Twelve Hot Companies to Watch

THESE 12 COMPANIES ON THE RISE DESERVE YOUR UNDIVIDED ATTENTION IN 2001

By Justin Kestelyn with Jeanette Burriesci, Michelle Nichols & Chuleenan Svetvilas

Accrue Software Inc.

Fremont, Calif.

www.accrue.com

If nothing else, the recent dot-com downdraft is a jarring reminder that customer retention remains a guiding business principle. But that's easier said than done when interpreting the fickle behavior of e-customers - a process best characterized by the axiom, "In the land of the blind, the one-eyed man is king."

Accrue Software, which was founded by a Bay Area webmaster named Jonathan Nelson in 1996, is in a good position to open customers' eyes in 2001. Insight, the company's e-business analytic solution, is admired by companies such as FedEx, Blockbuster Online, and Buy.com for its sophisticated Web-tracking capabilities, quick deployment, and open architecture. (Disclosure: CMP Media Inc., Intelligent Enterprise's parent organization, is an Insight customer.)

Accrue was wise to view this capability as a means, not an end. In anticipation of imminent market consolidation - driven by the fact that e-commerce analytics will be joining the decision-support mainstream sooner rather than later - Accrue acquired data mining company NeoVista in late 1999 and business intelligence (BI) vendor Pilot Software in 2000. Consequently, the company is now broadening its product line to include packaged analytic applications, business performance management apps, and online analytic processing tools, all of which draw clickstream data from the Insight Web warehouse.

In 2000, Accrue's valuation was punished for the company's dot-com exposure and failure to meet analyst expectations, even while posting record revenues and profits. Nevertheless, in 2001, the company has the look of a survivor.

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Informatica Corp.

Palo Alto, Calif.

www.informatica.com

Once a dominant enterprise data integration company, Informatica was caught flat-footed in the late 1990s by the e-business revolution and the industry shift toward packaged analytic solutions. The company appeared to suffer an acute case of complacency, which may have been aggravated by its 1999 IPO.

What a difference a new millennium makes: In 2001, Informatica has to be considered a company back on the rise. Its December 1999 acquisition of Influence Software - an analytic application company focusing on the e-business value chain - makes it one of the few (if any) players that can offer a complete decision-processing framework comprising a best-of-breed data integration infrastructure, a global metadata repository, and the targeted analytic apps that sit on top of them.

Informatica's renewed vigor is paying off. In April, system integrator heavyweight PricewaterhouseCoopers (PWC) agreed to jointly develop, market, and support packaged analytic solutions for business-to-business (B2B) e-commerce, a deal that involves the transfer of PWC's own supply chain and procurement management software to Informatica in exchange for a $30 million equity stake. In August, sales automation giant Siebel Systems announced that it will build hooks into its E-Business Applications for Informatica's data integration platform. And in October, the company signed its biggest customer deal ever, a multimillion-dollar agreement in which Motorola will deploy Informatica's analytic apps across its divisions worldwide.

Informatica wants us to believe that it has successfully transformed itself into a leading provider of analytic applications and infrastructure. In 2001, there should be good reason to do so.

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MicroStrategy Inc.

Vienna, Va.

www.microstrategy.com

The year 2000 was an annus horriblis for MicroStrategy. Its restatement of 1997, 1998, and 1999 revenue and earnings not only precipitated a massive stock devaluation and made the company the SEC's favored example of fast-and-loose accounting procedures, but also exposed some serious weaknesses in its business strategy. But now that its financial problems are in the past - having cleaned house, appeased the SEC, and settled two lawsuits falling out of its restatement - CEO and resident IT sage Michael Saylor is now ready to refocus industry attention on his company's powerful, highly respected product line. That line only grew more impressive in 2000.

Saylor's exhibit number one is Micro- Strategy 7, the new release of the company's enterprise BI platform. Four years in the making - the code base is completely new - MicroStrategy 7 is designed to let developers deploy analytic capabilities in virtually any operational scenario. For example, a new software development kit exposes the platform's full functionality, and a new middle-tier analytic engine makes 150 mathematical and statistical functions available through the MicroStrategy API. Furthermore, the platform supports a "collaborative analytics" paradigm in which the core MicroStrategy database and middle-tier analytic engine can work together to process a single, complex query, obviating the need for a series of individual queries. This formula may prove intriguing to customers and development partners alike.

MicroStrategy is hardly out of the woods - analysts are skeptical the company will break even in 2001 - but its customer and partner list should grow on the basis of a formidable product portfolio.

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