Vendor Ratings, VDR Betsy Burton, Howard Dresner, Jim Sinur, Ted Friedman, Benoit Lheureux

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1 Vendor Ratings, Betsy Burton, Howard Dresner, Jim Sinur, Ted Friedman, Benoit Lheureux Research Note 27 January 2003 Vendor Rating: Information Builders Transforms Gradually Information Builders Inc. has gradually shifted its focus from application development and gateways to business intelligence and application integration. IBI s new direction renews its market position and potential. Information Builders Inc. Overall Rating: What You Need to Know: Overall, we rate Information Builders Inc. (IBI) a promising ; however, with its current course and direction, we believe that it will become a positive within six to 12 months (0.8 probability). Although IBI is not always as aggressively competitive as its rivals, enterprises should consider IBI a solid and consistent vendor, particularly in the areas of business intelligence (BI) reporting, enterprise BI suite functionality and application integration. Analyst Comments: Information Builders Inc. (IBI) is in a solid position in the business intelligence market and shows major potential in the application integration markets. We rate IBI overall a promising, but we believe it will become a positive by YE03. Detailed Rating: Initiative Corporate Viability Strategy Financial Marketing Organization Product/Services/ Technologies Product/Service Focus (general application development) Focus (BI development) WebFocus iway Software Technology Pricing Customer Service/ Product Support Sales/Distribution Support Services Rating Caution Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Corporate Viability: Strategy: Founded in 1975 by Gerry Cohen (who still leads it today), IBI is best known for its Focus fourth-generation language (4GL) product. Although mainframe maintenance comprises a significant part of its revenue stream, IBI has gone well beyond this product line, and has created a reporting and enterprise business intelligence suite environment and an integration middleware offering. Rating: Financial Status: Because IBI remains privately held, its financial information is not publicly disclosed with a governing body (for example, the U.S. Securities and Exchange Commission and the European Commission). That can be a positive attribute, because it enables IBI to focus on customers and future investments without worrying about raising the ire of Wall Street. We estimate that IBI s overall revenue in 2002 was approximately $310 million. According to IBI, of its overall revenue, 41 percent comes from Focus, 23 percent from WebFocus and 12 percent from iway Software, its middleware/integration offering (see Figure 1). According to IBI, the company has a split of about 77 percent license revenue to 23 percent service/maintenance revenue. In addition, IBI has publicly stated that it has more than $100 million in cash reserves. Figure 1 IBI s Overall 2002 Revenue Breakdown Other 1% Services 23% Focus 41% iway Software 12% WebFocus 23% Source: IBI Although remaining private has afforded IBI the luxury of a lack of external scrutiny, it has also allowed IBI to remain extremely conservative and has not challenged management to be more aggressive in its target markets. Despite this, IBI is a rock within the business intelligence (BI) market. It is conservative, consistent and extremely stable. Rating: Marketing: IBI has stoked up marketing more than in the past in an effort to get its message out. This has primarily taken the form of print ads. Although the marketing program has helped elevate awareness for IBI, it has not yet had a substantial impact on the company s market share. Most selling still occurs within 27 January

