This column is not about September 11. I had planned to write a column extolling the virtues of Internet-based architectures and how they protect businesses from terrorist attack. I had also planned to write that the enterprise software market would enjoy a boom in sales as soon as everyone realized that putting paper and people processes into software — which is what enterprise software is all about — was an important way of insuring the invulnerability of IT systems.
The reason I’m not writing that column is that I just got off the phone from listening to CommerceOne’s latest bad-news call. C1 has been an ailing pup for a while, having started out life with a bang and ending up, of late, on life support from its soon-to-be owner, SAP. The fact that SAP will eventually own whatever is left of C1 is practically a done deal. The real question is what will be left of the once high-flying e-commerce pioneer when it morphs into CommerceTwo.
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The problem with C1’s balance sheet is what makes it hard for me to talk about the terrorism boom for enterprise software. The stuff that C1 sells, software that automates business-to-business commerce, is exactly what is needed to convert more business processes into software. Remember all the paper floating down from the remains of the World Trade Center? Every sheet represents a win for terror. Meanwhile, the databases that maintained the financial and customer records of the WTC companies largely made it back on line. While brick and mortar — and paper — crumbled, high-tech stayed the course.
Truth is, this isn’t the only message that could help poor CommerceOne. There’s a few more too. The important thing is that C1 have a message for the market that’s a little more succinct than “CommerceOne is the e-marketplace company.” It ought to be possible. This is a company that has a chief marketing officer, a new chief strategy officer, and 11 other VP-level managers. And there doesn’t seem to be a slouch among them.
Why am I picking on CommerceOne? Call it tough love. This is a good company with a lot of promise: strong experienced managers, a history of telling it like it is (instead of like it isn’t, which more than one competitor excelled at), and a solid partnership with SAP. But they keep missing the opportunity to do something interesting and dramatic, opting instead for something boring and predictable: more losses. With apologies to B.B. King, the thrill, and the leadership, is gone.
Or was it ever there? I asked every C1 executive I could find what the long-range plan was for the company, once SAP bought in and the two companies merged their code base. I never heard a solid answer. So I came up with one of my own: CommerceTwo would become a services company. And if the current balance sheet is any indication, it’s already happening. The financial call I listened to was a little shy on details, but two facts are irrefutable. License revenues are plunging, and services revenues are rising. (What about profits? Don’t ask.)
Now comes the tricky part. If CommerceTwo is really a services company, will SAP still be interested in going from 20% to 100% ownership. Right now, 100% would cost SAP more than $400 million. But will SAP pay for C1 what it overpaid for portal vendor TopTier? Hopefully not, for SAP’s sake. An acquisition scenario will require that either C1 to do much better or much worse.
Which takes us back to my original premise, terror-proofing business-to-business interactions. The fact is, the automation of business processes is always a good idea when it captures intellectual property and processes and ensures their persistence and survival. My terrorism boom idea is just an opportunistic spin on something I believe is fundamental to the progress of business toward greater efficiency and profits. There are a number of companies that can do this, CommerceOne being one of the most visible. But if something doesn’t happen soon, C1 will become invisible, or complete its transition to yet another services provider. And CommerceTwo, though viable, won’t be a company worthy of its progenitors.
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