The anxiety of the times: startups and the question of survivability

Having experienced the unbelievable turmoil in the markets in the past 12-18 months, there's no surprise that people are questioning the viability not only of major companies, but of younger, less established ones, too.

Birst was founded in 2004.  If you had asked us then if there would ever be a time that Birst would be thriving in an environment in which Lehman Brothers and Merrill Lynch were not, we would have laughed.  Those enormous, brand name companies going under or getting sold at a deep discount while our young company prospered? That was about as likely as a titan like General Motors going into bankruptcy, surely.

And yet all of those things happened.

So it's understandable that companies would be concerned about the viability of vendors from whom they want to buy mission-critical products and services.  Boris Evelson of Forrester recently raised this concern on Twitter, reflecting the anxiety that has arisen about on-demand business intelligence vendors in the wake of LucidEra's closure.

Established, traditional business intelligence companies have been particularly eager to use the LucidEra story to discredit the entire on-demand business intelligence category because on-demand BI can offer a better deal to customers - powerful BI that's rapidly deployed, at an affordable price.

So if you're one of the growing number of companies interested in this better BI value proposition, how can you overcome concerns about viability?

Here are a few things that we would consider if we were looking at BI vendors, in terms of viability alone:

1. What’s your financial strength? Birst, for example, raised over $10mm in financing last fall and has no need to raise additional financing for the next few years, if ever.  Birst raised funds during a particularly tumultuous time in the market, yet still raised it in just 10 days.  That's record time.

There are multiple ways to consider financial strength:

• Amount of financing raised, and how long this funding should last


• Current revenue base


• Growth in bookings in revenue over the past 12 months


• Cash flow position

 

2. How solid is your customer base? Birst has a diverse, solid customer base, including enterprise customers with large deployments, which ensures that the company has a strong revenue base and can continue to serve your needs in the future.

There are various ways to evaluate a customer base:

• Size of current customer base


• Growth rate of customer base


• Composition of customer base (lots of small companies providing small cashflows, large companies providing large cashflows, or a mix?)

 

3. What is your renewal rate? SaaS BI companies are paid on subscription, which renew monthly or annually.  So SaaS BI companies are generally invested in the long-term satisfaction of their customers.  The higher the renewal rate, the more satisfied their customers are.

 

4. Do you have customer references?  Who is the longest-subscribing customer that you have? You should be provided with case studies on existing customers or provided the contact information of a current customer who can candidly discuss their experience.  Preferably, it would be a customer who has subscribed for a lengthy period of time.

One strong indication is if customers win awards for their solution.  Birst's customer RBC Wealth Management, one of the largest wealth management companies in the US, recently won the prestigious TDWI Best Practices Award for Dashboards and Scorecards.  RBC Wealth Management has been a customer of Birst's for multiple years.

Doing due diligence on vendor viability is important, for any solution that you're purchasing - be it CRM, ERP, or BI.  The above are the types of questions that companies have to ask of all of their vendors.

Even when you're dealing with a very large company, recall that divisions of large companies are often shuttered or simply cease ongoing product support.  Many large technology companies have been on an acquisition spree in the past few years, and subsequently stop supporting whole product lines on which customers have depended for years.  So even if the company looks really strong as a whole, make sure that you're asking tough questions of the division within that company from which you're actually purchasing a solution.

Purchase anxiety will be unavoidable over the next few years.  Just make sure that you're asking the right questions and getting good answers before you buy, if the solution you're considering is Oracle, SAP/BusinessObjects, or Birst.

(As an aside, I particularly liked the interactive chart that the New York TImes published last weekend of the contraction and expansion of the financial industry in the past 12 months. Click here to see it.)

Another myth falls by the wayside- IT execs *do* like SaaS

The Birst Team recently returned from the Midsize Enterprise Summit in LA, which focuses on IT managers and decision-makers for midmarket companies.  We expected to hear many tales of woe - midsize organizations are often large enough to have decently sized IT teams and a deep understanding of technological complexity and capability, but really not enough resources to go around. It can sometimes feel like the curse of knowledge - you know enough to realize that you're in a tough situation, but you don't have the resources to get out of it.

And the squeeze has only gotten more intense over the last 12 months, as IT teams have had to grapple with economic realities, streamlining teams and budgets.  Of course, the list of demands on IT rarely goes down, leaving the team feeling beleaguered.

So we were expecting to see some signs of wariness in the attendees at the event.  What we found, however, was a souped-up crowd of IT executives ready and eager to tackle their 2010 projects, and open to new ideas about the best way to do so.   The on-demand business intelligence story, with its message of powerful analytics, fast deployment, and affordability, really found a receptive audience at the event. (It also didn't hurt that we had a fun giveaway that even our competitors were asking for.)

So it was nice to see this conference demolish another myth about SaaS - that IT departments don't like SaaS and won't approve it.   On the contrary, these IT execs were excited about the possibilities of SaaS and how it can help their under-resourced IT teams accomplish more without heavy capital investment and implementation time.  It's nice to see these forward-thinking execs yet again proving the conventional wisdom wrong.

(Birst has already demolished one of the most pervasive myths - that enterprises don't buy it.  That's news to our customers Securian and RBC Wealth Management.)