No fiesta
Every time an acquisition is published, it is time to celebrate. Well, it depends for whom.
I have learnt to love acquisition as a shareholder of the acquired company. I have learnt to rebuild teams, business and clients’ trust on the ruins of the acquired companies as a manager, several times. I have learnt to learn how tough, and rare, it was to successfully acquire a company as an investor, an employee or whatever, it is always a challenge.

Mission accomplished?
So I am not the kind to say “congrats” during an acquisition but to the team in charge of the acquisition, of course. They have “accomplished the mission” and anyone who had been in such business knows how tricky it can sometimes be. So yes, congrats to the management team of Day software, they have sold the company very successfully.
But from my point of view, there is not that much to celebrate during an acquisition, especially for many of the employees and for many of the clients. The most difficult part is still to come. Acquisition does not matter so much compare to integration. It is like celebrating a deal whereas what matters is the Go Live of a project, not the signature of the contract. 

Acquisition means “risky business”
OK let’s write “challenging” instead of “risky” to be positive.
I have not read much today about how a mid size company with a strong Swiss attitude and an open source philosophy will fit into a mainly US centric international proprietary software company. I have also learnt to learn that during acquisitions people may seem to matter, but not so much in reality. Not because you don’t want to, but because you cannot take care of too many details and that’s what individuals are during an acquisition. Of course some individuals will find great opportunities thanks to the deal, that not the point, but just to say that an acquisition is not a fiesta for everyone, far from that: it mainly means “risky business”.
And one of the key advantages of Day has been several very gifted, skills and committed individuals. I am wondering how Adobe will handle the famous “The surprising truth about what motivates us”
Day Software was one of the rare independent high end WCM vendor and will now be just one of the products of a major software company. That’s a major evolution. Uncertainty will prevail for weeks if not months like for any similar acquisition, at least for many employees, even if, of course, Adobe may argue the opposite. Many are speculating and will speculate about the products integration, the strategic fit, the risks, the advantages, the constraints and so on. I don’t really care so much as my employer is a competitor so I have to focus on my clients, Jahia's team (my employer) and our own product but I would like to conclude my post on something lighter as I cannot prevent myself from motivating Day's shareholder to agree to on this acquisition. Let me be more specific:

Four Reasons to sell your shares to Adobe
1.      The price is right
The share’s price of the company was extremely high before the acquisition, and I assumed the market was expecting something irrational, sorry I meant to say “exceptional”. And the market is so often right, so now it is really time to do something guys. Frankly I am impressed. I can write for pages why this valuation looks so unreal to me – maybe because I am coming from a different world - but frankly just sell for that price your shares. Exaggerating, I can write you are more likely to be hit by an asteroid tomorrow morning than to get a better deal soon.
2.      That’s good for my business
Everybody knows an acquisition is always good for the business of the competition at least for the months to come. Beyond more than a year, as usual in this kind of business, it does not really matter that much, that’s another time frame and we always have to face competitors of many kinds: that’s business. What matters is adaptation and anticipation, not conjecture. So for the time being, I believe that’s good news for my employer’s business development as we have very frequently met Day software both in Europe and North America these last months.
3.      You will give Adobe a cooler image
I really like the spirit and the values of the Day team. I don’t believe in miracles but I hope they will influence Adobe somewhere in a positive way. At least, they won’t be of any bad influence!
4.      This summer is so boring like any summer, thanks for the show
For different reasons, and somewhat surprisingly, daily business is always thriving during July and August but conversely market news is usually so boring during these sunny weeks in Europe too. At last some news to really speak about during the summer break. Cool. And just before the CMS geek up cessions! Very cool.

So please give me a favor, just sell your shares to Adobe.

Further readings:

Analysis, interesting comments and some (inevitable) speculation from our WCM industry gurus: Adobe to acquire Day – First Take ECM perspective

Great critics – as usual – from Seth Gottlieb: Will Day stay committed to web standards under Adobe’s ownership?

