For the rest of the August 2009 issue of CRM magazine, please click here. This article appeared as a sidebar to the feature, "Intelligence in the Cloud."
“My first thought was—'What am I going to do?' "
That’s the reaction Cathy Otocka recalls having when she received an email in mid-June from her software-as-a-service (SaaS) business intelligence vendor LucidEra, saying that the company was closing its doors due to lack of operational funding. Service was scheduled to terminate on July 10, giving customers less than three weeks to retrieve their data. The notice came only shortly before the rumor spread to the street—and before the other SaaS BI players had picked up the scent of opportunity.
“I don’t have another analytics option at my disposal,” says Otocka, vice president of sales operations at Salary.com, a provider of career-resource software. “I don’t have an internal data warehouse. I don’t have another vendor evaluated or chosen.”
In the weeks following the announcement, LucidEra still had a support team in place to help customers transition off the system. Darren Cunningham, the company’s vice president of marketing, was personally fielding calls from customers, including Otocka. “I’m taking them through the range of vendors,” he says. “It’s hard to make apples-to-apples comparisons. I’m trying to walk them through my different thoughts on the different approaches.”
Otocka says she sees LucidEra’s closing as merely an unfortunate consequence of current events. “I do feel abandoned,” she says, “but I also understand that the economy is something that’s difficult to live through for a venture-backed company.” Her 18-month experience with LucidEra had been extremely positive, she says, and its demise has done little to make her regret having chosen LucidEra, let alone SaaS BI. “There’s nobody I trust more than Darren [Cunningham] to tell me who’s healthy and on the right track,” she says.
The BI market can be overwhelming on any given day, but for former LucidEra customers caught with no analytics solutions and vendors coming at them left and right, the pressure is only exacerbated. “I hadn’t even heard of Birst until they began pursuing me with a vengeance,” Otocka says.
Many observers still believe that LucidEra had finally begun to hit its stride in the company’s final eight months. Robert Reid joined as CEO last July, and helped the company focus on “operational excellence” and delivering a solid product. During that time, Cunningham says that LucidEra’s pipeline had never been stronger; however, sales cycles had increased from 90 days to more than 150 days: A recession is a buyer’s market and LucidEra had to jump through a lot of hoops to show a return on investment. The economic climate also meant the company could no longer focus solely on its target market—sales executives—and instead had to extend the conversation to C-suite executives. “We were being pulled upmarket,” he says, which led to more hoops and higher costs.
During that time, LucidEra also unveiled its Sales Pipeline Healthcheck, a free 48-hour “physical” that identifies missed opportunities and potential risks in a sales forecast.
With enterprise technology, the 30-day free trial is now almost a prerequisite, but simply getting customers to try the software is often less useful than it is to show them how to achieve tangible impact. “It was a real landmark development for the overall SaaS industry,” exalts Jeffrey Kaplan, managing partner at ThinkStrategies. “I give them a lot of credit for that.”
However, industry experts—and many of LucidEra’s most-vocal competitors—speculated about the reasons behind LucidEra’s fall: Was it the perception that the company offered only prepackaged reports? Or that its approach to BI was application-based rather than platform-based? Did the company’s close alignment with Salesforce.com hurt as much as it helped?
In 2007, Peter Rip, general partner at venture-capital firm CrossLink Capital, announced that he had joined LucidEra’s board, with CrossLink leading LucidEra’s $15.6 million in Series B funding. In a blogpost at the time, he described the relationship as “love at first site.” In the wake of LucidEra’s folding, Rip tells CRM that he stands by that decision, explaining that “sometimes situational factors swamp even the best of skills, intentions, and execution.” LucidEra had proven what it was capable of but still struggled to make ends meet, which made securing another round of funding in this economy all the more difficult. In the words of founder and Chief Marketing Officer Ken Rudin, “It's just really, really bad timing.”
With LucidEra’s closing, Salary.com’s Otocka says she has two options: Either have LucidEra provide a copy of her entire data warehouse, or else run the reports she relied on most often, pulling out as much history as possible and keeping it in Excel. The first option, she says, would require report-writing software such as SAP’s Crystal Reports, which she neither has nor knows how to run. The second would force her to revert back to the “miserable sales operations” that drove her in search of an analytics solution in the first place.
In other words, what happened to LucidEra has done little to deter Otocka from looking again toward SaaS BI—and many other LucidEra customers agree. “We’re way past the point of no return,” says Jim Fowler, chief executive officer at online business directory Jigsaw Data. “We’re not going back. The [SaaS] model is too well-proven.”
Rip, too, is resolute on his view that “cloud computing and software-as-a-service are the long-term wave in information technology.” In fact, he adds, CrossLink’s venture-capital plans remain unwavering: “We have and will continue to invest in [SaaS] and cloud-computing companies.”
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