Those reinvention blues
Posted by: Steve Hamm on August 19, 2005
One of the most difficult things for a tech company to accomplish is a complete makeover. They spend years convincing customers, the press, and analysts that they’re one thing—then they have to go back and convince them they’re something else. That’s the dilemma of Ramco Systems, a 16-year-old Indian software company that’s stuck in the transition from being a me-too maker of corporate packaged applications to being an innovative provider of technology that allows corporations to combine the affordability of packaged software and the tight fit of custom-written software.
I came upon Ramco for the second time a couple of months ago when I was working on BusinessWeek's big China & India package. The first time we met was in mid 1990s when I was in Silicon Valley and Ramco was trying to be the next SAP. That strategy didn't work. SAP, Oracle, PeopleSoft, JD Edwards, Baan, etc. were plenty. But Ramco Systems founder and CEO P.R. Venketrama Raja saw the writing on the wall fairly early, in 1996, and started steering a new course.
It took him six years and 600 engineers to come up with the new thing--VirtualWorks. This is a software development platform that allows clients to pull together a set of business process automation modules from Ramco's library and glue them together into a semi-custom application that's easy to add to and modify. Raja and his crew have spent the last couple of years trying convince the world they have something unique and valuable.
They aren't there yet, but they're making progress. Thirty customers are trying out the software. And a handful are willing to talk about it. Petroleum Helicopters Inc., a Lafayette, La., provider of transportation services for offshore oil rigs, is redoing its maintenance and logistics systems using Ramco's tools. It created a first batch of 50 modules in just four months, about half the time it would normally take to write custom software for the same purpose. The result: a computing system that tracks the use of aircraft and forecasts when maintenance needs to be done--avoiding expensive unscheduled down time. "It's a good concept," says James Quinn, chief information officer for Petroleum Helicopters. "You get the best of both worlds, the standard components and the custom stuff."
Raja's a bit frustrated with the pace of adoption, though. You can hear it in his voice. "It's a fundamentally different way of building technology solutions," he says. "The problem we have today is when we pitch our story, people wonder if we can actually deliver it. To get the initial breakthrough we need credibility."
Ramco has a chicken-and-egg problem. It needs customers to gain credibility, but, to get customers, it needs to be recognized and tuted by the tech analyst community. And most analysts won't pay attention until it has a bulging customer list. Raja is trying to do something that will help him get momentum. He's talking to high- profile investors and large potential tech-industry partners about backing him. No details yet.
Even if he lands a big financial partner, though, he'll still have to earn the respect of the marketplace practically one customer at a time. Fortunately, his traditional ERP business hasn't gone away. The company's revenues were up 23% last quarter to $12 million. So he has staying power.
Can Ramco win in its second incarnation? Maybe in small chunks, to start with. But, if it heeds its customers and doesn't get ahead of itself, it could be a valuable business some day.