CMS Wire article: Web CMS: Adobe Buys Day Software for US$ 240 Million

Boris-Magnolia’s own publicity but with several excellent remarks: http://www.betterfasterbigger.com/2010/07/day-to-be-acquired-by-adobe.html

Jon on tech blog post: http://jonontech.com/2010/07/28/a-fine-day-for-adobe/

Jeff Potts who was very quick to write about the acquisition: Adobe acquires Day Software for $240 million

I want to write a post in my blog about “CMS selection” from the point of view of a vendor. So I have also collected some interesting advice as it could to help at least a little bit prospects writing RFPs and selecting a vendor the best way possible and adopting the best process possible.

An efficient process is – according to me – the best way to maximize the success so if you know other great articles, please let me know so that I could add them into this list:

Some do and don’t about Business issues:
CMS Selection: reveal budget in RFP
Finding the best vendor means treating bidders right
Bridgeline says focus on website ROI when selecting a CMS

Governance and other general issues:
Why IT should not run a CMS selection project
How to choose a web CMS
Selecting a Web CMS: the most common mistakes in RFP

Functional and technical issues
5 Criteria for selecting a global CMS
CMS selection criteria
Another CMS selection criteria

How to make a short list
Resourceful CMS selection
Selecting a CMS: how to build a short list

Some thoughts about the best process:
How to select a CMS
Intelligent use of spreadsheets in vendor selection
No scoring methodology for CMS selections
Evaluations vendor proposals – Kill your spreadsheets
5 Biggest mistakes in CMS selection
CMS selection: death to the features matrix
Requirements focus CMS selection
10 mistakes when selecting a CMS
Fifteen steps to select a CMS
The CMS selection process
Selecting a CMS: managing product demos
How to select a CMS
Does your CMS fit?

I have no doubts I forgot to list quite a few others but obviously, for years, recurrently, articles are published about “how to choose a CMS”. As a matter of fact, many projects are still choosing mistakenly a software (OK the implementation is a critical issue too but anyway, it is far from rare to see that a project did not chose the product it really needs).

Why advice are not enough and people still become angry about the CMS

I have written than making a successful CMS implementation project what not that easy, and again, I believe it looks important to take in consideration all the advice you can but at the end of the day, what really matters is to give to a skilled, experienced and motivated person – or team - the charges of choosing and implementing the software for the project.

From what I have seen so far, choosing the right CMS is not only about processes, methodologies or technology, it is before all about people.

Whereas “Content Management” (ECM, WCM, portal) software business is, at least so far, mainly (of course not exclusively) driven by North American or European companies, the strong potential of emerging markets such as Brazil, India (I mean for its local market), China or others look very obvious to all.

Wikipedia is classifying the markets in two kinds: the Newly Industrialized countries, and the Developing countries. I found these definitions arguable. E.g., Argentina was the 2^nd richest country in 1945, so not exactly a “Developping Country” but anyway, whatever the definition, they are all emerging markets.

And these countries are never the last ones to innovate, so we could expect much more in a near future. Some open source or not open source vendors have been recently quite successful and much more are likely to grow up there. That said, and as already mentioned by John Newton, or others, the fast growing economies don’t look so bright for the traditional software business or at least, far less from what it should. E.g., read page 9 about ECM licence for Open Text in FY Q1 2010 (ends 30/09/09) here (“[ECM Licence] was down […] a little bit in Australia and Asia-Pac a little bit.”) or the sample of new clients of Autonomy for Q3 2009, page 3, (how many are not located in North America / Western Europe?). Further more, when it comes to commercial open source, I don’t see so many obvious successes either. I don’t say there are none but I don’t see anything dramatic or consistent with the dynamism of these economies. To make a long story short, the open source is definitively a key driver for them but the commercial open source (COSS) must adapt itself dramatically to be really successful there.

Some will argue rightfully that several (free) open source software are already extremely popular there, fair enough, but it does not mean that the existing offer can answer all requirements. I am more believing these buoyant markets have adopted what was existing but I am quite sure that they will also require commercially supported open source software like anywhere and for the well-known reasons.

