Twenty-five years ago, I funded my Stanford MBA by becoming a junkie—a spreadsheet junkie, that is. IBM had just acquired a high-flying Silicon Valley technology company called ROLM, and the IBM execs needed data and analysis to manage and track their progress against their business goals. As a young engineer just entering the business world, I was surprised by just how extraordinarily difficult it was for managers to obtain relevant information on a timely basis to guide their decisions—even in the corporation that invented business computing.
Their difficulty was my opportunity, and I earned many thousands of dollars writing ever more sophisticated Lotus 1-2-3 macros to automate the extraction and analysis of market data for my new white-shirted bosses from Armonk, NY. The money’s long gone, but the key lesson from that time remained with me as I advanced into more senior management roles in six subsequent companies: for a manager trying to make high-quality fact-based decisions every day, it’s really hard to get good data.
Business Intelligence – Big Market, Low Satisfaction
It turns out that it’s worth a lot of money to customers to try to solve this problem. In fact, their willingness to spend has funded a lot more than just my MBA in the last 25 years. It’s spawned a $25 billion industry known as Business Intelligence, or BI, devoted to extracting and making sense of the masses of data trapped in corporate IT systems, with a couple of billion dollar revenue companies (Business Objects and Cognos) and one half-billion dollar company (Hyperion), along with thousands of smaller software companies and consulting firms.
But these companies achieved this level of success without even really solving the problem. For many IT buyers, traditional BI solutions came to epitomize everything that was wrong with large-scale enterprise software.
- Just to get started required a spend of at least a million dollars on software and hardware, with maybe another million on consultants for deployment and integration with a separate data warehouse, as well as the unwieldy ERP or accounting systems that were the source of the data.
- Maintenance and upgrades cost another 20% a year.
- Deployment would take six to 12 months, by which time user requirements might have changed.
- Trying to add a field or two to a dashboard, or create that new report format requested by the CEO might take weeks because changes and ongoing maintenance typically depended on a small team of dedicated experts with deep knowledge of the back-office systems and BI solution.
It’s no wonder, then, that many traditional BI implementations fell well short of their promise—confined to a small set of users and dashboards, or even shelved entirely.
As a result, that first wave of big BI pioneers is no longer with us, at least not as independent companies (SAP bought Business Objects for $6.8B, Oracle bought Hyperion for $4.5B, and IBM bought Cognos for $4.9B—all in 2007). In their defense, they did a pretty remarkable job with the technology and software business models of the time and created billions of dollars of value for their shareholders. Furthermore, their solutions continue to generate sizeable legacy software sales and consulting revenues for their new parents.
BI in the Cloud – The Chance to Do it Right
Business users’ appetite for timely, relevant information and analysis for decision-making hasn’t diminished since I wrote my first Lotus macro back in 1984. In fact, it’s stronger than ever. What has changed fundamentally in the last few years is our ability to meet enterprise customer needs efficiently and effectively.
The SaaS delivery model means the customer starts to see value from their software within days or weeks, with an up-front investment of thousands, not millions of dollars. Changes and upgrades are seamless, and included in the monthly subscription. The cloud enables consumption to be scaled up and down on demand on a pay-as-you-go basis. The platform shift to SaaS and cloud computing creates an opportunity to finally deliver on the promise of Business Intelligence.
Like their peers in other large established software categories, the old BI vendors are valiantly striving to port their legacy client-server stacks to the cloud. In any platform shift, however, the big winners are the new entrants who designed their product and business model around the new platform from the beginning.
Just like Salesforce.com in sales-force automation and Netsuite in cloud-based ERP, we believe there’s an emerging opportunity for the right new entrant to build a giant new franchise in BI. We’re putting our money on GoodData. We’ve followed the company closely since we invested in their original seed round, and we’re delighted now to be leading a $15 million expansion round to capitalize on the strong lead they’ve established in BI for the cloud.
Our enthusiasm starts, as always, with the Entrepreneur. CEO Roman Stanek is that powerful combination of brilliant product visionary and compelling sales guy. He started two successful software companies, Netbeans and Systinet, from his native Czech Republic prior to founding GoodData in 2007. He’s assembled a stellar team to pursue the BI opportunity and they’re executing very well.
We’ve been highly impressed with GoodData’s Product. Like its market-leading peers in other SaaS categories, GoodData was built on a multi-tenant platform designed expressly for the cloud. Unlike other BI offerings, it’s a complete solution, avoiding the traditional struggle to integrate one vendor’s BI product with another vendor’s data warehouse. While it can be implemented within days, the product is built for large scale. That’s critically important, because when you offer business users true operational business intelligence on demand, adoption and utilization grow explosively. (For example, there were 2 million report executions on the GoodData platform in July, up almost tenfold in six months.)
GoodData has already signed more than 100 direct and 2,500 indirect Customers, including mid-sized enterprises like Enterasys Networks and Pandora, as well as large corporations like Time Warner Cable and Capgemini. When we spoke to them, they said things like:
“The great thing about GoodData is that it’s been valuable right from the beginning – no waiting game…Our sales team now has direct access to metrics that used to take days for our engineering team to produce.”
“With GoodData we don’t have to jump through hoops to view our critical data.”
“GoodData has rapidly become our source of truth.”
“It’s put the power in the hands of our end-users.”
GoodData’s target is the ever-increasing number of established enterprise customers now migrating to cloud apps like Salesforce, Netsuite, Google Apps and Zendesk, as well as the new generation of players like Pandora who have built their entire business on the cloud from the beginning. Because cloud applications are dramatically easier and cheaper to implement, customers are deploying far more software than they did in the old world—one customer we talked to already has 18 cloud apps.
Roman and his team realized from the outset that it all starts with Apps: a cloud-based BI solution that provided dashboards, reporting and analytics on top of individual cloud apps as well as across apps—for example, combining website data from Google Analytics, marketing analytics from Marketo and CRM data from Salesforce to produce an integrated Lead to Cash report—would be hugely valuable to these customers. They already support most of the leading SaaS and cloud apps, and the number is increasing by the week.
However, they’ve gone further than that, creating an innovative Partner program called Powered by GoodData that allows leading SaaS and cloud providers to embed dashboards and analytics directly into their own applications. For example, help-desk software leader Zendesk—itself one of the most impressive exemplars of the new generation of cloud-based app providers—makes a compelling solution even more compelling by providing GoodData’s advanced dashboarding and analytics to its best customers.
Business Intelligence, and IT as a whole, has come a long way since my days as a spreadsheet junkie—and the best is yet to come as the shift to the cloud becomes mainstream. Management’s demand for relevant and timely information for business decision-making will continue to grow, and cloud-based BI will make it accessible to more users, in more companies, than would ever have been possible under the old regime.
As veterans of the original cloud computing company, Loudcloud, we’re excited to add GoodData to the list of Andreessen Horowitz-backed companies that are leading the charge to that brave new world.