FrontRange Solutions Plans to Go Public and Go Hosted

Another private player in the CRM industry is planning to become a public company. Following in the footsteps of the newly public Salesforce.com, the already-filed registration of RightNow Technologies, and the announced intentions of Salesnet, FrontRange Solutions CEO Michael McCloskey told CRM magazine this week that his company intends to go public by the end of 2004. In addition to the company's IPO goals, McCloskey also revealed FrontRange's plans to a hosted version of GoldMine, its flagship SFA product, in September. This comes on the heels of the May release of GoldMine Mobile edition. McCloskey was quick to note that despite offering GoldMine on a monthly per-user basis, the company will still offer the option of software licenses. McCloskey says that would allow customers to pursue "a hybrid approach" with Goldmine: "They can switch between a premise and a hosted model." Sheryl Kingstone, program manager for CRM strategies at The Yankee Group, says the company's choice to support both hosted and premise-based solutions "helps meet customer concerns, plus gets the hosted solution into the hands of the channel partners." Kingstone says GoldMine has "taken a big hit of credibility with [its] channel." One factor in GoldMine's favor, she says, is that "Microsoft has taken so long to deliver a truly viable product. That has opened the doors to reinvigorating FrontRange." McCloskey is also candid when speaking with CRM about the challenges FrontRange has faced in recent years. "We needed to get back in touch with our customers and the channel," he says. He noted that over the past nine months FrontRange has taken significant steps to change its corporate perspective regarding GoldMine, deciding to step up research and development (increasing expenditures in that area from roughly 10 percent of revenue to 16 percent, according to McCloskey). Before, he notes, FrontRange had "no new products" to offer, and customers may have had concerns about the company's viability. Today, he says, the company is aiming for quarterly product releases and is cash-flow positive--with gross profits of "a few million" on revenue of roughly $19 million in the three months ended June 30. According to McCluskey, the company has also grown revenue in each of the past three quarters. As for the decision to head to the public market, Kingstone remains skeptical about the long-term benefit. Her advice to FrontRange? Don't rush it: "I'd tell them to focus on their channels and on getting their customers really revved up, and then they can focus on their IPO. Look what it's done to Onyx and Pivotal -- they went public too soon and now they're under a microscope." However, McCloskey says that FrontRange currently has the financials that would allow for an IPO, but prefers to wait until after the new product rollouts in September to proceed. He's hoping the launches will raise the company's profile leading into the public offering. Related Articles: Week in Review: May 7, 2004: FrontRange boosts revenues and profits for Q3 Beyond the Salesforce.com IPO Hosted Service Gets a Boost: RightNow's initial public offering