Some are raising the point that the model is more related to services than licences (I am not so sure), some are mentioning the necessity to adapt the commercial offer to these local markets (well, we always have to adapt to any specific market and every market is specific so I don’t see anything specific there). Actually I believe the issue is more to be on two sides, but definitively not about the recipes “how to grow in fast growing economies markets”: the first one is the ability to deliver what these markets are looking for in terms of product, services, and pricing and the second one is the ability to invest into them as a key priority for the company’s growth strategy. The first one is basically saying you need to organize your company for these markets (which are not alike others as usual). The second point means it may not be trivial and can even be antagonist with other priorities for your existing markets, so you’d better believe in what you are doing. Both are saying you are aligning the whole company for this goal: becoming a global player, in particular being a global player for the emerging countries. I may be wrong, but I definitively don’t believe you can manage both markets classic/emerging in parallel but in a quite well integrated way.

Of course you need to have the people able to manage such markets, even more important you need to build a consistent strategy to set up a global growth for these markets and to link it to your global company growth strategy as, obviously, “the old Europe” and the “falling Dollar country” will stay for months if not years the main markets of the COSS for most of us.

One of the biggest challenges seems to me the return on investments which are unlikely to come so quickly, as far as I know. Not that you won’t get return on them, but they are obviously either better ways to invest your money as a COSS or it won’t pay as much as it should at the beginning. Both strategies are causing troubles for the different types of COSS companies. Those bootstrapped need to invest wisely as their money is scarce, those VC backed up need to get ROI within months or if not within no more than typically a couple of years. It won’t prevent both to invest into these markets, but it will not help to make them growing dramatically and at the level it should. More important, the fast growing markets are not homogeneous, but rather the opposite, and what works for Brazil won’t work necessarily for India. However, it seems quite obvious for this new decade to bet on those who believe into these markets.

Some analysts like to say: “We should not really care about corporate assets as a web project just last usually no more than three years so that’s not the point to focus at.”. Whereas sometimes true, I like to disagree as quite a few of our clients – if not the majority – have a much longer timeframe either because they want it, or because they need it. But I am not an analyst, I am just a software vendor, and admit my vision might be by definition limited. But that’s mine and it looks to me that investing into a technology designed and organised to work for the most promising markets will mean something when it comes to chose a software for a corporate project such as a global intranet, global corporate websites and other strategic web projects. Right now the point seems to be still very secondary, I am just wondering how long it will remain so. How long can you still be considered a “leader” whereas your commercial footprint stays weak into these markets?

If you want to share information, visions or trends about commercial open source and fast growing economies, I would love to hear from you. I have my thoughts and my experience, but I believe the road to be wide opened and quite long.

Speaking about Web, Enterprise or “whatever letter” Content Management software, some like to say the COSS was one of big new things of the last decade. Will this one be the one of these fast growing markets? What do you think?
Happy New Decade to all!

Some additional readings:

Open Source Emerging markets, a few points
Involving the Indian software services industry in the free and open source software world
Open Source in China
Top 5 emerging markets industry guide
Where is open source activity by Redhat
Emerging markets and MySQL

"Newly Industrialized Countries" (Source: Wikipedia) and "Developing Countries" (Source: Wikipedia)

(download)

Click here to download:

Commercial_open_source_for_the.zip (50 KB)

Software vendors don’t like so much publishing their prices on the web site. They will explain they have a very complex price list, or can be very creative justifying why they can’t. But to make a long story short: they just don’t want to. I don’t see the value for the client to hide the price. And that’s exactly why they don’t like to show it.

I can’t say there is a significant wind of change, but these days, several people have been arguing that Commercial Open Source Software (COSS), at least should publish their pricing.

Anyone who spent some times in countries located into the Middle East knows there is no price written in the bazaar. (By the way, it is funny to read into Wikipedia that “The word derives from the Persian word bāzār, the etymology of which goes back to the Middle Persian word baha-char (بهاچار), and meaning "the place of prices"”. Ironic, isn’t it?). And business is business so what works for Bazaar works also for other businesses, and, more important, that's where business was invented, a long time ago.

First Bazaar's Principle

As usual, the vendor is doing is best to sell to the buyer the highest price possible. Of course no vendor will admit it, but that’s basically the reason why you don’t have prices available. Hiding the pricing helps a lot. It is really a great rule; everybody will pay its “custom” price. That’s great. The more you are ready to pay, the better the margin will be for the vendor and the buyer will just pay the price he decided to pay. Everybody’s happy. You usually learn that basic principle during your very first year of sales, wherever you work.

