Q&A: Cognos CEO Ron Zambonini

Thousands of companies conduct business with millions of customers, but do they ever really know how well they are serving those customers, the lifeblood of their existence?

There are plenty of ways to tell how products, services, or salespeople are doing — the proof is in the pudding, in this case, the sales and success ratios.

But as enterprises face increased competition and IT dollars in sparse supply, lagging-indicators like past sales in order to divine the future aren’t enough. It’s now about intuiting what the customer needs, which is why business intelligence is one of the latest hot technologies within many business segments.

The BI space has seen some brisk evolution in the last few months, with Business Objects moving to acquire Crystal Decisions, Hyperion snapping up Brio Software and Actuate nabbing Nimble Technologies — all within a three-week span — to bolster their reporting offerings.

As further evidence that the space is getting hotter, market research firm IDC has forecast BI to increase to $4.5 billion in 2007, at a compound annual growth rate (CAGR) of 4.1 percent.

One BI specialist however, has chosen to build rather than buy to take advantage of the trend: Burlington, Mass.-based Cognos, which recently unveiled its ReportNet software, the product of more than four years work by 300 engineers within the company.

It’s a point of pride for Ron Zambonini, the CEO of Cognos, who points to the company when he talks about proof and pudding. The Scotland native knows of what he speaks (and he says it with a Scottish burr). Zambonini began his information technology career more than 30 years ago as a COBOL programmer. He moved stateside and later joined Cognos in 1989 as vice president of research and development, eventually working his way to the top.

The executive spent some time talking with internetnews.com about his company and the business intelligence software market during a recent Cognos event in New York City.

Q: What is business intelligence software and why is it so important?

Well, ever since computers started, people have been creating data. When you produce an invoice you’ve got all the data — who you bought it from and who you sold it and what product mix was in there.

All that data is in corporate databases and it contains insight into how your customers buy, how your sales guys sell, data about suppliers — where your products come from, who gives you the highest quality products. Data about your people, who is the best performer and so on. And business intelligence is the whole point of getting out that data in a usable way to give people insight into making better decisions.

There are different ways of doing it: standard reports with headers and columns but also multi-dimensional analysis where you have the ability to drill down and slice the data and start with a bigger idea and zero right in and focus on it. Those are the types of things that we do. Our strength is really for the end user to be able to get at the data and try and get through the IT stuff and really get the user doing it. Because if you make informed decisions you actually make better decisions that are faster and sharper.

Q: You have a flagship product called Cognos Business Intelligence Series 7.2. Discuss some of the applications in it and what they do.

Oh, there are just hundreds of applications. To break it down I’d have to say about half the applications have to do with analyzing sales and marketing. A company spends huge amounts of money marketing their products. Are those campaigns effective? Are they really getting the sales?

The applications help analyze product performance over geographies by salespeople. I would say in the last few years supply chain has become all about ‘which are my best vendors? Whose getting me the best price? who’s getting me the best quality?’ People. But probably the single most used application right now is customer profitability. Customers are focusing in on who is the most profitable customer. And you know, it’s surprising that the customer they think is the most profitable turns out to be the least profitable. I think we always pay attention to customers, we give them great discounts, we service them and so on. And they turn out to be not so profitable as they think. That’s changing the way companies are looking at customers. But there’s as many applications as there are customers.

Q: You recently launched ReportNet, a new reporting query software application. What is this product and what will it do for customers?

Well, you know what we tried to do was build something completely great. The complexity of reporting over the last few years has just gone wild. The current raft of reporting products really isn’t dealing with these things. We really need to be able to do quite complex reporting very quickly because the demand to get information has greatly increased.

So we wanted to build something that was, first of all, highly productive. Secondly, we wanted to build something was more. The Web has just given us enormous opportunities to present, format and merge data so well. And thirdly, we wanted to help companies consolidate reporting. Companies are, since the downturn, want to collaborate more. They want to make decisions together and that really means sharing information. Having a whole myriad of tools is just not the right way to do it, so to be able to replace all the tools you have to have everything so Cognos ReportNet is a very broad product from end-user creating to complex reporting and the ability to do that for a many users That what ReportNet is all about.

Q:Some of your competitors have made acquisitions to take advantage of the market, but Cognos chose to build rather than buy. Did you consider going the route of the other companies in acquiring such technologies or did you decide to build right from the beginning?

