How are the BPM Vendors Doing Now?

Scott Francis
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We have some contrary data points.  Pega’s last quarter was good.  So was IBM’s.  But they’re both big companies with too much complexity for outsiders to easily carve out BPM revenue.  However, what I hear on back channels from more than one vendor is that the big vendors are taking dollar share from the smaller vendors, and that the market is also growing nicely. I’ll be interested to see what Gartner and Forrester have to say in their reports on the subject when those are updated. Jacob Ukelson reports that ActionBase is retrenching in the Israeli market and focusing on professional services operations.  With today’s ASPs for small enterprise software companies, this isn’t surprising – likely much (all?) of the real profit comes from the professional services operation.  Cost of sales for enterprise software is high – but yet there is downward pressure on Average Selling Price (ASP). Appian reports good results from the first half of 2011 as well:
  • “The company signed 34 new-name customers across government, financial services, healthcare, energy and other industries” – Unfortunately, it isn’t clear to me what “new-name” customers means.  Perhaps special terminology withing Government purchasing circles.
  • “Sales orders for the Appian BPM Suite grew 158 percent over 1H 2010.” – Unfortunately, it isn’t clear if this is the # of orders, or the US Dollar value of orders… Obviously one interpretation is much better than the other interpretation.
  • “… with Appian Cloud orders growing 181 percent over 1H 2010.” – Again, number of orders or Value in US Dollars?
They also call-out some of their accomplishments in cloud and mobile BPM – well deserved pats on the back.  But I do wish I could get to the bottom of the numbers they’re reporting. Dave Brakoniecki is also a little frustrated with Appian’s specificity: 
The problem is:  Those three numbers are all the information in the release. No information on absolute customer growth or way to extrapolate into any actual financial performance. I’d love to know how many developers they currently employ and how many salespeople.  What is the trend on all these metrics? As one of the last pure play vendors standing, a full set of Appian results might have provided interesting insight into the trajectory of the sector.  Tibco, IBM and Pega all have all sorts of other product lines to complicate the picture. Appian might have provided a pure proxy for the BPM market generally. Still, 34 new customers is more than 1 per week in 2011 so I guess we should expect some good case studies in the coming months.
Unfortunately, this private company specificity isn’t anything new… even with the Appian results in 2009.  In fact, if you look back at those results, there was talk about international expansion (which, as I noted back then, is more challenging than it looks).  Subsequent reports I haven’t noted any discussion of international, and the numbers aren’t apples to apples. The only thing that is truly clear from the release is that Appian is acquiring customers at a rapid rate.  We can’t tell if it is a good business, but it is a good growth rate of named customers. Speaking as another private company, I’m not sure we want to release revenue numbers publicly either.  But then, I’m not sure anyone is trying to extrapolate from our numbers to determine if the BPM market is healthy or not.   Directionally, things are good for services firms across several vendors. I’d love to hear from people about what they think the real #’s are for BPM software for all of the BPM vendors out there – IBM, Pega, Oracle, Tibco, Progress, Appian, and the other independents / pure plays.  Drop me a line if you think you have a read on any of these.  Or comment anonymously!
  • Having come from the software side of IBM’s house recently I can say that the pure BPM engagement growth (i.e. no connectivity and integration) was respectable. This is largely due to 1) Lombardi which provided a lower barrier to entry, 2) a realignment of software and services offerings, and 3) software and services incentives. The first two points are a good thing and will fuel real growth $$ and net new customers. The third, I’m afraid, skews the numbers, so we really won’t get a sense of how IBMs BPM business is shaping up. What’s also not understood is how companies are replicating successful BPM implementations – repeat customers.

    • I’m curious how the folks outside of IBM and Pega are doing – at least they’re public co’s with some level of public disclosure.  It may be hard to dig through the fog of data overload but there’s some level of data.  Whereas for the private companies its all guess work as far as the data i have seen.

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