Second Bazaar's Principle

There is another (excellent) reason: people are not logic, they have emotions. They can be influenced. So they can change their mind and can adapt their budget accordingly. First you attract them, and then you try to convince them. Some people may not be interested into an expensive product first, and then would change their mind finding it finally to be the perfect match for their project.

But is it the perfect business model?

There is no perfect business model, by definition. But there is a basic principle into business: you have to be consistent if you want to be understood and to convince, it helps to be understood. As I am too a believer there is no “open source companies” but only open source projects, I would not say COSS need to publish their prices. That said, transparency is a key value of open source, so it is very consistent to publish the prices for that reason. That’s also why people will be looking for with COSS. Some will say there can be no transparency in business, fair enough, but at least there can be some transparency in the public price, which is already a lot.

Further more, I hate losing my time, like everyone, but as a COSS vendor, I am supposed to be more competitive too. COSS are supposed to be cost-killing solutions. So I cannot afford losing my time, and that’s a fact, sales model of COSS pretend to be more effective (Optaros’ white paper, page 6). For one client who will change his mind on his budget (assuming he not only wants but also can), how many will just knock at the wrong door, dreaming of a software too expensive for their budget? The second principle of the Bazaar is not consistent with the COSS argument of having more competitive sales.

So why does a vendor publish his pricing?

Because he believes it is a commercial advantage.

Publishing prices means renouncing to the Bazaar's Principles. It means something; it is not just a detail. So don’t expect high discounts with the vendors (otherwise they would be fool publishing too high prices), but expect them to believe in transparency and openness. Like in any business, you can ask for discounts if you are ready to buy something unusual (volume, volume, volume - mainly), but, obviously, you cannot ask simultaneously transparency and high discounts. As you know the price since day one, it is consistent.

We are almost in 2010, the software industry is a worldwide vibrant B2B business, so maybe it is time to renounce, for good reasons, to the so old Bazaar's Principles. Further more, open source is more and more adopted by global companies. Their projects don't like surprises and are allergic to aggressive commercial behaviors. Anyone who will take a few minutes browsing the web will find a good estimation of the software pricing thanks to the Searches/Social networks/Analysts reports. Why hide something easy to find out? Last and not least, every vendor should be able to justify its pricing and be convinced it is the perfect price. There is no such a (good) thing than a vendor believing into his pricing.

So, buyers, what do you prefer? Are you keen giving an advantage to the vendors not hiding their pricing? Or do you still want to be the next victims of the Bazaar's principles?

I did my best here, as a software vendor, to participate to the buoyant conversation about “fixing the wcm”.

Don’t expect an immature market to behave like a mature one.

Highly fragmented, evolving dramatically fast, based on emerging standards, concepts if not technologies, people seem to discover – rightly - there is something to be fixed in this business. Yes, don’t expect something else, unfortunately. Projects managers want new sophisticated features able to fulfil complex business requirements, users want simple tools to use, procurement wants much cheaper prices, vendors need to grow fast as generously funded by ambitious VC, if not disillusioned investors who put millions into WCM and are still waiting for ROI, big (historical) players seem to be more interested and skilled at milking the business cow - rather than innovating and beat the competition and – not a paradox - they are making therefore benefits.
What a mess, indeed.

Maybe it is already true, I just think that should be the Gold rush for skilled practitioners and consultants, they know the weaknesses and the strength of the products, the usual mistakes done during an implementation, how to advice clients. That’s trivial, fair enough, but so what?

That’s all I have to bring on the table?

Well to be frank, I am not so much convinced in anything else but relying on the right people, like in any complex and unstable situations. You don’t like consultants? Hire a skilled WCM project leader. You don’t find any? Reduce the ambition of your project. You disagree? No problem, but you have been warned, you will enter into a dangerous zone.

I have read it was everybody’s or nobody’s fault (implementers, vendors, clients: type #fixwcm into twitter). I have read everything should change, and don’t see where it will really fix the problem. It will improve the results, reduce risks, of course, but I doubt the entire proposals are likely to fix it.

