Attunity Ltd. (ATTU)

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Attunity CEO: New product InFocus is a revolution in business management
20.12.05 | 21:35 By Omri Cohen
Almost two years after the ex-Precise software people took over Attunity, the company has transformed itself from a technology company to a provider of a comprehensive business software vendor.

"We have reached our first significant milestone in building Attunity as a software company with long-term vision," says its chief executive Aki Ratner, after the company today announced the launch of Attunity InFocus, which the company calls "the first solution that addresses the daily operational needs of enterprise business managers".

From the company's perspective, when you sell only technology and not a complete solution, the product remains dependent on other companies to provide the additional components. The Attunity management hopes that the new offering will drive growth and turn it profitable in the year to come.

Shimon Alon, Ron Zuckerman and Ratner took over Precise in 1997 and sold it after five years to Veritas for $620 million. At the end of 2003 a group of investors headed by the trio bought 28% of Attunity. Investors applauded and in the space of two weeks, the company's market capitalization had risen 120%. But they are not magicians and the hopes ebbed, returning to life on Tuesday.

Attunity provides enterprises with software to link between information and data. The company's technology enables enterprises to connect to sources of information, to update changes at all levels of the enterprise, and to consolidate multiple sources of information to create a single picture of the enterprise situation. The new solution is designed to help the management operate the business more efficiently on a daily basis, and to receive data on operations in real time. It addresses the entire management echelon throughout medium to big enterprises.

"We set ourselves four goals in developing the new product," Ratner says. "To launch it by the end of 2005, for it to be a unique product, for it to add value to decision-makers in theorg, and for it to be sold as a shelf product (usable) within days, not as a project with a protracted sale period."

Attunity's thinking was that a manager wants to know everything about the organization in real time, to be able to collate data quickly, and to be able to use the data quickly and track the changes over time.

The company's business model is to sell user licenses, and services to subscribers. The new solution is installed on the enterprise server. The size of each transaction with a corporation depends on how many licenses it buys.

Say a company buys ten licenses: the revenue to Attunity should be in the range of $50,000 to $100,000, Ratner says. But Attunity is counting on repeat sales to the same enterprises, which will want over time to buy more licenses and increase transactions to magnitudes of hundreds of thousands of dollars, or even millions.

"With Attunity InFocus, business users have the ability to tailor their own daily business operation environment to the way they work," the company says it its press release.

"Operationally focused business intelligence applications provide real-time information linked with historical context helping decision makers improve daily business operations," said Bill Gassman, research director at Gartner, in the statement. "These applications combine the real-time alerting functionality of a business activity management system with the historical information and analytic power of a Business Intelligence environment, and the context and execution engine of a business process management system."

Attunity InFocus is a rapid and complete solution that can be implemented in weeks, not months, the firm says: it leverages IT skills and investments made in Business Intelligence technologies.

In the past Attunity marketed software directly and through OEM agreements. How will InFocus be marketed?

Ratner: "In our opinion, with the new product the correct way is first of all to create a market. Therefore, in the first six months we will focus on selling to our existing clients. In the second half of 2006 we will start to seek business alliances with other companies. Launching the product is the first step in turning Attunity from a small software company into another company that operates in the field of solutions."

You don't have much money in hand, and a launch requires investment.

"We finished the third quarter with $3.1 million dollars and have a $3 million credit facility. I don't see a problem continuing with the money we have, but I don't rule out raising money from investors, if the offers at the right price arrive in time. There is a lot of interest in us, because everybody thinks it should have happened, and it's important for the company to have more cash. But the choice between raising money and using our credit will be based on purely economic reasons."

Consolidation is all the rage in software. Are you thinking of selling the company?

"The question is, are we building a company for sale. The answer is, no. When the strategy is to sell, either you sell cheap or you don't sell at all. A company has to be built for the long run and at that point, I don't rule out anything. We have a huge market and great potential, so consolidation isn't on our minds at this time. We're focused on building the company.

"We have to build a business model in which profitability is higher, and based on repeat sales, which are necessarily cheaper, because the client already has the software and can - by phone or Internet - order additional usage licenses. If we manage to create a broad client base through initial sales of the product, and then get repeat orders, that is a way to achieve high profitability.

"The second way to achieve that aim is through business partners, which increase sales volume without increasing marketing costs."

How does the market like InFocus? Ratner says it was created together with veteran customers who provided feedback throughout. "Today we meet with a lot of existing clients and their responses were good. Therefore, product penetration should be faster than that of the first product by a startup."

For the first nine months of 2005 Attunity reported a 9.5% increase in sales to $11.2 million, and a 28% drop in operating losses to $1.8 million. Marketing and sales costs increased almost 24% in that time, to $6.9 million and R&D costs shot up 74% to $1.8 million.

Given the launch and high marketing costs relative to revenue, when will Attunity break even?

"We can decide for ourselves when to break even. It will depend on the market response to the product. R&D costs aren't expected to increase in the year to come and therefore, the shift to break-even depends on investments in marketing and the aggression we use in introducing the product. In any case I expected to achieve operating balance during 2006."

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