Appian, a self-funded company until now, is taking on $10M in venture from Novak Biddle, who primarily fund IT startups. Appian plans to use the funding in four areas:
- On-demand: enhance their Appian Anywhere on-demand BPM platform, including the application marketplace.
- Channel and vertical applications: work with the partner ecosystem to build vertical applications in areas where the partners specialize.
- Sales and services: expand geographically, particularly in EMEA and APAC.
- Marketing: invest in targeted brand marketing and improve technology partnerships.
I took part last week in an analyst call with Matt Calkins, Appian’s CEO, and Samir Gulati, VP Marketing, about the announcement. They’ve generated $140M in revenue over the 9 years that they’ve been in business, so the big question is why go for VC now?
Calkins sees this as a way for them to move up the food chain, not just competing with vendors their own size (he mentioned Lombardi and Savvion specifically), but taking on the BPM behemoths like IBM and Oracle. The marketing investment is a big part of this, since you can’t play with the big kids unless you look the part. They’ve doubled their marketing budget and added 15 people to their professional services team, and Calkins stated that “we now have the budget to be the company that we wanted to be”. When I asked if this was the first step on the road to an IPO, he confirmed that they were moving towards that goal.
The VCs that they spoke with were impressed by what they’ve done, coming a bit late to the BPM market but being opportunistic and building a leadership position while still generating significant revenue. $10M doesn’t sound like a lot these days, especially given the ambitious scope of their plans, but they have a reputation for doing good things on a shoestring and hopefully the influx of cash won’t turn their heads. Remember, this is the conservative east coast, not the excesses of the Valley.
In response to a question about the difficulty in moving from selling software licenses to selling on-demand software, Calkins responded that they’re creating a separate Appian Anywhere sales force and developing a sales model that will compensate them based on projected 3-year revenues, which makes it easier to compare the on-demand and enterprise sales teams. They plan to shift to a SaaS “metabolism” for Appian Anywhere, allowing for frequent code releases in the on-demand platform, while only occasionally freezing that code base for the Enterprise edition. This keeps the two versions in sync, but provides a functionality advantage to the Appian Anywhere customers, who will see the new features earlier.
Interesting developments for Appian. As for “vendors their own size”, if the lifetime (9yrs) revenue of the company is $140MM then I’d say they are a quite a bit smaller than Lombardi… but that’s a nitpick. definitely interesting that both appian and savvion have ASP/SaaS plans now. It would be more interesting if that appeared to be on the heels of a big success in the traditional software market. I’m particularly interested to see if Lombardi will follow suit or not.
There are a few successful ASP companies in Austin (successful as in, they make more money than they spend… I realize success is a subjective term), and for all of these companies, I believe they needed well in excess of $10MM to make the ASP model reality. Some of them scrimped through the lean years 2002-2004 and did enough consulting and whatnot to keep the lights on. So, I would guess that Appian will be doing that as well. I like all the activity going on in BPM though, and the innovation.
Scott, thanks for your comments. I’m sure that the $140MM isn’t equally distributed over the 10 years, but even so, they’re likely smaller than Lombardi in part due to the non-venture-funded organic growth decision prior to this. There’s a pretty wide mid-range of vendors, and since most of them are private companies, we don’t really know how much they make without some inside access to information. In any case, all of them are pretty small compared to the next tier up, so it’s fair to lump them together from that standpoint.
I think that Appian has some great product, and first wrote about their browser-based process modeler here — note that this is the only modeler that they have, it’s not a limited functionality version where a desktop tool has to be used to pimp up the models for execution. That positions them well for the SaaS space, although it’s only one piece of the puzzle. Appian first announced their SaaS offering at the same time as Lombardi, but there’s a big difference: Lombardi is providing a process modeler only, whereas Appian is providing an end-to-end BPMS.
Savvion’s recent announcement is more about their platform now being ready for SaaS wrt multitenancy, although it’s not clear when they or a partner will actually offer a SaaS solution.
