Wednesday, December 24, 2008

Business Transaction Management in the News

As you may or may not know, many of the major Transaction Monitoring players have their R&D centers based in Israel; Correlsense, Optier, Correlix and B-Hive. Considering the important role that "hi-tech" plays in the Israeli economy, it is no surprise that financial publications publish technology related articles on a regular basis; I have taken the liberty to translate parts of a recent article that was published in "Globes Israel".

"After evaluating both Correlsense and Optier; we have decided to invest in Correlsense"

The article talks about how the IT systems management world is currently going through some "tectonic movements" and that the companies that emerge once the dust clears will have a pivotal role in the market. Similarly, there are forces which are acting on the enterprise computing world in general - virtualization, the large growth in the availability of information and applications within the organization and outside of it and of course, the constant need to reduce operational costs – that are causing executives to think differently.

There are a number of Israeli companies who are in this position; Optier is an example of a company that is trying to become a big player in the IT systems management market. This is also the case with Correlsense, says Sam Somech. Somech is an Angel that invested in Correlsense, along with the VC firm eXeed, and is now serving as the company's chairman of the board.

Both Correlsense and Optier have developed technologies for the troubleshooting and optimization of data centers, with the belief that the best way to deal with the complexities of the modern data center is by tracking transactions from the user, through the data center and all the way to the back end data bases.

"The surviving company will have a high value"

According to the evaluation of Correlsense's investors and founders, the leading IT systems management companies – IBM, HP, BMC, CA or Microsoft – do not have this kind of technology yet. "We evaluated the two companies - Optier and Correlsense", Says Somech, "and in our opinion Correlsense's technology is favorable". Optier had no comment.

Despite the uncertainties, "if a start-up can provide real innovation that will give it the edge in a sale, then it has what to offer the market", says Somech. "The technological gap between what IBM has to offer in relation to Correlsense is large. In this world, he who has the faster, more economical offering is at an advantage. It is not likely that the companies in the market today [the big four] are going to be able to invest heavily in R&D, they have also been affected [by the financial situation] and they are not going to invest tens of millions of dollars when they do not know what will come out of them. Therefore the start-up companies that will survive this downturn will have a high value".

With all due respect to Mr. Somech, the IT systems management market will not wait for Correlsense or even Optier. The Gartner Analyst, Will Cappelli for instance told "Globes" at the beginning of the year that Optier will eventually have to find itself as part of a larger company that will acquire it. Even BMC CEO, Bob Beauchamp advises the companies that are active in the field to go for acquisition, as it is a mature field with no room for niche solutions.

"We don't want to cut our valuation"

"The transaction monitoring market is not mature, it's just starting", replies Somech. Oren Elias, CEO and founder of Correlsense, says "transaction management is a big leap forward. Therefore, in times like these when the "big four" are investing less [in R&D], there is an opportunity for a new corporation to rise up and take business even from the "big four"".

There are a number of players in the IT Systems Management field and the Israeli ones among them especially stand out; Optier, Correlsense, Precise, B-Hive and Correlix. Elias and Somech are convinced that their solution is unique. "The only companies that built their transaction monitoring technologies from scratch are Correlsense and Optier", they claim.

In order to turn into one of the hottest names in software in the world, Optier has raised $116M. Correlsense, still at the beginning of their route, has been satisfied by their $1.5M round that was completed half a year ago from eXeed, Vertex and Proseed and is now in the process of raising a few more million.

"We believe in the company, it's not a good idea for us to go for additional external funding at this point, we don't want to cut our valuation. I think that it is going to be a good investment for our firm, because of the advanced technology. We are looking for just enough money to keep the company going for the next two years at which point the market is going to look much different. At this point there isn't a lot of competition".


RGidron said...

Sam Somech was never invited to invest in OpTier.. talk is cheap.

Business Transaction Management said...

Ron Gidron
Director of Product Marketing at OpTier

Globes published this article I translated it - I am happy to post any article that comes out about Optier

RGidron said...

Reality does not get set by what a newspaper publishes...

לימור said...

Correlix probably has the greatest innovation and definitely developed from scratch one of the most complex transaction monitoring technologies, however Correlix is a Electronic Trading Player with a Business Value Proposition and is not part of this generalized IT Management space.

לימור said...

I'll be very surprised if OpTier considered raising money from Sam and his team relative to their investment model and the amounts they can invest