Sramana: What are some of the strategic changes you have made, and what results have you seen from those changes?
Steve Millard: Some of the changes that have been made are strategy and targeting changes. Everything we did was focused on getting customers. I have found that a lot of companies that are not successful in terms of revenue talk about other success stories. Anybody who talks about metrics other than revenue does not have revenue worth talking about.
We took a technology change around the cloud. We have been a cloud company and managed services company for 15 years. We have been doing this long before it was called the cloud. We were sitting on a gold mine, and that is very important. I forced a technology change through the system by forcing the cloud offering through the system. We have used Amazon Web Services to push out our public cloud offering dramatically. This has been a game changer for us, and it has raised our profile in the US. We now see most of our deals coming through the cloud.
We had to marry our technology shift to a customer set that was under-served. We are now focused on a greenfield opportunity, which is essentially young, venture-backed companies. They have data and want to use software like ours, and they want to use it in the cloud. We are making tremendous strides in that space. We have been doing this for only one quarter and it has been very, very successful.
Sramana: Can you give me some use cases?
Steve Millard: There is one in particular I really love. We closed this deal last quarter, and it is a mobile startup company. That use GPS sensors on smartphones to provide offers to their customers as they pass by various commercial locales. Their software will understand a person’s movement patterns over time to allow them to provide real-time offers to that person. For example, you may be walking by a coffee shop and receive an offer from that shop to stop in for a discounted drink. It is almost like a real-time Groupon that is based on location.
This type of application is very important for us. It is also a cloud-based application, and it is a company that can grow with us. It is not a huge company that requires layers and layers of approval. We communicate CEO to CEO, and we are going to grow with them as they move forward.
We have another use case that is just kicking off. There are devices on cars that provide the telematics about how you drive. If you are a good driver, that information can go to your insurance company and they can adjust your rates based on how you drive. There is a startup that has captured a lot of data in this space, and they are using Kognitio as the analytical engine behind their telematics. They are using us to provide real-time data integration and analysis as people drive their cars. They can then turn around and sell that information to insurance companies.
Sramana: What is the business model for Kognitio?
Steve Millard: We can do business one of three ways. Customers can buy an appliance, they can buy the Kognitio platform as software they can run on their servers, or they can run it on the cloud. The business model for the customers that we are gaining the most traction with are a public cloud model. These customers use the cloud service through Amazon, and they pay for the usage rate of the software.
Sramana: How much is an average deal size in the cloud model?
Steve Millard: On average, you are looking at a three-year deal that is around $500,000 total.
Sramana: How do you prospect for these companies?
Steve Millard: There are a lot of ways to do it. We have a strong telesales organization internally. We have a lot of Teradata sales folks who have retired and don’t necessarily want to go out on the road anymore. They are able to find opportunities through their contacts, through shows, and through VCs. We get prospects all over, but the best opportunities come from word of mouth. Companies are really starting to take to us, and as our profile gets raised within the Valley, it starts moving to other tech centers as well.