Analyst confirms: CommVault's sales stumble WAS down to staffing blunder
Tales from meeting with management
CommVault’s lousy results for its latest quarter, ended 31 March, were due to screw-ups in its North America HR and sales wings, those in the know have claimed.
William Blair analyst Jason Ader was at a meeting with CommVault management in late April, and has drawn up a report for the storage software biz. In that assessment, seen by The Register this week, he notes “the fourth-quarter miss was primarily execution related, with a fix underway, though it could take a couple of quarters to see results.”
In detail, Ader reckons:
- A dysfunctional and unproductive human resources engine in North America failed to recruit and retain salespeople.
- Several top sales teams moved to the recently established cloud services group.
- One of the North America region’s top performing vice presidents was promoted to head sales in the Asia-Pacific theatre.
- The shift away from Dell as a top partner consumed sales management’s time and energy.
There was also “a high rate of attrition in North American sales in fiscal 2014 … due to the growing complexity of the CommVault product offering, which exposed certain sales teams with a lack of expertise in solution selling.”
Overall, Ader reports, “according to management, the primary challenge the company has been facing is a dearth of productive enterprise sales teams in the Americas region, which is the single-biggest determinant of software license revenue growth and has hurt the company’s broader sales funnel.”
Ader described the fix, saying:
A new head of HR ... was brought on in January. This individual has since brought on a whole talent acquisition team, which management expects to start aggressively hiring sales teams this month. In total, management expects the company to bring on roughly 50 new North American sales teams this fiscal year — a 30 to 40 per cent increase over the current number. At the same time, management believes it will be at least six months before we see any results, as it takes the average enterprise sales team 12 months to reach full productivity.
CommVault has been battling rivals in the small-to-medium biz market, and has moved into cloud computing faster than it anticipated. "The emergence of up-and-coming competitors, including Veeam and Actifio, which CommVault admitted are creating disruptions in the market because of their highly specialized products, innovative pricing, and aggressive marketing," wrote Ader.
CommVault is changing the pricing and packaging of its products, with a launch of the R2 release of Simpana 10 pencilled in for this summer. It will offer standalone versions of its mobile, email archiving, and virtual machine backup software instead of including them in product bundles.
The company has two product-related activities, according to Ader:
- It will offer a native copy capability in R2 to compete head-on with Actifio and Veeam; both offer this feature. Native copy simplifies the data protection process by modifying copy data in real-time, eliminating the need for scheduled backups and complicated restores.
- There will be a software-only appliance version of Simpana for both backup and archiving, in response to demand from both SMB customers and remote offices of large enterprises for a simple, plug-and-play product. CommVault partners will build and sell the appliance.
There are pricing model changes coming, too. It has been selling its mobile, email archiving, and VM backup products on a $/TB basis. Customers prefer user-based pricing, so CommVault will start selling its mobile product on a $/user/month basis, its e-mail archiving product on a $/mailbox basis, and its VM backup products on a $/socket or VM basis.
In conclusion, Ader says he and his fellow analysts "have confidence in management’s ability, led by CEO Robert Hammer, to cross the chasm and reaccelerate software growth by year end.” ®