I agree that SaaS/ASP is going to be a challenge for a lot of the software vendors who are accustomed to the traditional software licensing models. Not only is there not as much money up front, there may not be as much money from one client over the life of the relationship. Also, clients are more likely to walk away from a SaaS platform than an on-premise platform: although they still need to get their data out, there’s much less investment in both hardware and software. The upside is that SaaS lowers the bar considerably for companies to start using BPM, and in some cases can drastically increase the number of users within an enterprise because of the low TCO on each desktop.
Sandy – of course we believe that we are delivering a whole lot more than a modeler with Blueprint. We are delivering mapping, modeling, analysis, wiki style documentation, central respository – all part of what companies need to figure out what their processes are and should do. Can that be condensed down to “just modeling”? I suppose – but it is a big challenge in the BPM space and a great fit for the cloud and crowd-sourcing model. At least, that is our take.
I submit that there is another big difference between what we have delivered with Blueprint and what Appian and Savvion have announced in the BPM SaaS space. You can go to http://blueprint.lombardi.com and sign up for an account today and be mapping processes tomorrow in Blueprint. Nothing to install. No hosting agreements. No payment up front. You can trial it for free – and even use a limited version for free forever. That has been the case since we went GA in April 2007. I think it is what most people have come to expect in the SaaS world – let me get into your product easily and figure out if it is what I need. 1 and a half years after the first Appian Anywhere announcement, there still does not seem to be any easy way to get signed up – let alone activated. So that is another big difference, as far as I can tell.
Jim, I’m not trying to downplay the features of Blueprint, but I’m making a distinction between SaaS BPM products that can execute a process (and monitor that executing process) versus those that are used in the design, modeling and documentation of a process. Appian Anywhere is in the former category, and Lombardi Blueprint is in the latter.
Jim, I will repeat here what I said in another blog where you posted a similar comment. Using these blogs as a way to try to suggest that Blueprint is anything like Appian Anywhere is misleading. Blueprint is not a BPM Suite it is a design and documentation tool. To somehow suggest that because Appian curently offers our product through our sales force and that because we have not yet released our full multi-tenancy product, Appian Anywhere is not of great value to our subscribers is absurd. In fact, your field sales people have repeatedly tried to offer similar server hosting (but with your modeler on PCs at the customer’s location because it won’t run in the cloud) to compete with Appian Anywhere. We haven’t just “announced” a product we have dozens of organizations and many hundreds of subscribers using our SaaS system every day and honestly, as long as we deliver the value and security they need at a price they find attractive they don’t care what the hardware looks like. To the best of my knowledge in the last few months we have gone head-to-head with your “SaaS” BPMS solution at least six times and been named the vendor of choice in every case. Sell your Blueprint documentation tool as SaaS but don’t compare it to Appian Anywhere. As for your BPMS TeamWorks, I have yet to see it offered as a real SaaS product.
Appian might be “Anywhere” but for sure it’s not for “Anyone”, as declared on their website.
After applying for a subscription, I got a reply that a representative will contact me. More then a week now and no one did. As for Lombardi Blueprint – it’s a different story. Quick response for any inquiry you make, even if you have only the free subscription, and you are not a “multi billion” company.
George – couple of quick follow up points.
We have never marketed Blueprint as a BPMS – like Appian Anywhere or our own Teamworks. We have always been clear that it focuses on a different part of the BPM space – process mapping, modeling, analysis. Sounds like that distinction is pretty clear to most folks – Sandy states the difference very succinctly above in her comments.
We do offer Teamworks in a hosted configuration – just like Appian Anywhere today. We don’t market this as on-demand/SaaS because we don’t think it fits most definitions of SaaS/on demand. For the hosted Teamworks offering, end users have a completely web-based experience. As you note, developers install the Teamworks Authoring Environment to their local machines. In our experience, developers prefer local installation for productivity. Only time and customers will tell us who is right here.
As to your claimed customer wins over the last months, I have yet to see any customer announcements from you about this. I doubt the number of wins number is as high as you say. We see demand for a hosted BPM execution offering as a small part of overall demand right now. Love to hear proof (not claims) to the contrary.