BARRA: Investment Software and Consulting Message Board

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Technology Stocks : BARRA: Investment Software and Consulting

BARZ 0.0001000

-90.0%

Aug 16 5:00 PM EST

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To: Czechsinthemail who wrote (14)	9/12/1997 1:00:00 AM
From: synchro	of 60

Barra belongs to a group financial software makes that makes their money with licensing fees. The reason its earnings is erratic is that it takes a while for these software makers to "penetrate" an institution. For example, my company made GAT's (GAT was bought out by BARRA) sales person fly down to do FOUR on-site demos in a span of six months. GAT's competitor CMS BondEdge came over SIX times (and for naught -- we went with GAT). The ironic thing is that once they went thru the difficult process of "bagging" an institution, there is usually a 1- to 2- year steep learning curve and conversion process (if the financial insitution has been using some old package -- usually some in-house antiquated mainframe clunker). During this time period the software maker is constantly being called upon to trouble-shoot, advice, hand-hold, ego-soothing, etc. The period when the company starts to make some real money is perhaps in the 3rd year when the insitution has the software all set up and all its personnel readily trained, then everything would be sort of on autopilot. Its support staff can then move on to other insitutional customers. My point is that for these software vendors getting new business usually mean a pretty long period of high-cost support. Once things settle down, it usually pretty hard to dislodge the instituion from the software vendor. Financial institutions such as banks, insurance companies and pension fund managers are a pretty conservative bunch. Once they find something that not only works, but works well, they will hang on to dear life. In general, financial institutions have pretty low expections on financial software packages--mainly due to their own in-house development failures. So once a good business relationship has been establish, the software vendor can count a pretty good annuity stream of cash -- as long as they don't have some major screw-up on support or pricing.

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