No sooner had I finished a post on CRM, started on Tuesday, finished on Wednesday morning, than I heard that one of the companies mentioned was embroiled in a criminal case. Turns out that the CEO and CFO, at least, of Entellium, whose CRM product Rave I reviewed in the article above, have lied to investors over the past several years about revenue figures. The CEO has pretty much confessed, and investors are left with a dead company and 10s of millions down the drain. Not sure what the users of the software are going to do. I deleted the demo that I used so I have no idea if the service is still up or not, but if I had data out there in the application I would be frantically downloading this morning - everything I could get my hands on. Couple of lessons in all of this I believe. First, as I mentioned in my last post about the CRM shell game, I just don't see the business model. What is the point of having your sales and marketing data in an application without accounting and inventory, or accounting and project data if you are a service company? Of all the accounts in the G/L why would I allow Revenue to be managed elsewhere? I can see travel expenses managed outside of the main business system, and you can make a good case for payroll to be done by a 3rd party and journaled in. But revenue? In the case of online CRM like this Entellium, I think that it was a way for companies to take a quick look at software as a service without jumping in headlong. So second lesson. Second lesson is that this fiasco is going to affect all of us in the online, software as a service space. There is no getting around it. Even though most of the major players in SaaS, like Salesforce.com, Concur, SuccessFactors, NetSuite, etc., are now publicly traded and audited firms, the noise on the street is going to be 'put your data in the cloud and watch it vanish.' Just another hurdle that we will have to get over. We will succeed, I have no doubt; but let's be honest, fiascoes like this create headwinds we all can do without. Third lesson is that there has simply been too much money floating around. I know that sounds strange to most of our ears, but when you look at the current world financial crisis, and at this, in comparison, minor fiasco, it is not ridiculous to say that there is way too much money trying to find returns. Evidently some venture capitalist, who, if you ever meet one, will tell you they are the smartest guy in the room, gave the company $19M over the years. And that is just one of the investors. You can read more about this here. |
