Review

Upstart Tenrox Plans To Survive Inevitable PSA Shakeout
By Ian Jacobs, March 8, 2002

In the crowded space growing around services automation, it can sometimes be hard for a small vendor to grab any attention. Tenrox, a company that does about 40% of its business outside of North America, has a few big wins under its belt and wants to push services automation into IT departments of large corporations as a way to maintain its growth.

Context Two and a half years ago, the market for CRM was so hot that software manufacturers flocked to the field, resulting in gross overcapacity. The end result was a consolidation that has likely yet to end. The number of vendors in the market for various elements of enterprise and services automation makes the CRM glut look as small as a dill seed. Large enterprise application vendors such as PeopleSoft claim to cover the entire spectrum, and the industry is littered with dozens of vendors that work on specific pieces of the puzzle, such as time and expenses billing or resource planning. In the middle of this tangle sit the services automation pure plays, companies like Evolve and Tenrox.

Although not a household name, Tenrox has been around since 1995, with its first product release two years later. The privately held company has about 90 employees and claims to have always been fiscally conservative and with no external financing. The company has some major customer wins, including EDS, the customer win also most often touted by its competitor Evolve. While Evolve went into EDS to replace 10 homegrown systems, Tenrox started on automating EDS's work on a single project. EDS won the deal for what is known as the Accord project, often cited as the largest IT project in Europe. EDS is automating the Social Security services for the UK government, and Tenrox is optimizing the processes used by the EDS team. This deal is actually a decent exemplar of how smaller companies can survive in an overcrowded market - slide a small wedge into the large account and work the account so that the deals grow.

Technology Tenrox PSA, Tenrox's services optimization suite, automates and streamlines business processes for project- or service-oriented companies. The suite is modular, and Tenrox officials take the position that each component is strong enough to compete for deals on its own. This design also means that customers can take a phased approach to implementation.

The areas covered by the suite range from expense reporting to opportunity management. The expense-reporting piece includes expense submission, validation and approval, as well as compliance reporting, foreign currency conversions, supervisory controls and automatic approval levels. The opportunity management module allows companies to identify and track projects, opportunities and leads. This can mean qualifying and prioritizing demand for services and projects, as well as pipeline analysis, forecasting revenue and resource requirements, competitive analysis, win/loss reports and performance statistics.

The Tenrox PSA suite also includes tools for project and proposal management, revenue and cost accounting, invoicing, timesheet management and resource and labor management. It ships with a software development kit that lets users expand, enhance and integrate the product. It supports three relational databases: SQL Server, Oracle and DB2. For reporting and analysis, Tenrox relies on an OEM deal with Business Objects.

Competition As previously noted, the field for automating the processes of project-based companies is completely packed. Even though the market is still developing, this crowding will lead to a major shakeout, likely within the next two years.

Currently, PeopleSoft, SAP and Lawson target this market directly, and Oracle and Siebel tackle parts of the problem. Smaller pure plays such as Evolve, Changepoint and Niku also compete with point-solution vendors like Elite, Journyx and Coretime.

With all these vendors clouding up the picture, it might seem surprising that everyone is expecting another major entrant into the field. But, with its forays into ERP and soon into CRM, it doesn't seem much of a stretch to expect Microsoft to attempt to capture the market for enterprise optimization, at least for small and midsize businesses. While Redmond is likely still a year or two away from dipping its toe into this market, all of the smaller vendors should be making plans of how to fend off this particularly effective competitor.

Conclusion For a small company in a very crowded space, Tenrox is saying all the right things. It is targeting divisions of larger companies as well as using project work to get its foot in the door, as it did with its EDS contract. The company also has a strong vision of selling to IT departments of the largest companies, hoping to convince these companies to turn away from seeing these units as only cost centers. But competing with the leaders of the application world is never easy.