Not playing games with process

From procurement to new hires, Appian targets government processes as growth market

If you want to succeed in business, you might do what Matthew Calkins does: He plays games.

“Games are valuable because they prepare you for life,” he said.

The president and CEO of Appian, a business process management software developer, doesn’t play electronic games or even chess, which he calls a very poor substitute for life because no one calculates or plans their life moves so far in advance.

Calkins also eschews games that require rolling dice, preferring a challenging board game predicated on mental strategy.

Even the name Appian was chosen by him with a strategy in mind.

“It’s ambiguous in the way that Amazon is ambiguous, and it therefore allows us to expand,” he said. “We had big plans when we started the company, and we didn’t want to feel constrained by a mission-indicating name.”

Calkins not only plays games, he creates them as well. His first game, Magnet, was named runner-up for Games Magazine’s Abstract Game of the Year in 2010.

He has named his next game, Sekigahara, after a decisive battle between two armies of more than 80,000 warriors that helped unify Japan in 1600.

“The better games minimize luck,” he explained. “I don’t like Monopoly because it involves too much luck.”

But some might say luck did indeed play a part in Calkins’ business success.

After nearly six years at MicroStrategy Inc., Calkins was only 26 when he left in 1999 to start Appian with $5,000 in seed money.

His early notion of what would make a profitable software company was Internet personalization, providing users with specific individualized information based on a set of unique factors.

To make buying or other recommendations based on personal preferences requires a great deal of unique data before the software can provide targeted services, he said, likening the process to the book recommendations Amazon can make after the customer has made a few genre purchases.

That business plan died when the tech bubble burst.

“We needed a new mission, and quick,” he said of his fledgling 30-employee venture.

Calkins thought the way to save the personalization concept was to move from the impracticality of trying to assist individuals into the corporate environment, where information is more easily and immediately known.

“So we refocused on what I thought was the savable part of the personalization concept, which was targeting people within an organization where you already knew a bunch of things about them,” he said.

“We effectively became a portal company because what people were willing to buy was a portal,” he said. “And we had the better portal because we targeted information to the people who ought to receive it instead of just having open information for everyone.”

However, the new business plan faced a pair of daunting problems.

Portals were rapidly becoming commoditized — a way to capture eyeballs, Calkins said, with the larger portal companies offering lots of software products.

“For us, all we had was a portal," he said. "It was like being in the razor business and not being able to sell blades. Everybody else is giving away the razor, and here we are, razors are the only product we have. So the writing was on the wall.”

The other problem, he added, was that the portal concept did not fulfill Appian’s original vision of personalization.

Targeting someone’s information about their work requires knowing what they are working on, and to know that, you need to own the work process, he said. “That’s what got us to [business] process management," he said. "We finally got to BPM by fulfilling the original vision of targeting information to the right person.”

From the start, Appian faced considerable competition in the BPM space, especially from Lombardi, a company based in Austin, Texas, that IBM Corp. bought in December 2009, and its current No. 1 competitor, Pegasystems Inc., a $1.5 billion company based in Cambridge, Mass., that specializes in financial systems and customer relationship management.

“We had to compete in a self-sustaining way against companies that had $70 [million] or $100 million to burn” in venture capital, Calkins said. “Their profile was higher, their marketing was better, and they got much more press and the analysts knew about them more. It was really difficult for us.”

So Appian played the simplicity card to counter the competition’s solutions. “We had to rely on innovation and customer service,” he said.

Appian’s BPM software runs on a thin interface without the need for any installation, he said. “It was all [done] through a browser. We made it software as a service, so you can get it through a cloud by subscription.”

Early clients were mostly commercial companies, and the customer base has grown to include Amazon.com, the New York Federal Reserve Bank and several government agencies.

“We have the world’s largest installation for the Army Knowledge Online, with more than 1 billion human log-ons,” he said of the Web-based information service for 2.2 million Army and other Defense Department customers.

This month, the company will host the Appian World user conference in Reston, Va. The speakers will include Keith Seaman, director of the Army's Business Transformation Agency.

“Appian’s BPM platform provides us a state-of-the-art tool for implementing financial controls, collaboration and performance reporting to optimize our procurement processes,” said Mark Whiteside, performance and resource management director at the Defense Acquisition University, a DOD organization based at Fort Belvoir, Va., that trains military and civilian personnel in acquisition, technology and logistics.

“We anticipate expanding our use of Appian to other key process areas to the point where ultimately it will act as the central business system for the DAU,” he added.

One of Appian’s biggest clients now is the Education Department, which uses Appian’s SaaS product to collect and collate annual data from every school district in the country.

A private company with some investment from Novak Biddle, Appian has been providing BPM services for six years and now has generated more than $140 million in revenue, with about a 100 percent increase in revenue year-over-year, Calkins said.

“We’re very lean," he said. "We rely on [innovative business] partners mostly. We have fewer than 200 employees directly on our payroll.”

Appian has a three-year growth projection of more than 30 percent annually, which will make the company about three times as large as it is today while remaining focused solely on its BPM offerings.

“All we do is what we do,” he said, adding that he has no interest in growing the company through acquisitions.

Calkins freely says his ultimate goal is an initial public offering. However, that won't happen in this market climate.

“We can wait," he said. "We don’t have a clock ticking on us. We have plenty of time to pick just the perfect window, and that’s what I expect we’ll do."

In September 2010, the Food and Drug Administration signed a new five-year blanket purchase agreement worth more than $12 million to continue using the Appian BPM suite.

In November, the Office of the Comptroller of the Currency awarded Appian a $10 million contract that will expand its use of Appian’s software.

The contract covers the creation and introduction of a BPM-based Central Application Tracking System, known as CATS, that will automate the paper-based licensing and regulatory filings that U.S. commercial banks must submit to the Treasury Department agency.

And in February, Appian released the newest version of its BPM suite, a platform with a mobile/social interface called Appian Tempo that delivers mobile access for iPad, iPhone, iPod Touch, BlackBerry and Android smart devices.

Customers can log support cases, register for webinars, get product and industry updates, share components, and collaborate on topics of mutual interest.

The release of Appian Tempo coincides with what Frank Gens, senior vice president and chief analyst at industry analyst IDC, calls “transformative technologies that will make the critical transition from early adopter status to early mainstream adoption in 2011.”

The IT industry is moving toward the adoption of this next dominant platform, characterized by mobility, cloud-based application and service delivery, he said of Appian’s latest BPM version.

Calkins has turned his eyes on the government procurement process, which he said he sees as fertile ground for Appian’s products. “The government must procure in a very rigorized way," he said. "It’s specific; it’s a matter of law. It’s a most valuable process. We have a specific offering that targets that process."

He said he also sees growth opportunities in supporting government hiring practices because, for most agencies, the entrance requirements are standardized. Appian, working with the Office of Personnel Management, has developed a solution to automate that set of procedures, which saves time, paper and money — always a trifecta winner.

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