What Killed Klir Technologies?
One of the energizing characteristics of the IT industry in general, and the Software-as-a-Service (SaaS) market in particular, is the continuous change. Part of the change process is the constant cycle of new companies entering the market and established companies disappearing.
Although many of these companies will come and go with little fanfare, occasionally the meaning of a promising young company that fails to succeed is worth extra consideration. Klir Technologies was such a company.
I was notified of the company’s closure by its CEO/Co-Founder, James Maiocco, at the time of its announcement on August 1, but have been unable to comment on this event until now because of other commitments.
Klir sought to solve companies’ IT performance management needs via a SaaS solution. While Klir had been in business since 2000, it started to attract serious attention in 2006 when it decided to apply some of the basic principles of the rapidly evolving Web 2.0 social networking world to address age-old issues in the IT management arena.
Just as the legacy, on-premise enterprise applications, like SAP and Oracle, have failed to satisfy the corporate needs of many business users, so have traditional network/system management (NSM) platforms from IBM, HP and other vendors fallen short of meeting the needs of IT managers.
Klir was leading a new generation of SaaS vendors seeking to deliver easier to deploy and use on-demand alternatives to these costly, cumbersome and overly complex management platforms. A pivotal component of Klir’s go-to-market strategy was offering a free, single-user license to IT managers that enabled them to test Klir’s capabilities without making a financial commitment and permitted Klir to permeate the market quickly.
As I indicated in a previous blog, this strategy resembled a similar approach which was successfully used by VitalSigns in the 1990s before it was acquired by my former employer, International Network Services (INS).
Klir’s vision of permitting users to benchmark their IT performance against their peers, so they could also build industry best practice standards based on real data, went beyond VitalSigns’ simpler market penetration objectives.
Klir’s innovative solution and initial success attracted more than just the typical trade press attention. In addition to being named to a number of ‘company to watch’ lists, Klir also entered into a number of unique cross-promotional arrangements with major publishers who have become increasingly hungry for new mechanisms to attract and retain readers. The rapidly growing ‘community’ of IT professionals downloading and using Klir’s SaaS solution quickly became an attractive target for IT publishers as well.
In another of my previous blogs, I suggested that Klir was rewriting the rules about how vendors and publishers might work with one another to achieve their mutual business objectives.
Klir’s initial success building a social network of IT professionals also attracted the attention of some major players in the market, including vendors and resellers, interested in incorporating Klir’s functionality into their portfolios and leveraging its community-building mechanism to extend their own market penetration capabilities.
The company built a solid management team with experience at companies such as Microsoft, Amazon and Expedia. And, it had a strong set of investors.
I’d been singing the praises of Klir’s innovative approach for over a year. My consulting work gave me the privilege of having a unique perspective on the company’s strategy and potential partnering opportunities.
Despite its tremendous promise and these exciting opportunities, Klir still succumbed to the same strategic challenges which have stymied countless other companies before them.
First, it failed to successfully convert its community of users into paying customers.
Second, it was distracted from the customer conversion process by its efforts to simultaneously secure strategic partnering arrangements with the major vendors and resellers.
As a result of these distractions, Klir was also unable to clearly distinguish its IT management capabilities on a functional basis from a growing array of on-demand and traditional on-premise players.
The popular business management book by Michael Treacy and Fred Wiersema in 1997, “Discipline of Market Leaders”, stated that most companies succeed by choosing a corporate strategy focused on one of the following three options,
– Operational Excellence in which customer proposition is simple, and companies such as Wal-Mart and McDonalds can offer low or lowest price and hassle-free service.
– Product Leadership where companies such as Intel, Nike and 3M offer products that push performance boundaries.
– Customer Intimacy which permits companies like Airborne Express and Nordstrom to deliver goods and services that specific customers want.
Although I’m a firm believer that the Web 2.0 and SaaS movement is challenging many of the generally accepted ideas of the past, the demise of Klir clearly demonstrates why I remain a realist that today’s trends cannot fully redefine business best practices.