Throughout the turbo-charged growth years of the 1990s, Mike Saylor, CEO of business intelligence (BI) software company MicroStrategy, wore a gold ring featuring a beaver motif. He would often draw attention to it, highlighting how much he admired the tenacity and structural engineering skills of the rodent.
The beaver ring is no longer a permanent feature on Saylor’s finger, but the characteristics he so admired are still very much part of his make-up. They brought MicroStrategy to the brink of disaster but have now returned it to rude health.
Customer demand for the company’s BI portfolio of integrated online analytical processing (OLAP), data query, reporting, statistics and data mining software is rising fast again. Buoyed by corporate drives for efficiency and risk reduction, MicroStrategy’s software licence sales in its latest quarter to 30 June were up a stunning 31%, with the company chalking up its sixth profitable quarter in a row.
Two new contracts, among the 139 new customers added in the quarter, typify the revival.
The US postal service wants to be able to increase operational efficiency and customer service by analysing the vast amounts of data it gathers in its retail, financial, transportation logistics and supply-chain activities. The hotchpotch of tools it had used historically simply was not up to the job. The singular ability of the MicroStrategy platform to work with high volumes of data was a key part of the sale, as the Postal Service intends to use it to deliver reports and other information on a regular basis to up to 33,000 employees, says Robert Otto, chief technology officer for the Postal Service. The value of the deal to MicroStrategy: $5 million.
On a smaller scale, Unilever Cosmetics International wants to put analysis and reporting tools in the hands of 200 sales, marketing and operations personnel, enabling them to perform sales promotion management, sales reporting and supply chain reporting and analyses against a large data warehouse. Again the selection was based on MicroStrategy’s traditional strength – scalability – but Unilever also said it was drawn to the products’ easy-to-use web interfaces.
Saylor puts the bounce back in sales down to some changing dynamics in the business world during the past 18 months. “What our technology does is allow companies to create fraud detection, loss prevention, financial transparency, asset management and P&L optimisation systems. If you were a business pessimist in a [tough] market then you would ask yourself, ‘who is selling the arms, the weapons that enable people to rationalise the businesses. If you look at the hundreds of applications our customers have built, they all have the impact of avoiding a loss, or controlling a risk exposure, or putting back working capital, or controlling the expense of running a business, or identifying an opportunity that would otherwise be lost.”
And the tools do that for the biggest companies with the biggest challenges. “Our focus is on the high end of the market – the largest retailers and banks in the world – who might have spent $50 million on a data warehouse and know they need a technology that can sift through a billion records and deploy a certain insight on the desktops of 5,000 people,” says Saylor.
The second dimension that has influenced the recent sales record is the capability of MicroStrategy’s 7i toolset to build analytical applications that are deployed on the web to thousands of users. Several technical analyst groups have given the product glowing write-ups, but even Saylor admits that it was a hard nut to crack, taking seven years and several false starts.
Lastly, a third key differentiator is the fact that 7i uses a single data repository for all of the tools companies use to build their custom analytical applications. That enables applications to be created rapidly and encourages considerable code re-use.
By concentrating on the high-end, MicroStrategy feels it has put distance between itself and the giants of BI, Cognos, Business Objects and SAS.
“Cognos and Business Objects cater for the low and mid-end of the market where the customer can be convinced [that BI] is a simple or straightforward thing,” he says. The companies that need MicroStrategy-level performance have high-volume, complex problems to solve that require a product that has had $1 billion spent on it to create the technical depth to ensure it can solve them, says Saylor. “That’s our focus.”
But that focus is something MicroStrategy has had to relearn. Through 2000 and 2001, the company almost crashed and burned after Saylor pushed it into new, and largely unsuccessful, directions – most notably Strategy.com, a wireless data delivery division. Those non-core units were disposed of but not before other cracks appeared: the company had to admit it had overstated its revenues by around $60 million and had to settle numerous shareholder lawsuits. As sales tanked, it plunged deep into debt and was forced to lay off one-third of its staff.
It has been a slow fight back, and one that has involved restoring faith with both customers and Wall Street.
“Ten years ago, Bank of America, Wal-Mart, Metro and other large companies told us what we would have to do to solve their large-scale analytical applications problems and then we spent 10 years doing it. It takes a long time to get that technology depth,” he says.
That long haul has also earned it customer loyalty. “Out of 1,000 customers, maybe one has switched out of our technology. The reason people leave us is Chapter 7, they liquidate.” The irony of that point is not lost on a CEO who not so long ago was facing the prospect of winding up his own company.