U2 databases Universe and Unidata are like the red headed step child. U2 has had a lot of suitors from Informix to IBM and now to Rocket Software and still not much as changed. The growth rate is double digits, but the software is still not well know. There are approximately 35,000 customers with 2.7 active maintenance licenses around the world.
Rocket/U2 does not really have sales people that sell software because the have none to sell. All of the sales are driven by U2 VAR's that package the database in with their software. The time to change this model is now.
When Oracle started in 1977 selling its signature database and middleware it only took 9 years before it started developing business application software. In the intervening years it spent billions to purchase software companies like PeopleSoft, Siebel Systems, and Hyperion solutions to name just a few of the 100 or so acquisitions.
So Rocket needs to loosen the purse strings and start acquisitions that help sell the databases licenses just like Oracle and Microsoft are doing. Then those sales people will not be writing sales orders from the VAR's, they will be out on the street, so to speak, making those sales. The growth rate could be 10 times better instead of a 120 million dollar business that should be a billion dollar business.
Think about would you rather buy your software from a VAR or the company that makes the database? Easy answer in Q4 of 2010 Oracle had 7 billion in licenses and 13.1 billion in software services.
Tuesday, June 21, 2011
Monday, June 6, 2011
Startups and U2
After watching the fantastic ride of Facebook, LinkedIn, and many others, we have to question whether a bubble is going to burst or do these startups have something U2 software companies need to do? The overall differentiator is those startups are that their programming departments are functioning at or near 60 to 80% R&D. The overall percentage as report in 2009 for software companies on the internet is around 13.6% and we can safely say U2 shops are no where near that figure.
Think about this for a minute if we have 1,000,000 in sales we need to spend 136,000 in R&D to be just on the industry average. So those companies you are doing business with spending that kind of money? Sorry people, they are not!
For a while U2logic R&D percentage was around 4% until around 2009 when the economy and our business tanked. From that point on our R&D percentage went to 40% or 60% depending on what we need done for the next 18 months. This was like throwing out the software baby with bath water and expecting that the software baby was still working which was not always the case. However, it was not until about 10 months into the spending level that our products started to reflect the changes we had made to them.
Demos that had been ho hum turned out to be much better received at the same companies we had given them a few years ago. The new companies we showed our wares to were suitable impressed with our new look and capabilities that sales started to increase.
We learned that besides spending 40% or more on R&D in a bad economy is very risky, is that our products needed the boost and the little time and money we spent on them showed every time we attempted to sell to a current customers or a new one. We need to have the drag-and-drop, contextual menus, multiple skin support, and a consistent look and feel for all our plethora of products such CRM, SMB Accounting, Payroll, Public Warehousing, Distribution, and our transportation packages called MoveNet.
Even our tools division that runs on Eclipse IDE has been reworked, re-engineered, refocused for our Unidata and Universe users. Our XLr8Editor, XLr8Resizer, XLr8Installer internet sales that were tiny took off.
Take it from a U2 boutique software company: improve your software by investing in it.
Think about this for a minute if we have 1,000,000 in sales we need to spend 136,000 in R&D to be just on the industry average. So those companies you are doing business with spending that kind of money? Sorry people, they are not!
For a while U2logic R&D percentage was around 4% until around 2009 when the economy and our business tanked. From that point on our R&D percentage went to 40% or 60% depending on what we need done for the next 18 months. This was like throwing out the software baby with bath water and expecting that the software baby was still working which was not always the case. However, it was not until about 10 months into the spending level that our products started to reflect the changes we had made to them.
Demos that had been ho hum turned out to be much better received at the same companies we had given them a few years ago. The new companies we showed our wares to were suitable impressed with our new look and capabilities that sales started to increase.
We learned that besides spending 40% or more on R&D in a bad economy is very risky, is that our products needed the boost and the little time and money we spent on them showed every time we attempted to sell to a current customers or a new one. We need to have the drag-and-drop, contextual menus, multiple skin support, and a consistent look and feel for all our plethora of products such CRM, SMB Accounting, Payroll, Public Warehousing, Distribution, and our transportation packages called MoveNet.
Even our tools division that runs on Eclipse IDE has been reworked, re-engineered, refocused for our Unidata and Universe users. Our XLr8Editor, XLr8Resizer, XLr8Installer internet sales that were tiny took off.
Take it from a U2 boutique software company: improve your software by investing in it.
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