I am an (arrogantly supposed) experienced mountaineer, and live near Chamonix. So I know several mountain guides. They often say mountain guides are here for two kinds of people: those too beginners to go alone in the somewhat dangerous and somewhat unpredictable complexity of the high altitude, those skilled but having too ambitious plans to be able to accomplish them on their own. There is no way to go in the mountains safely alone in these two cases. But if you are experienced mountaineer and are spending your day doing something consistent with your skills and means, you should return home in good health, and (relatively) on time. Same issue for a WCM implementation…

I am not sure if you need, or even if you can fix within soon the WCM, I just believe you should be aware it is a dangerous business, and learn how to live with this reality.

That’s it? As it is unlikely to change soon, yes, I am afraid that’s it…

The implementation of CMS / Portal software is not least critical for a client than the product itself. Actually it is even much more as what matters to the client is the final implementation. Strangely, it seems to me that this topic is not so much discussed maybe because not a matter of technology but mainly a matter of management and business. I can nevertheless recommend reading the great blog CMS Myth.

Also rather rarely discussed is the relationship between the software vendor and its partners.

Basically it is well known that one will find two models: vendors making themselves the implementation and those relying on their partners’ network. The first is the so-called “direct model” and the second one the “indirect model”. Things are not so Black and White on Earth and much more Yin and Yang, so usually vendors are using both modes depending on their strategy, their management, spring or autumn and… opportunities even if, as usual, they might pretend the opposite.

That said, every vendor should clarify its intention and assume the Pro and Cons of each model. Every business person will try to leverage benefits of both, but, and that’s what I like in business, at the end of the day every vendor will need to assume its choice. Actually the twitter mania / blog & other social networking are helping a lot making things clearer. Choose any side you want, but you will be known for your decision: direct or indirect or a mix of both with clear rules you actually apply or no rules but the vendor’s short term interest.

Any rule works. If *no rules but vendor’s short term interest* won’t prevent the vendor getting new partners and new clients, it will certainly not help the vendor building a network of skilled partners, able to be successful at integrating the product.

That’s why clients should be aware of the vendor’s policy about the integration model direct / indirect.

The choice of Jahia has been for long to rely on its network of partners. It does not prevent us for knowing somewhere how making an implementation:

1) To support actively clients who don’t want to have integrators and want to make the integration work themselves,

2) To do the implementation ourselves when the client demands it (yes it happens…),

3) To train the new partners of Jahia and let them integrating the software for their clients successfully.

We have written this policy in our (public) business partner program.

So it means for our clients that we can help in different ways them but will not compete with our partners. We can do a part of the implementation ourselves if they want – especially if we have no partners in a given location – but we don’t try to be a fine young cannibal because the strategy is to transfer the knowledge (about our software) to our recurrent partners and – we don’t hide that point, to take benefits from the strong commercial network of our partners. We like to work with the same partners and we welcome new partners who convinced us they should become recurrent partners, whatever the reason may be. But we are quite realistic on their real motivations, so no reason to hide the real intentions.

Why? We just prefer to focus at the product development and supporting our clients and partners rather than diversify into complex services somewhere quite far from our product core business – we won’t get any strategic value for becoming an expert in “MySQL –in-cluster integration” (for example)!

In conclusion, I believe any policy works, but it should be clarified for clients’ and partners’ benefit and should be consistent with the vendor global strategy.

That could even be a new “Vendors Meme”… Jon started it with its “How to keep a CMS vendor on their Toes”. The list was commented by several “usual suspects”, but it was well improved by Jeff Potts by its nice “Summer grilling tips for your CMS Vendor”.

I could myself add a couple more, but I am not a masochist – I am myself a CMS sales person. That said, we all agree, it is an excellent idea to focus at the people and not only at a product when a buyer is about to start a new CMS project.

So it makes a lot of sense trying to guess how trustable people are during the presales. But I am far from believing trust may appear from a list of (tricky) questions. Whereas most of these questions can be very relevant for a given project, it is about trust and the question is more “how grilling tips can help choosing the most trustable vendor?”

How the BBQ cession is actually the CMS Sales Idol

Well, thanks to this BBQ cession I believe you will certainly choose – with some sadism btw – the best sales person. Managing tricky questions is a sale’s routine. Some are gifted for such shows, some are not. It won’t mean they will be more – or less – honest than the others, it will mean there are better sales people than the others.

