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SaaS BI vendor LucidEra to shut down

SaaS BI vendor LucidEra will cease operations by the end of June due to a lack of funding, but that doesn't mean the end of SaaS BI, some say.

Software as a Service (SaaS) business intelligence (BI) provider LucidEra will cease operations by the end of this month, a company executive has confirmed.

The vendor sent an email to customers on Thursday with the news and pledged to help them wind down their relationship with the company and its SaaS-based BI products by the end of June, said Darren Cunningham, vice president of marketing at LucidEra, in a phone interview.

LucidEra's decision to shut down was brought about by a lack of funding, not a lack of interest in its products or in SaaS BI as a whole, Cunningham said. He would not go into details regarding LucidEra's financial problems other than to say, "It was a matter of funding or being acquired. And neither of those things happened."

Founded in 2005, the company's last round of funding came nearly two years ago, in August 2007, when it raised $15.6 million in Series B funding, according to the company website. Its customers, who must now either bring their BI and analytics functions in house or find another BI vendor -- SaaS or otherwise -- include Enterasys Secure Networks, Serena Software and Parature.

John Hagerty, an analyst with Boston-based AMR Research, said LucidEra's inability to find more funding was probably due in part to its approach to BI, not its SaaS delivery model. "I think that SaaS BI is still a valid model and something a lot more people are looking at," Hagerty said.

"[The vendor] took a very rigid and rigorous approach to how they were doing their analytics applications," he said. LucidEra's prepackaged applications focus mainly on data and do not allow for a lot of customization or access to other data sources. The company believed that by limiting the amount of customization it did, its SaaS BI apps would be able to scale out faster, he said.

Hagerty said, however, that "BI, by its nature, people want to customize it," including tapping into multiple data sources and customizing the resulting reports and analytics.

Other SaaS BI vendors hope that is the case. Brad Peters, CEO of Birst, a competing SaaS BI provider, agreed with Hagerty's assessment, saying LucidEra was betting that there was enough demand for prepackaged, reports, and there simply wasn't. Peters said that Birst's SaaS BI applications, by contrast, let customers access multiple data sources.

"I do not believe this says anything about SaaS or about SaaS BI other than it says you can't really fake it," Peters said. LucidEra's demise is "not for lack of marketing and PR -- they were everywhere," he added. "But when you can't find that many people with identical problems that should tell you there aren't that many people with identical problems."

Birst is wasting no time reaching out to LucidEra customers, as are a number of other SaaS BI vendors. Birst is offering 25% off its subscription services to LucidEra customers that sign up by August 1, and the company plans to host a number of webinars to help them make the transition. Good Data today unveiled a safe harbor program offering LucidEra customers free access to its on-demand analytics service for six months.

PivotLink, meanwhile, "will be contacting [LucidEra customers] in the next 24 to 48 hours and giving them a proposition that we hope keeps them in the SaaS BI world," said Dyke Hensen, chief marketing officer for PivotLink.

Backing up the claim that interest in SaaS BI is still strong, Birst CEO Peters said his company raised $10 million in November, while Hensen said that privately held PivotLink doubled its revenue in 2008 and "had a record Q1 in 2009," though he wouldn't reveal specific figures.

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