Tuesday, 30 June 2009

Portrait paints a brighter picture with point solutions

(By Philip Carnelley - Tuesday 30th June 2009 8:15am). Following yesterday's FY09 results (see Profits and growth in sight for Portrait Software), we met Portrait Software’s exec team, including newish CEO Luke McKeever (7 months in post) and very new non-exec Chairman Paul Hewitt (2 weeks in post!), taking over from our old friend, John O’Connell. Hewitt comes from a solid blue-chip finance background, at the Coop and RAC, amongst others.

A ‘Little British Battler’, Portrait has a long and chequered history. It had a rather torrid FY09, in particular Q2, when licence sales nosedived following the banking crisis – 50% of sales are to retail banks. But licence sales are now back to earlier levels, and it has a solid maintenance revenue stream (43% of revenue) while service sales are holding up (36%). It also has a deal with US-based banking services giant, Fiserv, which is ‘white-labelling’ Portrait’s CRM software.

For a company like Portrait, the big challenge is that the market has moved on. The opportunity for selling big CRM suites to medium/large organizations is both tough and limited, because: (a) most sizeable companies already have a CRM suite and (b) those that don’t or who want to upgrade are more disposed to buy from the global players – Oracle (Siebel), SAP, Microsoft and, increasingly, Salesforce.

So Portrait has sensibly switched tracks to focus on selling ‘complementary’ point solutions, in particular using the technology it acquired through Quadstone Analytics, an Edinburgh University spin-off, into the majors’ installed base. Indeed 70% of Portrait’s new licence sales now come from ‘complementary’ products. The critical thing is to offer something the majors don’t – in this case, analytical capability to improve successful customer interactions through intelligent real-time selection of products for cross-sell/up-sell. One of Portrait’s partnerships is with Microsoft Dynamics, and Microsoft, as we noted in Microsoft Dynamics: Four ERPs and a CRM, is aiming to get half its bizapps revenues from its CRM product. Portrait is surely hoping so, too!

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