SeeBeyond Peers into Government Market

With a boost from systems integrator partners, SeeBeyond Technology Corp. has made a fast start in the federal technology market.When SeeBeyond hired David Donovan in March 2000 from Tivoli Systems Inc. as federal sales director, the company had no public-sector sales to speak of. By the time the middleware provider tallied fiscal 2000 sales, however, federal sales totaled 8 percent of revenue, or about $9 million. The company's products, which link newer systems with older legacy technologies, have been used by the Defense Department, the Social Security Administration and Veterans Affairs as well as by San Diego County, Los Angeles County and Wayne County, Mich. Integrators such as Electronic Data Systems Corp., Plano, Texas; Accenture Ltd., Hamilton, Bermuda; and Computer Sciences Corp., El Segundo, Calif., have been using SeeBeyond for some of their largest government projects as well. For instance, EDS uses SeeBeyond for its $6.9 billion Navy-Marine Corps Intranet contract, and for its Department of Defense Enrollment and Eligibility Registration System and Manpower Data Center contracts.And in September, Donovan placed SeeBeyond on the General Services Administration schedule. "We're doing federal right," said Donovan, adding that his office has a federal contract manager and federally focused marketing, public relations and business development personnel. "This isn't a matter of a company sending three guys to D.C. and saying 'Hey, we're federal.' "Although Donovan could not discuss public-sector forecasts for 2001, there is every indication the government unit will continue to grow along with the company as whole. SeeBeyond's revenue jumped from $55.2 million in 1999 to $115 million in 2000, and Donovan estimated the company will bring home $185 million in 2001, of which $115 million is already booked. Although the company had a net loss of $31.3 million in 2000, investment bank Pacific Growth Equities Inc., San Francisco, which follows SeeBeyond, expects the company to break even in the fourth quarter of 2001 after paying off debt from expansion. Founded in 1989 by James Demetriades, SeeBeyond was originally called Software Technologies Corp., and focused on serving the health care industry. In recent years, the Monrovia, Calif.-based company has sought to expand into other vertical sectors, including government, which has no shortage of legacy systems."What we do well with is the old and big," Donovan said, referring to decades-old databases the company has worked with, such as Adabase and Computer Corp. of America's Model 204. "We were integrating hierarchical databases before they were considered legacy." SeeBeyond officials said its products can cut software integration costs by 90 percent from the traditionally employed method of linking disparate systems, which is hand-programming the translation code for each individual application. "Point-to-point solutions are a maintenance nightmare, because if you change one application, you have to change the [protocols of] the other," Donovan said. "We have a bus architecture that acts like a power strip. You can plug in a customer relationship management system, an enterprise resource planning portal. The bus architecture worries about the data transformation between the applications." The company's products are interoperable with 84 different communications protocols.Accenture has tapped the company for its $400 million contract for the Defense Logistics Agency's Business Systems Modernization initiative. The integrator needed to connect new software from SAP AG and Manugistics Group Inc. to the approximately 150 agency field systems that still required data in the legacy format."SeeBeyond is easy to work with, and it brings good skills to the table," said Kevin Laudano, an Accenture partner for its enterprise application integration practice who was involved in the DLA work. "We see SeeBeyond just as we see SAP, PeopleSoft and Commerce One: as a premier player in their space." In a similar fashion, CSC is using SeeBeyond for its $70.1 million Army Defense Acquisition Logistics Information Management System contract, which involves replacing COBOL software-based systems built in the 1960s with SAP-based components. Like Accenture's modernization work, Donovan said, this job requires the new software to talk to the field units still geared toward the older system. This run of integrator partnerships is no accident. In the competitive enterprise application integration market ? crowded with players such as CrossWorlds Software Inc., Mercator Software Inc., Tibco Software Inc. and Vitria Technology Inc. ? SeeBeyond sees value in integrator partnerships. According to the company's annual report filed with the Securities and Exchange Commission, SeeBeyond recognizes that joint marketing and support costs are considerably less than those efforts undertaken by the company itself. Leveraging integrators' relationships with existing and potential customers also prove valuable.Erick Brethenoux, a vice president who follows the company for Lazard LLC, a Paris-based global investment banking firm, praised SeeBeyond for this approach. Developing relationships with companies focused on services is more effective for middleware providers than trying to offer both product and services themselves, he said."A software provider should remain a software provider," Brethenoux said. "We are providing a tool kit. I can show people how it converts this type of data source to this type of data source, but a partner can show how [the software can solve the client's specific challenges]. The domain knowledge that the integrator possesses is key," Donovan said.According to SeeBeyond, the company maintains alliances with Accenture, CSC, EDS, PricewaterhouseCoopers LLP, Andersen, Booz-Allen & Hamilton Inc., Cap Gemini Ernst & Young, Deloitte Consulting and KPMG Consulting Inc.Accenture, CSC and EDS have acquired equity stakes in SeeBeyond, and SeeBeyond boasts two executives from two systems integrators on its board of directors: George Abigail, vice president of corporate business development and ventures for EDS, and Jack Wilson of Accenture Technology Ventures.The partnerships get the integrators a wide range products, according to Brethenoux. Donovan said there are about 12 different functional areas that enterprise application integration entails, such as process modeling, security and relationship management. "There [are] a lot of companies that do maybe three or four of these things. We're the only company that does all 12," he said."An integrator doesn't want to be half way through a project and say, 'I need this tool,' " Donovan said.XXXSPLITXXX-According to Erick Brethenoux, a vice president who follows SeeBeyond Technology Corp. for Lazard LLC, one of the most valuable elements that SeeBeyond Technology offers systems integrators is a unique management tool called the e*Insight Business Process Manager.Based on the unified modeling language, an increasingly adopted methodology for process modeling, e*Insight allows planners to chart an organization's operating processes and derive the appropriate equipment needed to outfit the organization. According to David Donovan, federal sales director for SeeBeyond, e*Insight goes beyond normal business modeling tools in that it connects requirements with solutions. "We push down the integration components from the business process models, so there is a direct connection from the process models to the underlying technology to make it happen ? the number of queues you'll need, what adapters to use and so on," Donovan said.According to Brethenoux, such a tool "helps system integration and acquisition integration from a business perspective and that's much more valuable to the customer."