I understand the audience had funny – or sad - experiences with terrible sales people; we all have had terrible experience with sales people, we are all buyers of something in this world. And a demo is a demo, the unique chance to make a first impression, fair enough, but trying to grill your sales representative will have mainly two effects:

-         Satisfy your sadism if you get some pleasure making people miserable (why not),

-         Detect how good the sales person is.

The sales’ grill cession is not a trust challenge. It is a sales academy to detect the best sales persons.

Maybe I am wrong as a sales person myself, but I am much more in favour of pragmatic meetings, and making people comfortable: it always help to see how they really are.

My opinion: the best way to manipulate a vendor is to make him comfortable and make him believing you are not so skilled, not so aware, and not so clever that you actually are. If dishonest, the person will take the opportunity to use your fake weakness/lack of knowledge and will bullshit you in a way you won’t miss. If the sales person only wants what a sales person should (making a business successful, not only a sales itself but the whole project), he/she will behave accordingly.

It can’t say it has been a pogrom – vendors listed into love it of course - but their WCM magic report received a very cold welcomed from the non-vendor-community:

On the 31^st of July, Gartner released its (in?)famous WCM Magic Quadrant.

A few days later, several blogs were published, most of them were not “very” enthusiastic:

CMS Watch: Looking beyond the magic quadrant to find the nitty-gritty

Brandinteractivism: Gartner’s WCMS Magic Quadrant is unfair to Open Source

Jon on Tech: What has the ministry of magic quadrants got against me

Word of pie: Am I buying a WCM solution or stock?

At least, (at last maybe), Irina Guseva just commented the release without arguing against the Gartner: Parsing Gartner’s 2009 Magic Quadrant for Web Content Management

And I found only one – relatively - positive comment from Kevin Cochrane into Jon on Tech’s blog…

Whatever I missed, there is a clear consensus against the MQ of Gartner.

Whereas I fully understand the critics – most of them are quite true – I cannot support any consensus against the way analysts are providing advice and I am not so sure it makes sense to focus at what Gartner does not say or the limits of Magic Quadrant.

By definition, an analyst is supposed giving unbiased critics, based on facts. There is always some interpretation or perception but analysts are mostly saying how things are. What could be criticized is what they are focusing at, or even they commercial policy to get revenues, or business model. Fine, but I don’t mind as long as their analyses are honestly performed.

Why? Because analysts are providing advice, to let people decide. Most of the time they are just providing advice (no offence), they don’t possess any theoretical and mystical “truth”. Reality, while sometimes sad, is more complex than just an analyst advice and decisions are far from being taken only according to facts and unbiased analysis.

So Gartner is providing reasons to people to explain their decision often based on so many criteria (including - and not covered by Gartner! - irrational fear/trust about a vendor, about some people – presales team they met for instance, – rarely but it happens too - personal interests, hidden agenda, – or whatever reason someone cannot often give to his/her colleagues / team / managers). So these reasons are not for some people the good ones? Fine, but why pretending it is useless to all? If it were, nobody would purchase Gartner’s reports.

Ah yes, of course, the vendors… their sponsors! OK I propose to add this new conspiracy to the long lists of the famous conspiracies.

More seriously, I don’t think there is an analyst “better” than another one (maybe a WCM vendor A can provide a better multilingual feature than a vendor B, but as long as an analyst is making his job honestly – analysis based on facts – by definition I don’t see the point comparing them). There are just analysts who provide more interesting /detailed information than others, according to me, to my requirements, and to my agenda.

The more different from each others they will be, the better it will be.

Open source mob disagree or is upset because we are making only the 4% of the revenues covered by Gartner according to their criteria? I just agree with Seth Gottlieb comment: “If buyers are still making decisions based on what Gartner says, they are probably not ready to benefit from open source anyway.” True, if you need a supplier which is an established company for years, soon but not yet, open source is maybe not for you. Period. You find the reason stupid? Sadly, sometimes it is a requirement (and this requirement upsets me so much, like traffic jams and French strikes when I used to live in Paris, but I have learnt to live with).

So where is the problem? At least we will see next year what is the WCM open source trend, ok according to Gartner, but a trend based on facts. At least open source vendors can also say “we are known and commented by Gartner”.

