Happy WizKids Day

Sometime between Groundhog Day and the Final Four each year, we try to publish a short report that showcases some of the brightest emerging companies in front-office computing. We call it the “WizKids Report,” and we present the companies in the report with a small award. At times, companies who have felt they deserved the recognition of a WizKids award but who did not receive one have referred to it as “Passover.”

What can I say? It’s that time of year again.

Throughout the year we take a lot of briefings from the newest and smallest companies to the very largest in our space and we make our decisions on which companies to profile in the report based on those briefings and later follow up. We also speak with real customers to ensure that what we’re hearing in the briefings matches reality.

There have been times when we have followed a company for two or three years before including them in a WizKids report simply because when we started coverage the company was truly embryonic and one of our requirements is to speak with customers who have used the product for a while.

Signs of the Times

This year’s group is really eclectic and reflects several trends in our market, including the prevalence of the SaaS (Software as a Service) business and technology model and the general level of maturity in the market. Interestingly, six out of the seven members of the Class of 2008 are involved in the Salesforce.com partner program, and their wares can be seen on the AppExchange (.860 in baseball terms, not bad really). That could simply reflect my need to get out more, but I think it’s also a sign of the times.

Another sign of the times is the emphasis more and more companies have on delivering solutions that make their clients easier to do business with. I have been investigating this phenomenon for a while and believe it is very understandable.

Fundamentally, we’re at a point in many markets where competing on features and functions is becoming less effective because so many competitors have acceptable functionality. When that happens, companies look for other ways to compete, and one of the richest areas to explore is a company’s customer-facing business processes. With that comes a need for technologies that streamline and simplify making it easier for the customer.

And the Winners Are …

Here’s a rundown of this year’s WizKids.

• Firepond helps vendors improve their sales processes with a configuration, price and quotation SaaS-based solution which organizes proposal data and reduces error, leading to better margins and improved customer experience.
• InsideView is a sales intelligence SaaS service that uses Web crawler technology to find and deliver useful information for sales professionals.
• Lithium Technologies helps companies deliver great service through customer communities.
• LucidEra provides on-demand analytics to sales professionals and managers so that they can run their businesses more precisely and profitably.
• Marketo delivers sophisticated on-demand marketing solutions to emerging and small companies in a format that is affordable and easily consumed.
• TerrAlign brings sophisticated mapping and planning to territory planners for large sales teams such as pharmaceutical companies.
• Verticals onDemand has made a business of providing vertical market versions of Salesforce applications, for example in pharmaceuticals and medical devices.

If you’d like more information about any of these companies check out their Web sites or download a copy of the WizKids 2008 report here.

Acquisition Not a Sure Bet

What’s interesting to me is that some of these companies look more like parts of a solution than the whole enchilada, and no doubt some might get acquired, but the current environment suggests that acquisition is not as certain as it once was. The presence of rapidly improving platform technology makes it possible for all of these vendors to integrate with other applications and thus deliver end-to-end functionality out of the box — or off the cloud to be precise.

Thus, platform technology is reducing the need for some companies to buy others. For example, there has been a great deal of consolidation in the analytics space in the last few years, but that does not seem to faze LucidEra, which offers a growing suite of on-demand analytics.

There’s also an economic angle here. The current financial situation is drying up credit, many initial public offerings have been delayed, and there’s no telling how much M&A (merger and acquisition activity has been forestalled. Having the ability to stand alone and play well by partnering with multiple other vendors is a good strategy for survival and something common to these companies.

A few years ago, I thought the market would play out like this, and I wrote about it, but I had no idea how many new and different applications would be developed as a result. The WizKids program has identified some pretty cool solutions, but even more interesting to me is the high degree of innovation that the SaaS model continues to inspire. There are a lot of vendors offering the application delivery part of SaaS these days, but still very few who are providing the ability to create and deploy solutions at a low price point. The WizKids are a great example of why it is important to provide both.