Interestingly, they've managed to keep pretty close to Vantive in license revenue growth in a direct basis. But, ho-hum no-one notices.
(Actually they've generated more in direct license revenues than Vantive over the last three quarters, but Farber will have a a fit now that I've mentioned that.)
Two comments: I think overall license growth is more important that direct license growth, because VNTV has decided to pursue a blended direct/indirect strategy. Obviously, a lot of resources are being placed on the indriect channel, and even more obviously, some deals that VNTV could have taken down directly were allowed to be taken down by the indirect channel, to avoid channel conflict and to build long term trust and relationships.
However, and this is even more interesting, I am becoming less convinced that license growth alone, of any kind, is a useful (i.e. valid) statistic. Here's why:
In many sales situations, how much is allocated to services and how much is allocated to licenses can be quite arbitrary. A customer says, in effect, "I've got $350,000 in my budget - it's yours, for your complete solution. How you allocate it internally is your business".
It is up to the sales manager to decide how to write up the contract. Is more allocated to the consulting? More to licenses? Most software companies will actually weigh heavier on the services side, since that can be recurring revenue, especially maintenance.
(It's hard to write up a deal with an effective rate of $1,000/day, then come back later when you sell more consulting at an effective rate of $2,000/day). Also, professional services managers tend to get measured on their revenue, so they fight to keep professional services pricing higher. So, you could have a $350,000 deal with $1,000 in software, and $349,000 in services. Given the fight for professional services resources, Mr. Sales Rep then has a bigger deal to go to the resource manager with, and get the resources for his deal.
Then, you pick a number for annual maintenance - say $30K/year.
This is just an example, and an oversimplified one at that. In the real world, it's usually less blatant, but there can be 10 or 20% shifting pretty easily. As many customers account for license purchases as a capital cost, and services as an expense, so they may want to see more on the expense side. Most sales reps are pretty happy to oblige. you get the picture.
I think a much more interesting number would be the number of seats sold, and the average price. Another interesting number would be how much consulting revenue the partners are generating from the core business. For example, if VNTV partners generate $50MM/quarter, and CLFY partners generate $25MM, that can tell you a lot, particularly about who the partners wil support in the long term.
But, mostly, I care about overall revenue and profit. And, with VNTV and SEBL, for that matter, generating a lot, the valuations should be higher. |