At least Gartner is a good indicator of the vendor corporate assets. Every buyer should be interested into corporate fundamentals. I never said they should decide only according to them, I just believe they should also look at them, take advice and as usual eventually make their mind.

So yes, I am a fan of Gartner.

“The worst threat for a good plan is the dream of becoming a perfect plan” – Carl von Clausewitz.

On July the 29^th, Day Software (SIX: DAYN) published quite impressive results for the first half of 2009 and actually that was the 2^nd quarter which was impressive as the first one was not better than 2008’s 1Q. (Read my blog post, the paragraph about Day). Therefore, even if I am a little bit paranoiac by definition of my job, I just tried to find out how they have been able to use their 4Q results – quite bad – to make the 1H looking better by “making it even worst” (e.g. there is often some revenues you can postpone and charges you can anticipate) but I can’t really see how, at least significantly, as the nice part of the semester... is the second quarter. So in conclusion, Day, for me, just made an excellent quarter, really. And that’s good news both the open source and for the WCM industry.

Considering the huge investment done into their new product and its release date (4Q08), it is not such a surprise but, in 2009, it is still excellent news. Of course one good quarter does not mean so much – neither a bad one does – but we can hope Day will make too a decent, good or even maybe excellent 2H and it would be a – bad – surprise – if there second half would be not showing some bright colours again. Indeed, the main new push is given by the release of their new product and, I hope, by the top management, who changed one year ago. Last and not least, the global economic context should not really get worse worldwide (can it really be worse btw? !). So, to me, there is no challenge to make a second good half, it looks to me to be more a “duty” for their sales team! (Yes I am putting here some pressure, I hope the Day’s sales team will appreciate :) ).

So what are really the main challenges of Day for 2010?

Not surprisingly, Day points out the necessity to invest in sales and marketing. But this is a fragmented market, both big and small. It is big when you take the sum of its small independent and fragmented markets. But indeed small and fragmented into regional markets, e.g. a German country manager will not sell easily, far from that, to a French client or conversely. And building a country’s network/reputation takes often time, especially when you are just a few months ahead of opening new premises locally. Day has invested already into countries’ developments and Day’s visibility is quite good, as they are targeting majors companies and already broadly covered by analysts. So the main issue seems to me for the next months to be able to develop new markets thanks to the existing local sales team and those likely to reinforce the sales group. Even if Day is giving public numbers on sales & marketing costs, the efficiency of these investments would not be easy to evaluate as there is, so far, no breakdown by country publicly published. If I were a shareholder of Day, I would ask for it and will demand how much will come from the business development program compare with the existing and recurrent market where Day’s reached the “critical mass” to develop itself given the local team, local clients in production and skilled local integrators, but that’s another story.

Of course for the mid term and as usual, Day will have to be again very creative about the product like any similar vendor. That’s their reputation so this is a challenge which does not concern me too much. The main challenge is overconfidence, Day has had several years not so successful, and strangely it keeps you away from overconfidence. Several successful quarters would not mean they don't not need to reinvent everything again. This business is to be good at changing, evolving, and anticipating and even the more modest can forget it when success is coming.

But Day’s ability to create value for their shareholders seems trickier when you have a closed look at the company’s history. Their accumulated deficits – not only during the crazy years of the dotcom burst even if it makes the biggest part of this cake – are really huge. Day has very few debts but has burnt so much cash of its investors in the past that it must now prove its ability to create value from it. The recently appointed CEO is very experienced, and will have to demonstrate the ability of the company to invest wisely without losing the strong creativity skills of its engineers. Obviously, and they cannot be blamed for that, there are very proud of their product, they may now need to become proud of their company’s financials.

Day is indeed famous for having heavily invested into open source projects – given back to the community - and is definitively a key player for several very promising initiatives. It would be great seeing Day’s results in the future again profitable and its benefits regularly growing. Very few open source companies are publicly listed, and the private ones have often a corporate communication far from being transparent. So such performances would show, based on facts, the financial advantage of the open source business and the Day R&D team could be extremely proud of that.

Nice challenge for a skilled manager like Mr. Hansen and his team, and the success will be easy to evaluate.

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