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When it Comes to Middle-Market Software, Commence Corp. Thwarts the Importance of Being Larry

Eatontown, N.J. — Ask any technology executive to identify a software firm with a CEO who goes by the first name of Larry, and chances are that Commence Corporation isn’t the first company to come to mind. Yet Commence Corp.’s technology roots run nearly as deep and are arguably as nimble as those of many of Silicon Valley’s most celebrated software firms.

“At one time, Larry Ellison was keenly against the cloud, but it’s clear that he’s now made an aboutface when it comes to the cloud community,” explains Commence CEO Larry Caretsky, while alluding to just the latest technology segue of Oracle Corp.’s highly visible CEO.

larry_caretsky_of_Commence_imageDetailSizeFounded in 1988, Commence has made its own share of segues from contact management to sales automation to customer relationship management (CRM) solutions. However, unlike its larger competitors, Commence honed a singular focus on small and midsize clients, and unlike its middleweight software peers, Commence remained independent.

“As far as being acquired goes, we’ve had a lot of interest, but we’re just not ready for that at this point. We believe that we have some nice growth ahead of us that will make the valuation of the company that much stronger,” says Caretsky, who, along with the firm’s CTO, bought Commence from Edison Venture Fund in a deal struck more or less on the eve of the firm’s latest transition to cloud computing.

Part of the future growth Caretsky foresees involves a private label strategy. “We are speaking to several companies in different vertical industries that would like to acquire the rights to our product and put their name on it and sell it into spaces where we do not,” explains Caretsky, who says that a big part of Commence’s lack of notoriety in the market has to do with the success of an earlier private label strategy — one that involved such technology titans as IBM Corp., AT&T Corp., and Compaq Computer Corp.

“IBM sold private label solutions to Rémy Martin, the New York Post, and the state of Pennsylvania, but typically of IBM, they would send nine guys on a sales call,” says Caretsky, who believes that IBM’s past midmarket ambitions eventually fell victim to a tendency to overpopulate its accounts with sales reps.

“We used to call ourselves the poor man’s Lotus Notes — we were easier to use and lower-cost, and for the SMB market, that’s what clients want,” explains Caretsky, who says that the firm continues to target lower-middle-market customers ranging from $10 million to $250 million in annual revenue.

According to Caretsky, two of Commence’s most challenging transitions to date have been related to the software-as-a-service (SaaS) computing model, where the firm had to quickly modify both its workforce skills and its pricing model. “From a technology standpoint, our entire engineering team was made up of experts in client server technology, and the cloud was really something entirely new to them,” says Caretsky.

Asked about the pricing model, Caretsky remarks: “The adoption of SaaS quickly became a cash flow nightmare, as the prices became reduced as far as what was being paid on an annual basis went, and customers could pay at a lower rate than what they had paid when they were purchasing the software outright.”

Meanwhile, Caretsky believes that a “paradigm shift” is under way in sales and customer service as more middle-market customers find the information that they require to make a purchase on the Web.

“On the sales side, we find that a lot of companies are working feverishly to change their business model, and what’s become clear is that the days of hiring high-salaried sales people with big commissions are long gone in the middle market,” he asserts.

Asked how the shift is impacting Commence, Caretsky explains: “I spend a good deal of time trying to update the analysts: Gartner Group, Yankee Group, Forrester. They can tell me everything that we’ve done wrong. Well, we’re certainly not perfect, but we’ve been around 25 years, we have thousands of customers and a successful profitable business — we’re doing something right.”


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