December 5, 2007

EnterpriseDB grows rapidly and fires its field sales force

Ashlee Vance discovered that EnterpriseDB had shot its field sales force, and opined that EnterpriseDB might generally be in trouble. EnterpriseDB CEO Andy Astor and marketing exec Derek Rodner responded quickly in their respective blogs. Andy and I also talked on the phone.

As best as I can tell, here’s what’s actually going on:

  1. EnterpriseDB has a lot of OEM traction. But things have changed since OEM deals fueled Oracle and Ingres (then called RSI and RTI respectively) a quarter-century ago, and OEM bookings may not translate into huge amounts of immediate revenue or cash.
  2. EnterpriseDB is doing well with small departmental deals as well, and/or sales to smaller companies. I’m sure the vast majority of those 200 customers Andy Astor cites are four- or low five-figure payers. (Uh, Andy – they are all PAYING customers, right? And you’re not counting end customers of your OEMs, right?)
  3. EnterpriseDB made a sales strategy and/or sales management mistake – they tried to go straight to the megadeals, rather than focusing on the high five-figure and low six-figure ones that are the obvious next step up.
  4. For some reason, EnterpriseDB felt that fixing this error required firing the whole field sales force and starting over. Part of that reason apparently was: As good as EnterpriseDB’s growth has been, is the company had expected to grow ever faster, and it seemed desirable to cut costs somewhere.
  5. More generally, it seems EnterpriseDB has had some churn on the revenue-creation side of its management. Since April they’ve brought in new heads of both marketing and of business development, yet neither is currently listed on the EnterpriseDB website. That kind of thing is usually associated with strategy zigzags as well.

And by the way: A field salesforce isn’t necessarily as big a deal as it seems. BMC, VM Software (!= VMware), and Florida Software all enjoyed six-figure license deals via telesales way back in the 1980s. And in my own business, I’ve found that there’s much less traveling to customer sites than there used to be even in the 1990s.*

*My count of active clients stands well in the double digits, and I’ve met with about half of them face-to-face over the past year. But I only recall making one out-of-town visit to client offices over the past several years, and I hope my friends at SAS are duly impressed by the effort. 🙂

One final note – I’d like to commend Andy and Derek on marketing well done. Their blog posts are textbook examples of presenting company-validating data points just when such things are most needed.

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Comments

2 Responses to “EnterpriseDB grows rapidly and fires its field sales force”

  1. Andy Astor on December 5th, 2007 10:35 pm

    Hey Curt,

    On your analysis, points 2 and 4 require some correction…

    2. First of all, YES, these are paying customers. (The number of non-paying users is greater by orders of magnitude.) And deal size averages are actually somewhat above your estimates, but you’re not terribly far off.

    4. Good god. We have *not* fired the whole field sales force. We’ve *adjusted* the business model, not trashed it. We’re in the middle of our best quarter in history, and we couldn’t be there without a reasonable complement of our amazing field force.

    Thanks, by the way, for the compliment about our marketing. The truth is, though, that often the best marketing is simple transparency. I hope these comments help in that regard.

  2. Curt Monash on December 5th, 2007 11:05 pm

    I agree completely. Be transparent about the good things that you have going, then also be transparent about the bad ones so as to gain credibility for the good parts.

    Most alternative marketing strategies are breaking down in this skeptical age, but that one remains powerful.

    CAM

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