I think something as core to our future as this, it was important that we had it. We also had over 22,000 customers, so we wanted to bring them along with us. And we wanted to build something really great. You know, when you acquire, as some of our competitors have done — you acquire pretty similar products, you’ve got a big headache in putting these two together.

A lot of that work — which I’m sure they’ll do well — is really unproductive. It isn’t moving the ball forward, it’s just moving the ball across the field, and so we felt it was important to build. You know, in our business, the key word to me is ‘innovation.’ You’ve really got to do something different. You’ve got to raise the bar and we wanted to do that and it’s hard to do that. It’s certainly okay to fill in the gaps in your product line by acquiring. But for your core product you have to go and use the smartness of your engineers to build something special.

Q: I realize you’ve just launched ReportNet after three to four years in development and you’re still basking in the glow of that, but obviously you’re not going to rest on your laurels. Where does Cognos need to improve?

Well, I think you can always do things better in every area. Our engineers have been great. They’ve produced a lot of products in the last few years — Series 7, the Metrix Manager, the visualizing tool, and ReportNet. We’re really in good shape there, but ReportNet uses a whole new architecture and I’d like to get all of our products on that as quickly as possible. We really want to be a worldwide company and I think we can do better in Europe. I think ReportNet, one of it;s big features is multi-lingual, so you can write the report once and have it come out in any different language. That’s going to be a key feature in Europe, so I’d like us to do better there. And we always continue to strive to make our customers satisfied. If we don’t make our customers successful no matter how neat our technology is, then we just won’t be successful, so that’s always a driving point for me.

Q: A gentleman earlier today asked a question about migration concerns. You stridently said you didn’t want customers worrying about migrating to Series 7 to ReportNet. What are you bringing to the table with 7.3?

ReportNet builds Web reports. That’s what it’s for. But not all reports are Web reports. People want reports on PCs. People want a lot of paper reports, so we’re going to advance Series 7 as a separate product. There’s no point if you have a hundred reports in production, what’s the point in changing it? Just when people need Web features of ReportNet, for example, they might choose to migrate. We’ll make it easy for them to do that. The metadata comes across instantly, so they can go in and they’ve already figured out their data warehouse. This snaps right on tap and you can write reports for it. We’re not in a rush to migrate because we’re going to be advancing Series 7 from now on.

Q: Right now, what firms are the main threats to Cognos in the business intelligence software space? Any more so than others? Business Objects perhaps?

Right now we have a set of competitors that we’ve had for a long time. Especially Business Objects now, having chosen to acquire Crystal Decisions. But I think that’s going to be a tough job. They’ve got a lot of integration to do. Both of their customers are going to have to migrate to something new. So, we believe we have an opportunity during the next few months with this really hot new product. We’ve accelerated the training throughout our whole organization of all of our software specialists and salespeople. We’re going to go after them. Apart from Business Objects and Crystal, there’s always great companies out there. SAS, which is a private company does good reporting, and there’s MicroStrategy. So, there’s other companies out there and, of course, some newer entrants from vendors like Oracle. But we believe we have the leadership position and I think ReportNet is going to push us forward.

Q: You mentioned Oracle as a challenger to leaders such as Cognos and Business Objects in the business intelligence space. Gartner has listed Microsoft as one of the challengers. This has been a trend of Microsoft’s — the predominant consumer software company rolls up its sleeves and delves into parts of the enterprise to compete with leading vendors such as Cognos. Specifically, it has an effort called Microsoft Reporting Services, slated for an unveiling within the month. As the leader of an enterprise software company, what are your thoughts on that?

Well, anyone who laughs at Microsoft is a fool. I don’t think they’re just entering the market. I think they’ve been in for awhile with their OLAP (online analytical processing) services.

Cognos products currently work with OLAP services. They’re reporting services, which are do out this year looks interesting to us. Microsoft certainly has informed its partners about them and I think it will do well. But it’s important to understand that Cognos is an enterprise company and that’s different.

That means you have to form a relationship with your customer. You have to go there, you have to service them, you have to consult them. It’s not something you can ship away in a box. Microsoft’s a great company that produces great products. But I often hear Bill Gates say this. ‘All we do is produce good products.’ That’s all Cognos is doing. We have produced what I think is a fantastic product. No matter who competes with us, no matter how small or how large, they’re going to have to match the functionality as well as the services and support we’re going to give this product.

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