Speaking to a 350-plus strong audience at Actuate’s 11th international user conference this week, Cittadini said: We continue to be a substantial member of the open source community and will continue the evolution of our BIRT offerings.
We expect [BIRT] to become more mainstream and ubiquitous across the entire J2EE development community.
BIRT is an Eclipse-sponsored open source development initiative that Actuate kick-started in 2004 as part of the Eclipse development framework, which over 65% of developers use today. The software is now in its second major release cycle, with version 2 launched a year ago. In 2007 BIRT surpassed 1 million downloads, uptake that Actuate expects to snowball into the next year at least.
[Eclipse] dominates and it’s paramount to our future. We’re the only business intelligence provider to access the Eclipse market today, Cittadini said.Cittadini said that BIRT’s expansive community of Eclipse developers will help companies to substantially pull down the cost of their enterprise reporting and BI, which has traditionally been an expensive endeavor.
Companies can now readily reach outside of enterprise door and pull in Actuate or BIRT resources. That’s been difficult to do in the past. It’s less so now with BIRT.
Actuate’s BIRT however represents the tip of Actuate’s hybrid business model, which is to get customers to add incremental value to their open source BIRT projects with commercial Actuate BI software that provides more enterprise-like features for report distribution and interactivity.
Actuate claims that the latest BIRT version 2.2 offering provides 95% of the functionality offered by other commercial reporting tools like Business Objects Crystal Decisions and Cognos ReportNet. But unlike traditional reporting tools BIRT has been designed with a web-centric metaphor in mind, whereby users design reports as web pages.
Cittadini said that 2007 is an investment year for its open source strategy as the company continues to build up an organizational infrastructure to drum up revenue around BIRT.
Part of that investment includes setting up an exclusive BIRT Exchange website for developers that he expects to be up and running before the end of this year.
The Exchange is partly a developer resource but also a storefront for Actuate’s commercial BI offerings like iServer, iPortal, eSpreadsheet Server, BusinessReports Studio, and Interactive Viewing. Actuate hopes to use the Exchange not only to engage more closely with developers, its target market, but also to provide a conduit for quick and easy lead generation and up-sell sales opportunities into its commercially licensed software in 2008 and beyond.
One of the benefits is lowering the sales and marketing costs typically associated with closing enterprise software deals.
Cittadini envisages a low-touch inside sales model whereby the self-serve support environment created by BIRT Exchange sets the stage for enterprise software sales down the road, with iServer and iPortal leading the charge for enterprise scalability requirements.
Instead of pursuing ice-cold leads with a six to 10 month sales cycle, we can give our direct sales force hot-leads that can be closed that much quicker. That’s because all the self-serve work has been done and the technology has been surfaced and proven.
Cittadini said that customers can capitalize on their commoditized open source BI environments with Actuate’s commercial products that are now being elegantly integrated into BIRT.
BIRT reports are 100% compatible to run with its commercial products, and last September actually incorporated BIRT code into its Actuate 9 reporting platform that provides a link that was previously lacking between the BIRT development and Actuate enterprise deployment environments.
We want to make BIRT a product, and it’s key to our success that we build a community around it and then capitalize on that community, Cittadini said.
Actuate 9 is already creating on-ramps for open source developers to easily digest our commercial products.
Cittadini estimates that incremental percentage increases in quality leads and deal closure rates of 15-20% would dramatically grow quarterly license sales, reduce marketing expenses, speed up close rates, and improve operating margins.
Key to enhancing those BIRT environments is Actuate’s iServer reporting server platform into which 80% of the company’s research and development dollars are being directed.
Actuate claims that roughly 1.8 billion report pages are being generated in a day by iServer today, of which 43,000 active users are viewing cached BIRT reports, and a further 10,000 interactively accessing reports.
Cittadini also believes that the market for extranet-based e-commerce applications is getting its second wind. That, he said, plays directly to Actuate’s technology heritage and strengths.
The extranet world is back with a vengeance. And e-commerce apps are now back in a very big way.
He said that in the last quarter over 50% of Actuate’s license revenue came from extranet applications that were not necessarily related to BI or performance management.
That’s getting close to the split before the dot-com bubble world where 60% of our sales were for apps delivered outside the enterprise.
If you look closely most of today’s e-commerce sites have undergone significant facelifts, with sites constantly getting better and more interactive, with the addition of more detailed data and improved layouts, and so on.
The problem is that intranet information doesn’t even come close to rivaling these extranet apps.
That’s where Cittadini sees an opportunity for Actuate. All of principles making extranet applications a premium experience today coupled with Actuate’s core Ajax and enterprise reporting technologies will help to drive next-generation BI and performance management applications netted out as intranet applications.
He said that Actuate will continue to push the envelope to be post-transactional information applications supplier for financial and public sectors, its two core markets, to provide a similar high quality experience.
No one else has enabling technologies that we have. So, ironically many traditional BI companies will not be ale to participate in the future of BI. It’ll be Actuate and other small up and comers.
Actuate reported revenue of $34.7m in its recently closed second-quarter. The company grew its license revenue 24% which Cittadini claims is unparalleled in the BI and enterprise software sector.
We’ve now had six premium quarters of revenue growth and non-GAAP operating income, all of that double digit, and we anticipate that will continue for some time to come.
Our View
It’s perhaps appropriate that Actuate chose Las Vegas as its venue for this year’s user conference as its open source BIRT strategy is somewhat of a gamble. The company is looking to the Eclipse development community to push forward the development of BIRT and make it a conduit for downstream revenue generation via the BIRT Exchange.
This is very much a developer-oriented business model. BIRT Exchange support site should be a welcome resource for developers in the coming year. It’s also an attempt by Actuate at grass roots marketing, with developers the primary target.
Whether strategy will successfully translate to lucrative up-sales to commercial licenses still remains to be seen. Developers typically don’t hold the purse strings for IT budgets, though they do influence the development agenda in terms of technology selection.
Key to success is how effectively Actuate’s inside sales teams can tap into the lead-generation potential of the BIRT Exchange as a streamlined sales channel to shorten typically lengthy and expensive enterprise software buying cycles. We’ll have to wait well into 2008 to see how this tactic blossoms.
