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Cash-strapped LucidEra 'exploring options'

Reality of SaaS and Salesforce.com

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One-time software-as-a-service poster child LucidEra seems to have shut its doors for want of cash from its venture-capital backers.

Co-founder and chief marketing officer Ken Rudin told The Reg that LucidEra is "exploring its options," saying it's "just really, really bad timing to have to be raising your next round of funding in this economic climate." Rudin also appears to have left the company.

"We're exploring various options in the best interest of our creditors, customers, employees, and shareholders. We expect resolution for everyone involved soon so there is an orderly transition," Rudin said. Questions over LucidEra surfaced here.

LucidEra's investors were Crosslink Capital and Matrix Partners, who've poured at least $22m in to the company since 2006. LucidEra was founded at the height of the SaaS frenzy in 2005. It's likely that investors will now be looking to make money from the sale of customer lists or any unique or special technology or patents the company might have.

At least one on-demand competitor has jumped in to the uncertainty and offered LucidEra customers an aggressively priced migration offer to its own hosted service. Birst will cut 25 per cent of its price for LucidEra customers who move before August 1.

Birst is available on Salesforce.com's AppExchange and offers connections to customer data held inside the Salesforce.com system. Salesforce.com was one of three connectors provided by LucidEra, along with a connector to Oracle and Microsoft's Excel.

LucidEra's apparent closure has been explained by rivals as failure to target the right market instead of a vote of no confidence by customers in the SaaS BI model as a whole.

Birst chief executive Brad Peters told The Reg the market for BI remains big and the potential for growth huge during a recession. "The last big spurt was between 2000 and 2001. There's a huge opening for alternative business models," Peters said.

He claimed there's an opportunity for SaaS BI vendors because big systems from Oracle and SAP are expensive and complicated to implement. But he noted that "We are not pleased to see this happen to LucidEra, we'd be much happier to see them in the game."

LucidEra focused on charting and graphics for data held in Salesforce.com rather than providing fine-grained BI querying unique to each customer's different needs.

Despite nearly 50,000 Salesforce.com customers on the planet and some very big organizations using its hosted customer relationship management (CRM), the overwhelming majority remain relatively small or department-level. That meant customers paying for a Salesforce.com subscription would have had little cash left over to pay for additional add-on services.

Furthermore, setting up and running SaaS is more expensive than the SaaS cheerleaders would have you believe. Running such as service requires considerable capital investment not just in servers, network, and storage, but also in security, the creation and verification of service level agreements, and the individual experts to devise and maintain policies.

The CEO of one BI rival who wished to remain anonymous told The Reg his company learned a lot in trying to penetrate the Salesforce.com customer base. "We know we need to be careful about markets like that," he said.

The rub was that LucidEra needed lots of customers paying small increments to become viable, so it seemed like it would have remained wedded to venture capital for a while. But start-ups that hadn't raised their latest round of funding before the market went south last autumn have been in trouble. They've been cutting their costs through layoffs or closing entirely. ®

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