In-Depth

Actuate Buys Into Performance Management

With the acquisition last week of a CPM player, Actuate is setting its sights on the CPM space, too.

• By Stephen Swoyer
• 01/18/2006

The business intelligence (BI) marketscape is changing. Drastically. Best of breed is on the way out, even as all-in-one-ed-ness is coming on strong. Over time, most organizations will replace non-integrated best-of-breed tools with highly integrated good-enough offerings. It’s unclear just what this will mean for BI pure-plays who’ve staked their market aspirations on one or two best of breed offerings. But it can’t be an encouraging trend.

BI reporting specialist Actuate Corp., for its part, doesn’t appear to be taking any chances: Actuate has significantly expanded its financial performance management (FPM) practice over the last 12 months, shipping two iterations of its Actuate FPM product (now in version 2.0) and aggressively courting financial services firms. (Actuate claims that more than half of new sales go to financial services firms with $1 billion or more in annual revenues).

Last week, Actuate made another performance management-related move, nabbing Toronto-based performancesoft Inc., a provider of corporate performance management (CPM) products and services, in an all-cash transaction valued at $16.5 million (US). Analysts say the performancesoft acquisition could be a boon to Actuate in a couple of ways: it fleshes out the company’s performance management stack, for one thing (CPM has become a de rigueur component of most of the platform BI suites); and it also gives Actuate cross-selling opportunities into performancesoft’s customer base.

Oh, yeah... one other thing: performancesoft also gives Actuate an analytic dashboard. And if you’re drinking Actuate’s brand of Kool-Aid, dashboards are the thing. “Dashboards and scorecards are the preferred applications to deliver executive-level information to manage corporate performance,” said Actuate president and CEO Pete Cittadini, in a statement. “Our customers will now be able to quickly build and deploy rich, intuitive and easy-to-use dashboard and scorecard applications, offering managers at all levels the ability to drill through from executive-level information to real-time operational details.”

performancesoft’s bread-and-butter product—pbViews—is a dashboard-based offering powered by an OLAP engine. It supports drill-down to real-time operational data. More importantly, however, it’s pitched as a tool for both the analytically savvy (business analysts) and the not-so-analytically savvy (business executives). Add it all up, says Robert Lerner, a senior analyst for data management with consultancy Current Analysis, and it looks like a sound move.

“Overall, the acquisition should be a good one for Actuate. The company needed to strengthen its corporate performance management capabilities, and performancesoft’s technology will enable Actuate to reap some immediate benefit, since the company’s pbViews can essentially be snapped into Actuate’s platform to give customers dashboard capabilities,” Lerner writes. What’s more, he argues, performancesoft and pbViews should help to retrofit Actuate’s spreadsheet-centric reporting line for CPM.

This could be important, Lerner speculates, for customers that are using Actuate’s products to support heavily spreadsheet-biased business processes. (Indeed, performance management specialists Hyperion Solutions Corp. and Cognos Inc. have incorporated enhanced support for spreadsheets into their dedicated CPM products for this very reason.)

In the end, it’s all about dollars and cents, however. Will performancesoft be worth the $16.5 million in upfront costs (not to mention an additional $13.5 million, in the event the combined companies achieve certain performance metrics)? Lerner thinks performancesoft could deliver the goods here, too. “[W]hile there were some joint customers [e.g., Bank of America and Wachovia], most of the customers will be new to Actuate and hence provide the company with cross-selling opportunities,” he notes.

In addition, Lerner observes, performancesoft notched about $10 million in revenue (licenses and services) for FY 2005, and has grown its revenues by between 10 to 15 percent annually. While performancesoft only managed to break even (more or less) as an independent entity, Actuate could conceivably cross-sell its own solutions into the company’s customer base.

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