large deals appear to drying up, with just six deals over USD 1 million, half that of the same quarter last year. On the other hand there were 154 deals between USD 200k and USD 1 million, which is up 36%. This suggests that customers are phasing things more gradually, and also points to the tendency towards saturation of the BI tools market that I have written of previously. There are likley to be fewer and fewer giant deals to go around, as most companies that want to make an enterprise purchase have already done so.

With USD 1 billion in cash lying around Business Objects also has plenty of ammunition for further acquisitions should it decide to do so. This has been a smart strategy in my view, with acquisitions such as Cartesis having diversified Business Objects from the pure BI tools market, which seems to me to be one with limited growth potential and vulnerable to price pressure form Microsoft. Going “up market” is the way to go here.

Informatica announced an excellent set of quarterly results, demonstrating continuing rude health. Revenue of $94M was a spanking 17% up on the same time last year. License revenue was up 15% at $41M, so the improvement was more than just good services revenue. Eight deals over $1 million compared to nine last time, but deals over $300k were massively up with 35 compared to just 9 a year ago. There was also a major OEM deal, with SAP now going to OEM Informatica, a rare exception to their usual not invented here attitude. This is a good move for both parties.

The results were broad-based, with Informatica’s international operations doing particularly well. These results are a sign of continuing broad based good conditions n the broader BI market. When ETL prospers, data warehouses and BI tools are not far behind.