Leading business intelligence vendor Cognos has turned in a respectable first quarter profit but admits it needs to improve its image and bolster its sales force if it is to gain market momentum.
In its first quarter results to 31 May, 1999, Cognos reported revenue up 21 per cent to $81.6 million. Profit was down to $10.9 million from $11.3 million last year, which it blamed on a substantially increased projected tax rate.
Licence revenue from Cognos' business intelligence products, such as Powerplay and Impromptu, were up 33 per cent to $65.4 million. Sales from its older development products, Axiant and Powerhouse, were down slightly in the period.
In a muted statement, Ron Zambonini, Cognos' chief executive said, "We are quite pleased with the financial performance of the company as we start our new fiscal year. The markets for our products and services continue to grow and we are expanding to address this opportunity."
Zambonini re-emphasised Cognos' drive to achieve significant numbers of sales above the $50,000 threshold, citing 220 new deals in the quarter above that figure compared with 180 as evidence its sales and distribution strategy is reaping reward.
From Cognos perspective, it is crucial it remains successful at this level, because it is widely acknowledged in the business intelligence market that concluding 50 seat or less deals is not cost effective.
Last week for instance, Seagate Software admitted there is no profit in selling at this level and in the past, Cognos has admitted it loses money where deals are inked at the sub $40,000 figure, which is approximately 50 seats.
But in order to continue its growth, Cognos needs to do more. Zambonini said as much when he acknowledged the company needs to grow its sales force from the current 1,900 to about 2,100 by the company's year end. In the latest quarter it said it increased the sales force by 60.
Rob Zalums, Cognos UK managing director, said he had to refocus the sales effort to improve penetration in key customer sites.
"Towards the end of last year, licence growth was flat at around four per cent growth but within a quarter we moved it on to 60 per cent," he said.
According to Zalums, two factors inhibited growth. First, the sales force did not have a coherent message about the strategic nature of business intelligence products and second, Cognos Novaview 1.0 - acquired technology from Panorama - did not really support the Web in the way customers wanted.
Today, Zalums is a lot more upbeat about Cognos UK strategy and the recent announcement of Novaview 2.0 removes the Web problem, but he accepts Cognos faces intense competition from Businessobjects, against whom it is pitted in 90 per cent of deals.
"They had their troubles a few years ago and have bounced back, we have to compete effectively against an improved profile," he said.
Zambonini added, "I'm not sure that as a company we have done enough in communicating our story to Wall Street and other people. Our chief financial officer and I intend telling our story a little bit more."
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