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Is the next Microsoft out there?
|
July 2, 1998 Web posted at: 3:35 PM EDT by Bob Browm |
From...
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BURLINGAME, California (IDG) -- For every Microsoft, Netscape and Oracle, there are a dozen small, lesser known companies fighting for some recognition and business. And to keep up with their much bigger rivals, these upstarts are also seeking money.
That's what this week's Enterprise Outlook conference here is all about. The conference brings together about 100 software start-ups and a couple of hundred venture capitalists, investment bankers and other potential sugar daddies.
Among the hottest topics at this year's conference is the opportunity for start-ups to deliver a new breed of front-end applications designed to work with a variety of back-end programs from the likes of Oracle Corp., Peoplesoft, Inc. and SAP AG. The new programs tend to target specific tasks. For instance, Extensity makes Web applications for automating expense report processing and related tasks, while Upshot delivers Web-powered sales automation software.
Speakers said these new programs let customers take advantage of much of the data that they have stored in legacy databases and enterprise resource planning programs.
Many of the new companies have come up with ways to help companies do a better job of communicating with their customers and business partners over the Internet. Motive Communications, for example, sells software to automate IT tech support, while Onyx Software offers a comprehensive customer management software package.
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Robert Frankenberg, president and CEO of Web site-in-a-box vendor Encanto Networks said customer interaction is a key area for start-ups to address. Companies will succeed that can help customers get paid for goods before they have to pay for the goods or materials to make those goods, said Frankenberg, formerly Novell, Inc.'s CEO.
Another good opportunity awaits companies that can tie together new front-end applications, said Steve Singh, president and CEO of Portable Software, which makes software for automating expense reports and other tasks. "A real aggregator of business applications [is needed] . . . a Microsoft Office of business apps," he said.
Jim Breyer, managing partner at Accel Partners, a Palo Alto, Calif., venture capital firm, said that the SAPs and Oracles of the industry "can't move quickly enough to take advantage" of these new market opportunities. He anticipates that the software market will mirror the data communications infrastructure market in that the bigger companies will wind up investing in these new companies or buying them outright. Peoplesoft, he said, plans to model its acquisition strategy after that of Cisco Systems, Inc., a voracious eater of smaller network companies.
Industry watchers can expect to see plenty of these new software companies go public in the months ahead, most likely around this fall, said Rick Sherlund, a partner with Goldman Sachs in New York. He said many of these companies have the strong earnings that Wall Street wants.
Among the biggest challenges for these companies is their stories tend to be complex, Breyer said. He said the question is: Will customers and investors be patient enough to hear these companies out?
Another question is whether the start-ups themselves will be patient and not overreact to Microsoft's challenges. Breyer advised these companies not to act too hastily. "It takes Microsoft a long time to get it right" when it comes to getting into a new market, especially an enterprise software market, he said.
"Microsoft usually represents a relationship [possibility], but of course you need to be careful," he said.
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