Lay-offs, and talk of lay-offs, by Citigroup (NYSE: C), Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley, Lehman Brothers Inc. (NYSE: LEH), and other US and European financial institutions, as they respond to the market and credit crises, may be just the tip of the iceberg. The financial institutions' cutbacks could very well spread to their IT budgets and development plans, and some Israeli start-ups could feel the pinch. Uncertainty now pervades these tier-1 customers.
Octavian president and CEO Klod Ghez says, "This year was supposed the breakthrough year, but things won't be so simple now. We'll try to expand our customer base and increase our accounts."
Octavian provides middle-office software wealth and investment management (WIM) solutions. The company is in a fairly strong position, after raising a $7 million financing round in August 2007, and with a customer base that includes leading US financial institutions, such as Bank of America Corporation (NYSE: BAC) and Oppenheimer & Co. Nevertheless, Ghez knows that the market climate is liable to make it harder to sign up new customers.
Ghez adds, "We're in negotiations with three large customers, but it's clear to us that, although our solutions offers enough streamlining, when enterprises want to save money, they first make cuts. We hope that next year will be a growth year after the market changes." Octavian is also seeking to extend its penetration of the European market via local integrators.
Clarizen chief operating & engineering officer Assaf Rosen says, "We hear the alarm, and it's obvious that the mood is bad, but when a customer seeks to cut costs, he'll actually come to us." Clarizen Inc. provides remote access project management solutions. The company believes that, because it sells user licenses on the basis of access rather than the actual product, its offering may be a way to cut costs. Obviously, time will pass before it will be possible to know whether the theory works in practice.
Ronen knows that in the event of a prolonged economic crisis, Clarizen will suffer like its peers. However, he claims that that the company has found a better means of defense in its target market.
Both Octavian and Clarizen provide software applications to the financial industry. Aternity Inc. provides an solutions for IT application performance monitoring problems. Aternity chairman Amnon Yacoby says, "No one completely halts procurements, and they buy what they need. The question is, at whose expense? It's a near certainty that there will be cutbacks in the purchase of new products; the question is, which ones? Companies that are able to bring exceptional value are likely to succeed in times like these. However, for the industry as a whole, procurements are reduced when there are problems."
Aternity held a financing round last year, and has enough capital to give it breathing room if things go wrong.
"Globes": Are you worried about your company's business?
Yacoby: "I'm asking myself that very question. We're not feeling anything unusual, but that doesn’t mean that we won't. I'm not feeling a slowdown at the moment, but everyone says that it's coming, and I believe that the effects will hit. When you're tightening your belt, you might buy something that will help you."
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2008
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