Au Revoir LucidEra

Apparently, SaaS BI player LucidEra is shutting down as of the end of this month.

Excerpt:

He [marketing VP, friend, and former Business Objects colleague Darren Cunningham] would not go into details regarding LucidEra’s financial problems other than to say, “It was a matter of funding or being acquired. And neither of those things happened.”

I’ve always thought BI was a particularly difficult category “to SaaS” for a number of reasons:

  • The dependency on external data. Operational apps (e.g., NetSuite, Salesforce) inherently have data associated with them, data that gets loaded initially when you configure the app, and data that gets supplemented every day when you use it. BI is a blank slate that requires data to be useful.
  • The variability of user requirements. There are only so many ways to call a lead, pay an invoice, or promote an employee (i.e., implement use-cases in transactional apps). In BI, just about any question you can imagine is fair game and different people think about things in different ways. This is one reason why BI has seemed to defy “applicationization,” despite repeated attempts from multiple vendors. While you certainly can package some common reports and dashboards, my guess is you’re grabbing only 20% of the requirements, not the 80% you grab when package up transactions.
  • The variability of data. While software industry consolidation is slowly reducing the number of different sources from which BI needs to pull data, BI still needs to pull data from a wide variety of sources. This is a complex problem, made more complex by the need to pull from both SaaS and traditional sources, and serves to undermine both applicationization and multi-tenancy. My hunch is you either (1) need to be highly vertically focused and “force” (e.g.,) all retailers into your retail data warehouse or (2) end up doing custom implementations for each of your customers at both a data integration and data warehousing level, and you become a hosting vendor of custom applications instead of a true SaaS vendor.

Simply put, I think BI’s hard to bottle and you probably need to be very big, very focused (in either a vertical market or application-centricity sense), or both, if you want to succeed.

Interestingly, LucidEra doesn’t blame the category for its own demise:

LucidEra’s decision to shut down was brought about by a lack of funding, not a lack of interest in its products or in SaaS BI as a whole, Cunningham said.

Another friend and former Business Objects coworker, Timo Elliott (who stayed on with SAP post-acquisition), covers the winding-down in his BI Questions blog in this thoughtful post, The End of a LucidEra.

Excerpt:

My position has always been that on-demand business intelligence is an essential part of the market, but that some of the claimed benefits have been over-hyped.

In particular, I don’t think the debate should be about choosing between on-demand and on-premise: customers should be able to seamlessly and easily move between one and the other according to their needs, using the same technology platform.

One response to “Au Revoir LucidEra

  1. I'm going to comment-scrape this comment off Timo Elliott's post on LucidEra. (http://timoelliott.com/blog/2009/06/end-of-a-lucidera.html/comment-page-1#comment-3368)The comment comes from Alex Moissis, formerly of LucidEra and a member of my BOBJ marketing team.Hi Timo, since I was part of the LucidEra team and on board with the company’s early vision before my departure in 2007, I can’t resist the temptation to comment here.Seth is right, the LucidEra deliverables were really pre-packaged analytic applications, not an open ended, general purpose BI platform. The early bet was that a standard schema structure and a standard BI stack (with data cleansing, data integration, storage, and ad hoc report generation capabilities) could be applicable to multiple pre-packaged business processes and problem areas. And, with a fixed set of fields to be populated for each app, the bet was that the integration and deployment costs could be brought down as the deployment staff’s experience grew. Furthermore, the assumption was that the operational reports delivered would then become a standard element of each customer’s process and hence would bring in good renewal rates for the SaaS vendor.So, in summary, the bet consisted of 3 key elements:1. A multi-purpose platform capable of supporting multiple pre-packaged analytic applications developed by LucidEra, or potentially by partners with the relevant domain expertise.2. Enough data integration repeatability in terms of populating the same standard set of fields for each application to allow for a gradual drop in the deployment cost over time as the volume of customers increased.3. Operational reporting applications that would be needed and used in an ongoing basis by customers and would thus deliver decent renewal rates.I doubt that data integration complexity, as some have claimed, is what “tripped” this initiative. The company probably did not get far enough down the experience and cost curve to validate the theory that the data integration tasks for an analytic application would be sufficiently repeatable to bring in efficiency gains over time.My guess is that the company faltered because it was forced to narrow its focus to a single analytic application area. This may have been due to limitations in the core platform that made supporting multiple application areas too time consuming and expensive, to the cost of building domain knowledge in the company around multiple process areas of expertise, or due to both. I don’t know. In any case, the company probably had no choice but to “double down” in one analytic application area, namely sales analytics. The total available market for this one analytic application area was simply not large enough to support the significant costs to build and sustain the full BI analytic application stack.If someone can come up with a more cost effective way to build and support a versatile BI analytic application platform and potentialy enlist design partners with the relevant domain expertise to create the packaged applications, they may yet be able to prove the second and third elements of the LucidEra bet, namely that integration and deployment costs can indeed be reduced over time and that renewal rates for these types of pre-packaged applications can be strong.Best of luck to Darren, Ken, and to the rest of the LucidEra team.Alex

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