CRN Interview: IBI CEO Gerald Cohen, VP Michael Corcoran

CRN: How do you describe the business segments that IBI operates in today?

Cohen: We're in two businesses today. We have a business intelligence business that delivers information to human beings. In that business, we compete with Business Objects and Cognos. We also have a business that delivers information to other programs that we rebranded under the name iWay Software so that everybody understands that's our integration unit. The main business for iWay is providing adapters to everybody else in the industry. We're probably the largest adapter provider in the world. A very substantial number of companies will either OEM or resell our adapters. We also sell them directly through system integrators. So that's a very big channel business.

CRN: What is the crossover opportunity between integration and business intelligence?

Corcoran: You always had business rules and you always had intelligent transaction. But now if you can imbed a [business intelligence] component with the transaction technology, you could add a quick historical perspective to a transaction to make an intelligent decision. So there's opportunity. We're making our money with realtime analytics in places like homeland security, port security, bio-terrorism alert response. None of the [business intelligence] competitors have this kind of offering.

Cohen: It's also a great iWay business because it's all about integration. You've got to get to all different kinds of data, transform everything to some natural form, and send it off to someplace else.

CRN: If you listen to a BEA or an IBM, the app server platform is now the center of the integration universe. Integration is essentially a feature. And now application vendors such as SAP are saying that integration is a feature of their platform. If this is all true, how does it affect IBI?

Cohen: SAP has entered the integration business, and the same engine that updates R3 is also going to do the integration. We don't compete with these vendors. They're our partners. SAP is becoming one of our largest OEM partners. BEA has been selling our stuff for years. We've had a deal with Oracle for many years. We also have a deal with PeopleSoft. We say pick your engine. That engine is useless unless it could actually integrate to all the other things it has to talk to. And that's where you need adapters. It sounds trivial, but these adapters are very sophisticated things.

Corcoran: A lot of these guys realized this is hard and it's tough to maintain. It's costly and it's not their core competency. That created an opportunity for us.

CRN: How does SAP's focus on integration change the nature of this segment of the software industry?

Cohen: What's going to change next year is SAP is going to become a very big competitor. About 50 percent of all integration deals that we see involve SAP. It's very dominant. By them providing integration engines, in many cases they're going to be the center of the integration world. It's going to change the structure of the industry.

CRN: Given all that, why do integrators need to have a relationship with IBI vs. a company that resells your adapters?

Cohen: They could in many cases buy it from someone else, but it's possible that a particular vendor doesn't sell our whole line, maybe only takes part of it.

Corcoran: And not every project has an integration broker as a centerpiece. There are a lot of different components of applications where they just need the adapters.

CRN: What is IBI doing in the channel these days?

Cohen: In 2001 when we started iWay, we also started to build a new channel sales group, and that's got about 35 people right now. We're now building a separate sales group whose job it is to get resellers, system integrators and VARs. For this year I would say of all new business sold in iWay, probably 10 to 12 percent has been influenced by partner channel deals. I think we'll go up to 30 percent or more. Eventually I think it's going to go up to 80 percent because I think it's eventually going to be all channel business. For the SMB space, we are Microsoft only. To deal with Microsoft requires that we work with their resellers.

Corcoran: On the[business intelligence] side, we're doing a lot mostly at the systems integrator level. We're doing a lot of education with those folks. The midsize partner adds value to us as a guy who has some kind of domain expertise.

CRN: Given that XML Web services was supposed to be the lingua franca of integration, what is IBI's take on this technology?

Cohen: All of our adapters have a number of connections, Web services being one of them. Web services is very useful. But in the Java world, most people want to talk JCA. There's a lot of competing things. In the Microsoft world, it's XML on a SOAP transport very often. But some people don't want a SOAP transport.

Corcoran: The other issue is that you can download an XML adapter from SAP for a module. But everybody customizes the applications, and those vanilla standard XML adapters don't work for customized implementations. Then now you've got to maintain that. We minimize the work effort that you would need to customize things, and the majority of the implementations of ERP and CRM systems are customized. And most companies don't have one packaged application. They have multiple from different vendors. Most SAP shops have PeopleSoft or Siebel somewhere and vice versa.

CRN: What's your take on all the standard efforts around the WC3, Web Services Interoperability Consortium, etc?

Cohen: Most of the stuff that the W3C does gets implemented without a lot of customization by every vendor. But a lot of standards never make a difference. The phenomenon is that the first standard gets pretty well implemented by everybody and even the second, and then all the vendors start changing it. Everybody wants a competitive advantage. Every OEM wants us to work his tooling to where a guy cannot unplug him. We make a general adapter. You can take out the engine for another engine. None of these guys want us to do that. They want us to write the tool that only works with them so they can't be unplugged.

CRN: How would you describe your relationship with IBM these days?

Cohen: There's been a little bit of a shift. We don't do that much work with IBM. They're selling their own product much more. When Gerstner was there they were much more open; they'd sell you anything. Now they push their own products.

CRN: Overall, what are you hearing from customers today that is different from last year?

Cohen: I think we're hearing a little less, "I don't have the money, I don't have the budget." I'm not hearing that so much. I think we're seeing more projects to bid on and more things that they want to at least explore, do. A lot of people felt they overbought and said, "Use what you have. Make it work better before you buy new stuff." There's a certain sentiment there, but at the same time you read how the American economy has the highest productivity increases ever, largely due to IT. So everybody is worried about it. I better be efficient like my competitor is, otherwise I'm in trouble. Meanwhile, [business intelligence] is all new. They never thought of [business intelligence] as a category that they ought to save money on because they got so damn much of it. Only recently have they looked around to see we've got 20 [business intelligence] products.

CRN: As CEO, what's your primary focus these days?

Cohen: I would say sales, sales and sales. You survive by what you sell. Every other problem is secondary. If you sell more, every other problem is just a good problem to have. It's a competitive world out there, and there's another guy doing what you're doing in every category.