SeeBeyond Technology has filed a registration statement with the Securities and Exchange Commission relating to a proposed public offering of seven million shares of its common stock. The company said it intends to use the net proceeds for general corporate purposes, including working capital and capital expenditures.
The company has suffered in the past when customers compared its cash balance with those of its competitors. SeeBeyond hopes to raise $60-75 million from the offering. According to SeeBeyond's senior vice president of marketing and business development, Kate Mitchell, the money will help SeeBeyond eliminate concerns over its position and longevity in the enterprise application integration market.
In December last year, SeeBeyond raised $15 million by issuing approximately 2.6 million shares in a private placement. During its fourth-quarter earnings call last week, SeeBeyond founder and CEO Jim Demetriades estimated it could have lost as much as $5-10 million of business in the quarter due to its poor cash-balance position. The company raised its cash balance to $47 million as a result of the December placement.
Context: SeeBeyond provides a comprehensive software suite for business application integration, enabling the flow of information across systems, applications and enterprises. While SeeBeyond is as well positioned as any of its competitors in this marketplace, with strong technology and an increasingly diverse customer base, the market is attracting the attention of the application server vendors and software development companies -- witness IBM's acquisition of CrossWorlds and Sybase's acquisition of Neon. Enterprise application integration (EAI) is expected to be one of the primary IT vertical growth markets in 2002, while some of the other technology sectors are expected to remain stagnant and become commoditized over time.
In addition, the EAI market is facing a period of radical change and confusion as EAI vendors begin to add Web services to their messaging brokers and software suites. This, along with the need for companies to differentiate their product offerings, will require additional spending on research and development.
Sales and marketing: As part of its strategy to differentiate itself, SeeBeyond is hosting a half-day event in New York on Friday, led by Demetriades and director Ray Lane. The company will unveil its new Real-time Information Networks strategy, which Mitchell claims will take the mystery out of integration and reveal the pivotal role that EAI plays in enabling instantaneous global access to information. Accenture, EDS and JPMorgan Chase are expected to provide support and validation for SeeBeyond's strategy.
SeeBeyond's Real-time Information Network strategy emphasizes the business rewards to be gained from SeeBeyond's technology, rather than its more traditional appeal to the IT manager. The excitement over Web services and standardized J2EE protocols for messaging and integration (JCA and JMS) threaten this core connection value proposition that EAI vendors have traditionally brought to the table. In its place, EAI vendors are starting to emphasize value-added functionality such as business process management (BPM) to keep the EAI value proposition healthy.
BPM addresses the complex field of real-time e-business process management. The software, targeted at IT and business professionals, is designed to actively monitor a whole company's e-business IT infrastructure in order to diagnose and resolve problems in real time, predict upcoming trouble and measure the impact of any problems or changes on bottom-line business goals -- what Mitchell calls "velocity."
More specifically, SeeBeyond's flagship eBusiness Integration Suite includes something it calls intelligent queuing, enabling persistence, buffering, routing control and an audit trail of business events. The queuing function enables recovery from application failure without data loss or duplication, and is achieved through queue-level transaction control and event states.
SeeBeyond is hoping its message will resonate in particular with the financial market, where the Securities and Exchange Commission is working toward establishing T+1 (trade date plus one day), a shorter settlement window for securities transactions. Currently, most securities are settled three business days after the trade date. To accomplish faster settlement, greater external and internal data integration will be required of brokerages and clearinghouses.
Conclusion: While SeeBeyond is one of the more innovative EAI vendors, it faces intense competition from Tibco in the financial space. Meanwhile, Vitria and webMethods are also using BPM technology to provide industry-specific solution sets to address problems -- including T+1 and Straight Through Processing -- for the financials vertical. Fourth-quarter financial results from the companies in the sector demonstrated that EAI solutions have real potential value for corporations. SeeBeyond's Real-time Information Networks strategy attempts to highlight its return-on-investment story and demystify its technology ahead of further consolidation in this crowded space.