3 the safety of IBI s installed base, with a few notable exceptions, such as Allstate and Administaff. Additionally, IBI has redoubled efforts surrounding third-party vendor recruitment. Rating: Organization: Although its management team has remained intact for its entire history, in 2001, IBI made some changes to take better advantage of market opportunities; IBI reorganized itself and created iway Software, an operating division focused on its data integration and middleware technologies. Rating: Products/Services/Technologies: Focus: Focus has two market positions: 1) a general-purpose 4GL and 2) the development language for the BI applications that are used in conjunction with WebFocus. 4GLs are generally not considered a strategic buy today for application development and generalized application development. Focus certainly falls into the 4GL category. Although WebFocus is highly productive and driven toward time to market results for BI applications, Focus is not in the mainstream for developing Web services or any other reusable component strategy, as needed for general application development. We do not see Focus components used economically in any orchestration scenario imaginable and do not recommend the use of Focus in any strategic developments. For BI applications, particularly integrated with WebFocus, we rate Focus a positive. For general application development, we rate Focus a caution, to be used only for tactical projects that have a life span of three years or less. WebFocus: The latest version of WebFocus (v.4.3.6) insulates customers (nearly completely) from the traditional Focus 4GL. This often masks the power of the Focus language, which lies waiting to tackle complex problems that a graphical user interface (GUI) can t handle. Learning Focus is an endeavor in which few are willing to invest. The GUI integration with Focus is also bidirectional, meaning that interaction with GUI dialogues and wizards generates 4GL, and any hand coding or modification of Focus can also be managed through the GUI. WebFocus is not a native SQL environment, which is a mixed blessing. The Focus 4GL has more flexibility and power for reporting and analysis than SQL, but it must be translated to SQL statements at runtime. Embedding SQL statements within Focus is also possible, but it requires 4GL knowledge. To the user, WebFocus presents a compelling Web-style dynamic HTML interface that is comparable or superior to competitive offerings. The latest version introduces a useful integration of 2-D reporting and online analytical processing viewing, within a single document, in a fluid and dynamic fashion. From a scalability perspective, WebFocus supports innumerable hardware and operating-system platforms and offers distributed processing properties across those environments. Rating: iway Software: iway is attempting to grow visibility independent of its parent and the Universal Adapter Framework a mature, comprehensive suite of adapters and a small sales force. In concept, this structure would enable IBI to increase its focus on BI and integration offerings, generate cross-selling among its divisions and create the opportunity for growth through BI-tool-independent data integration infrastructure sales. Despite this approach, IBI has kept close ties among its divisions, with some products being marketed and sold under both the IBI and the iway brands. This separate branding strategy has been moderately successful, but it has also caused some confusion for customers and the IBI and iway sales forces. We believe that IBI will evaluate the appropriateness of this strategy during the longer term. iway has emerged as one of the revenue leaders in the small but important unbundled adapter market (around $100 million) by closing a number of marketing and reselling partnerships for distribution of its adapter technologies (for example, BEA Systems). However, its growth as an independent direct channel has been slow. Rating: 27 January

4 Technology: If nothing else, IBI has remained remarkably consistent. Unlike other software companies, it has not acquired much technology from the outside, and has succeeded in evolving its core Focus technology to stay functionally competitive. Although Focus hasn t embraced newer application development paradigms, as reflected in its rating, IBI has overall continued to enhance the functionality, usability and scale of its newer technologies (WebFocus and iway) without negatively affecting its installed base. Rating: Pricing: IBI s pricing is largely influenced by its mainframe product legacy with its offering of tiered serverbased pricing. The majority of BI tool vendors offer named user and server-based pricing without the performance tiering. IBI s pricing is in line with its competitors in the BI market. This is an advantage when there are a large number of users and a per-user price point is less economical. However, its tiered pricing model can be a competitive disadvantage for IBI when a customer is doing a price comparison, because it is hard to do a price comparison between models. Rating: Customer Service/Product Support: Support Services: As a privately held company of substantial size, IBI tends to focus more on its customers than the average publicly held company. As a result, customers can expect slightly better-than-average support. This can work as a disadvantage if product initiatives are driven primarily by customer input skewing development away from future/emerging market needs. Rating: Sales/Distribution: IBI s sales organization is its Achilles heel its vulnerable point. Favoring opportunities within established customer accounts, where it may be an incumbent vendor, IBI occasionally shows up outside of its installed base. To be a more-effective competitor, IBI must become more aggressive by building its direct sales channel and creating the appropriate incentives to grow its installed base. Rating: Related Research and Ratings: BI Magic Quadrants: Excitement in a Flat Market Information Builders: A Rock of Business Intelligence Rating Definition: Strong Solid provider of strategic products, services or solutions. Customers: Continue investments. Potential customers: Consider this vendor a strong strategic choice. Demonstrates strength in specific areas, but is largely opportunistic. Customers: Continue incremental investments. Potential customers: Put this vendor on a short list of tactical alternatives. 27 January

5 Caution Strong Negative Shows potential in specific areas; however, initiative or vendor has not fully evolved or matured. Customers: Watch for a change in status and consider scenarios for short- and long-term impact. Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this initiative or vendor. Faces challenges in one or more areas. Customers: Understand challenges in relevant areas; assess short and long term benefit/risk to determine if contingency plans are needed. Potential customers: Note the vendor s challenges as part of due diligence. Difficulty responding to problems in multiple areas. Customers: Exit immediately. Potential customers: Consider this vendor only if there are no alternatives. Acronym Key 4GL BI GUI Fourth-generation language Business intelligence Graphical user interface Core Topic Business Intelligence Markets, Technologies and Techniques ~ Business Intelligence and Data Warehousing Information Builders Inc. Headquarters: New York, New York Web Location: 27 January