Partnerware Ceases Operations

Partnerware, a partner-relationship management (PRM) software developer, shuttered its doors today. Calls to the company's offices were not returned. But in a document obtained by Line56, Doug Miller, vice president of sales and marketing at Partnerware, wrote: "Partnerware's 'reinvention' program, which involved a complete redesign and rewrite of our PRM software on a web services platform, simply ran short on time. The product is complete, but without customer traction, our board of directors and investors were not willing to provide additional funding to continue operations. The timing for introducing a new product was not good, with most IT organizations unwilling to risk purchasing from a startup." The Texas-based company becomes the latest victim in an increasingly tough market, "and underscores just how difficult it is for best-of-breed vendors to survive without a deep bench of reference customers to rely on, and a lack of order capture and management expertise," says Louis Columbus, senior analyst of sell-side e-commerce at AMR Research. Last year, PartnerWare abandoned the application service provider (ASP) model to focus efforts on licensing software that helped companies manage their relationships with channel partners. Industry watchers though, argued that PRM would see limited early market demand simply because corporations wouldn't view it as 'must-have' technology. "Aggressively focusing on enrolling and enabling channel partners was the wrong message at the wrong time in this market," Columbus says. Further complicating matters, Partnerware developers were re-writing the company's flagship product to a more Web-friendly J2EE platform. Faced with product woes and a new delivery model, sales this year dried up. "Even if Partnerware was able to pull off several significant transitions at the same time, they would have still faced a challenging and unforgiving market," Columbus says. London-based researcher Datamonitor predicts that the global market for xRM software (which includes PRM, ERM and even supplier-focused SRM) will reach only $3 billion in 2006, compared to expected CRM license revenues of $11.8 billion. Columbus says Partnerware might have been better served by expanding its PRM offering into order capture, order management and post-sale pain points. In other words, embracing transactions in Web services. This would have helped customers trim costs per transaction, which would have resonated better with the current market. "It would have been a very risky bet, but in hindsight one that could have saved the company," Columbus says, adding, "Ignoring that and the pains of supporting those strategies is a path to extinction." So what's next for Partnerware? According to to the document, venture backers will likely try to sell Partnerware's product, preferably to a CRM or ERP vendor. President and CEO Donna Troy will help conduct a potential asset sale. Tom Kaneshige also writes for Line56.com