Visibility has become the mantra of high-tech companies during this economic downturn. Without visibility, earnings forecasts are useless, component needs are guesses at best, and large corporations seem adrift at sea.
Closedloop Solutions Inc. hopes to bring the companies safely back to shore, providing them with software tools that allow them to view their financial standing in real time.
Focusing on short-term financial planning, the suite of supply chain software solutions updates data almost instantaneously, allowing for accurate revenue projections and dynamic expense planning, according to the company.
"Over a two-week period, if you have a revised forecast you can pull back or re-orient expenditures much more quickly," said Chandran Sankaran, president and chief executive of Closedloop, Redwood City, Calif. "The world changes [quickly] and you don't have the power to go back."
Formed in 1998, Closedloop began marketing its wares at the start of the current downturn, but has already chalked up 10 customers, including JDS Uniphase, Network Appliance, and Silicon Graphics.
Closedloop's Web-based software products-SpendCap Manager, BizPlan Manager, and TopLine Manager-track finances and provide both a company and its suppliers with the most up-to-date information available, according to analysts.
"There are all kinds of ways of identifying your profitability drivers," said Bettina Zwerdling, an analyst at AMR Research Inc., Boston. "[Closedloop software] has been built in such a way that it can peer into the supply chain, but it doesn't have custom analytics built into it."
It can take anywhere from two weeks to two months for companies to enter their data into Closedloop's programs, depending on the size of the company and the amount of data. Once operational, businesses typically use it to re-evaluate quarterly data, Sankaran said. Eventually, they move to monthly, then weekly updates.
"It's much more effective than running out a spreadsheet," said Jeff Osorio, vice president of finance for operations at Silicon Graphics Inc., Mountain View, Calif. "It's going to save time and money because it makes things more visible. From an individual geographic perspective, some people [at SGI] say, 'You're replacing one spreadsheet with another.' I say, 'I'm replacing 100 spreadsheets with one.' "
It took SGI just under a week to enter all of its data for 35 countries and about 18 products, according to Osorio.
Still, Closedloop has not built a tremendous market share, according to Paul Hamerman, an analyst at Giga Information Group Inc., Cambridge, Mass. "They are still in the early stages of their development [and] are not well-known."
The company competes against Hyperion's Pillar, Adaytum's e.Planning, and Longview Solutions' Khallix.
"These alternatives boast flexible and powerful functionality that stand up to Closedloop's features, and add best-practices templates customized to vertical industries," AMR's Zwerdling said.
Also in the mix are Strategic Enterprise Management from SAP, Oracle Financial Analyzer from Oracle, and Enterprise Performance Management from PeopleSoft.
"These [competing] products take advantage of the enterprise backbone from which they are coupled," Zwerdling said. "However, as single applications for high-tech companies in rapid ramp-up mode, they may be considered too cumbersome."
The Closedloop products, geared toward technology companies, set themselves apart from the others by focusing on short-term financial planning, Sankaran said.
But Closedloop is targeting high-tech and semiconductor companies that are hurting right now, Zwerdling said. "Planning is more important for these segments at the moment, but it may be a challenge for them to implement" because their resources are strapped.
Many of these companies have cut their IT budgets or reduced their personnel, so they lack the financial wherewithal and employees to implement the program, she said.
But Sankaran believes companies will pay for the visibility his products provide.
"You're driving through the high-speed tech world with your windshield wipers refreshing every 10 seconds," Sankaran said. "If you're told that in those 10 seconds, the road could turn, many of us wouldn't venture onto it. We're seeing an environment where there was a swerve and half the cars left the road, when maybe only a handful should have."