Interview with Bernard Liautaud - Chairman Business Objects

24th June 2007

Following a substantial period as a leader in the Business Intelligence sector, Business Objects has burst onto the scene in performance management by snapping up SRC, ALG and Cartesis in quick succession. Bernard Liautaud, Business Objects' Chairman talks to Gary Simon , FSN's managing editor about the recent market turmoil and how Business Objects is positioning itself to become the leading independent performance management provider.

Bernard Liautaud - Chairman Business Objects Business Objects may have entered the performance management space rather late in the day but it has played its hand very well acquiring two jewels in the sector under the noses of SAP and Oracle. With the purchase of ALG, the organisation has gained a formidable player in Activity Based Costing and Profitability Management, added to which the acquisition of Cartesis has given Business Objects a high end player in financial reporting and consolidation.

"SAP bought the wrong company," says Liautaud referring to the ERP giant's acquisition of OutlookSoft, a second tier provider of CPM systems noted more for its mid-market presence than its traction in the high end of the market. "It was over priced which was probably why Microsoft did not buy it. SAP should have bought Hyperion three years ago when they had a unique opportunity to consolidate their position in the CFO's office but they let Oracle in," he remarks.

However, Business Objects believes that the recent entry of Oracle and SAP into the mainstream performance management space has created the ideal environment for an 'independent' supplier, not tied to a specific ERP platform or technology. But getting to this position has been a game of patience and Liautaud has had to hold his nerve as other competitor's made their moves first.

"Our strategy was to establish leadership in the Business Intelligence (BI) market before broadening into the wider CPM (corporate performance management) space. Our first sizable acquisition was Crystal in 2003. This gave us an absolute lead in reporting and analytics which put us in a different position to Cognos who had by this time already made its first moves in the CPM space with the acquisition of Adaytum."

"We paid around a $1 billion for Crystal and considered it important to concentrate on integrating the acquisition and generating a return on our investment before launching ourselves into the higher growth enterprise performance management space," confirms Liautaud.

However, by 2004/05 Business Objects had digested the Crystal acquisition and through a mixture of organic development (dashboards, strategy maps, scorecards) and quick acquisitions positioned itself in what the company calls the EPM or Enterprise Performance Management space. The acquisitions of SRC, ALG and Cartesis followed in quick succession.

But making a convincing play as an independent provider in performance management is demanding, especially against vendors such as Oracle and SAP and who make a virtue of 'owning' the platform.

Liautaud agrees. "To be successful as an independent vendor you need a broad stack of business applications because customers seek a small number of strategic partners rather than buying a little bit of product from everyone." But to compete against the platform players best of breed vendors such as Business Objects need extensive connectivity in order to leverage any computing environment. According to Liautaud, this is why Business Objects has also invested heavily in data management applications that provide assurance around data quality as well as data federation tools that allow real-time access to source data. Liautaud is particularly proud of the acquisition of a small company called Medience which he believes gives Business Objects an edge in this area.

"The platform players argue that their ownership of the underlying platform is key to reading and writing data back to their underlying databases – but this is missing the point. First of all we can do this anyway, but more importantly the reality is that customers have lots of different systems. Increasingly the business requirement is to read data from a number of source systems and write the results back also to a range of systems. A good example is the need to match demand and supply forecasts in order to inform a manufacturing planning system," he says.

With the growing complexity of the solutions nomenclature in the performance management space is becoming ever more difficult. Like many other vendors, Business Objects is grappling with the difficulty of explaining the boundaries between EIM (Enterprise Information Management), CPM and BI particularly when talking to the CFO who is unlikely to be impressed with a technical description.

Liautaud agrees that there is a need for simplification – but not just confined to labels. "The user experience needs to be much, much simpler with more consistency in interfaces and implementation. We need a much more visual and intuitive environment and work flow has to be much simpler as well. Google succeeded in dumbing down search capability but we are far from being there in the performance management space."

"There are of course different ways to resolve complexity and 'on-demand' software or Software-as-a-Service, may help to create a ready made simplified environment. I think the idea of spreadsheet add-ins as a substitute probably creates more problems than it resolves. Nobody wants to manage that kind of environment."

As for the future, Liautaud believes that there will be radical change around the way that we manage and mine information with external sources of data playing a much more prominent role in performance management. "There will be an increasing requirement for 'information on demand' but not just utilising internal data as has historically been the case, but drawing on all sorts of external benchmarks, performance indicators and financial metrics. These will be ushered into business applications whether they are public data or paid-for information feeds," says Liautaud. In fact Cartesis, the most recent acquisition has already started on this path through the integration of XBRL data from third part sources such as EDGAR Online.

"The other trend I see is towards much better analysis and understanding of profitability. Many companies report turnover by different business segment but struggle with reporting profit in different dimensions. Activity Based Costing is a means to an end which we consider will give companies a better capability to allocate their costs across dimensions and give a better understanding of their true profitability."

Liautaud is now excited about the possibilities for Business Objects. Through patient management and nurturing relationships over a long period it has managed to pull off impressive acquisitions and position itself quickly at the high end of the performance management market. Business Objects' new found scale, approximately $1.4b turnover and 1700 developers also gives it the scope to compete effectively in a competitive global market. "We are working towards our strategy of becoming a top 10 software house globally. It's an exciting period for the company as we seek to become the leader in performance excellence," concludes Liautaud.