COMMENT OK. Let's talk about Microsoft. They've had business-intelligence tools in SQL Server for a while, though with limited results. But now they're upgrading SQL Server 2005, and going after the small and medium-sized markets. You've been able to fend them off until now. But what do you need to do to avoid getting nailed? I don't need to tell you Microsoft's a pretty big company.
I am always very serious about any competition from Microsoft but I believe we will still succeed and be the leader in the segment. Customers want solutions that are independent from other apps. Microsoft being a company that drives one database - SQL Server - doesn't have the independent attribute that's so key to business.
The other thing is that [IT] wants solutions that scale with their business... and Microsoft's not very good at that. They're relatively late while we've been here for years.
But even if Microsoft fails to dominate this market, won't that still put added pressure on pure-play vendors such as yourself?
I think they can have some impact on the [small and midsized business] market. But the market is expanding rapidly and we have very strong play in the enterprise... I also see that as a potential opportunity because they bundle our products now. If they're making more noises about business intelligence, that just pushes our product to more places.
After you close the SRC deal next month, what do you expect to come out of the acquisition over the course of the next year?
It is a strategic question for us. The deal propels us into new territory - financial planning, budgeting and the whole spectrum of enterprise performance management. This completes our product portfolio so we can come to the customer and say we cover all their requirements.
Do you expect you'll need to substantially increase the size of your company's sales force?
Not necessarily substantially. We have about 560 salespeople right now.
When you did the Crystal deal a couple of years back - I think for $1.2bn - some people said you might be biting off too much.
True. There were a lot of sceptics - and that's normal because there are a lot of failures in enterprise acquisitions. But we brought together two successful companies that were highly complementary and it made for a great outcome.
I'm extremely happy with the acquisition. Two years ago, the stock was 18 and now it's 32. Our combined trailing revenue at the time was about $720m; this last year it was $925m, and we're expecting to grow this year. Also, two years ago we were number two in the space and now we're the clear number one.
Do you feel a sense of vindication?
Absolutely.
What's the hardest part about pulling off a successful merger? How do you keep the integration issues from tripping you up?
One of the hardest things is to create a common culture. We really embraced what Crystal had done. It was two-thirds of our size and it was really important for us to embrace the other's strength and culture. The other thing was to give a path to customers to move to the new platform and not leave any of them behind. The third point was to create a product portfolio that takes the strength of both products and that's what we've done.
What was toughest choice you had to make?
Technology choices and infrastructure. We had to take out some parts of the business that we had worked on for a long time because Crystal had some better ones. But these were the right choices and today we have a platform that's very scalable.
What with stock prices going up, valuations aren't as cheap as they were six months ago. As you look around the market over the next six months, is it going to be a buyer's or seller's market?
Clearly, we believe in our future as an independent organisation. Business intelligence is an important category in itself... Along with that, we believe acquisitions will be a weapon in our arsenal and we'll look for ways to fill the gaps in.
What do you say to convince IT managers who don't expect to increase their budgets all that much that they should buy your software?
It's not about increasing their IT budget. It's about allocating the budget in areas where they can get a higher return. There will be a lot of money going forward to spend on business intelligence because it provides them with much faster and stronger returns. IDC found that the median return is 400 per cent in less than a year. With that kind of return, IT managers are going to take a look at it.
At LinuxWorld, Business Objects said XI server software would now support Red Hat Enterprise Linux and Novell Suse Linux Enterprise Server. Several other non-Linux companies also made support declarations. Was that just coincidence or is it a reflection of a change in the rate of acceptance with enterprise-class customers?
There's clearly a trend of enterprise customers moving to Linux. It's been growing [for] several years but IT has come to the point where they're looking at it as a base platform and they want the [business intelligence] part of it. They want the best cost of ownership. So for us, Linux is starting to become increasingly important.
Charles Cooper writes for CNET News.com
