Home | About | Recent Issue | Archives | Events | Jobs | Subscribe | ContactBookmark The Sterling Report


Will the enterprise market spend significant IT budget on Windows Vista in 2007?



CEO Spotlight: Pete Cittadini, Actuate Software

By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants

With revenues of over $100m in 2002 and over 2000 customers, Actuate is poised to show the market that it is far more than just another business intelligence vendor. As difficult as that may sound, with Chief Executive Pete Cittadini at the helm, it looks possible. Angel Mehta, Managing Director at Sterling-Hoffman, talks with Pete Cittadini about growing up at Oracle, growth plans for Actuate, and why he was never bitten by the entrepreneurial bug.

Angel Mehta: Tell me how you came to be at Actuate and about your transition to the CEO role.

Peter Cittadini: Nico Nierenberg, founded the company in December of ’93 and in September/October of ’94 is when I was first approached on the opportunity.

At that point in time, I was looking to get closer to my roots, which were very heavily data-base-oriented having come up in the IT and ISV worlds primarily through database technology as a technician and then in the sales and marketing end of things in the database world. I just saw the opportunity; it was very intuitive to me. A great understanding of the void in the marketplace for this type of technology tightly associated with getting value out of information that’s stored in database management systems. I took the jaunt from east coast to west coast back in January of ’95.

Angel Mehta: What was the mandate when you were made CEO? What there a specific reason the Board made that transition?

Peter Cittadini: I transitioned over a number of steps. In other words, when I came to Actuate my title was Executive Vice-President. There were responsibilities associated with the initial title, back in 1995, for building the sales and marketing business around the technology. I was not touching the technology at that point in time I was really just bringing the technology to market and creating franchises, if you will, for the technology. Now, I had done that for a good 3 years that being my charter before becoming the CEO. Nico Nierenberg, at the time, wanted me to take the next level up in hierarchy to the President and Chief Operating Officer; that happens 3 years into this adventure. The Charter, then, became the rest of the business, which included the business of building the product itself. So when I transitioned from EVP to President & COO, I picked up the Engineering organization and the Customer Support organization and the CEO, at that time, retained Finance and Administration. Two years of doing the President and COO role then I was promoted to the CEO role and took over the last piece of the business which was the Finance and Administration part of the business; that happened in August of 2000 so the CFO has been reporting to me as of August 2000. That was the last cog in the wheel, if you will, of the Charter being, ‘Pete Cittadini you run it all’.

Angel Mehta: When did the IPO happen – height of the bubble, right?

Peter Cittadini: July of ’98. The Bubble was in full swing, there is no question. We were born through our IPO as an “Enterprise software” company six months prior to the bubble embracing a new category of software companies called, “Internet Software Companies”. Those companies have come and gone but they got the ultimate euphoria during the bubble years. Examples of that are companies that used to have $300 share prices now having $0.35 share prices. Our all time high was $37.00 we’re down to $2.00 or $3.00 so that’s what’s happened to Enterprise software companies versus Internet software companies.

Angel Mehta: What a lot of CEO’s are telling me is that their revenue is coming or their incoming growth is going to come from existing customers versus new ones. Is that the case with Actuate, as well?

Peter Cittadini: Clearly, the ratios over the last 2 years have moved toward more repeat revenues from current customers than new account openings. The good news is, however this year we’ve been through the first three quarters, opening up in excess of 100 new company names per quarter. When you look at the percent of revenues from current customers versus new customers the percentages have gotten higher in ’02.

Angel Mehta: Give me a snapshot as to how Actuate differentiates itself from the other BI vendors.

Peter Cittadini: It’s always a challenge. The world of ISV’s is a tough one. Everything needs to neatly fit into the world’s cubbies and we, unfortunately, continuously get characterized as ‘business intelligence software’ sort of as a catch-all but what we bring to the market is drastically different. Today, we describe ourselves as an ‘Information Application Platform’; I would say the salient differentiators between an Information Application Platform and a business intelligence platform is the end result. What you get with an Information Application Platform is an application that’s built once and used by many - whereas BI tools are typically desktop-oriented tools that are used differently by many people. Thus, we build a ‘one-to-many value relationship’ between an end resulting Actuate application, which is built by an IT organization, into production or deployment - whereas the BI folks primarily focus on the warehouse being the ‘identity-of-one’ with a bunch of tools going over the fence to a multitude of users; there is no cognizance of value the users get from the warehouse. It’s not an application which knows upfront the value you are going to get out of using the application. The BI tools don’t work that way; thus, corporations have a hard time holding the users of those tools accountable because you need to know how to fend for yourself; it’s dependent on your knowledge, your expertise level and the way you can fend for yourself utilizing that tool.

So in that scenario a lot of enterprises that use the BI tools never understand the true value of information to the user whereas the application paradigm layered on top of an Information Application Platform is different. I know exactly the value the application will bring you, thus, I can make a judgment as to what your value is to the firm based on decisions you make through that information flow that I’ve given you. There are no excuses of “I didn’t know how to do the query, I didn’t really understand this type of table within the data warehouse and, thus, how can you hold me accountable for my personal performance?” Applications that are layered on top of an Information Application Platform alleviates that out for employees.

Angel Mehta: I’m always interested in the assumptions that CEO’s are basing their go-forward plans on. One of those assumptions for Actuate, as you said earlier, is that things aren’t improving in terms of the spending environment…

Peter Cittadini: Correct.

Angel Mehta: What are some of the other assumptions?

Peter Cittadini: Assumptions in our business plan for ’03?

The climate doesn’t get better; however, we’re going to be more productive.

There are assumptions on productivity metrics per sale rep. How we intend a sales rep to execute in the ’03 Year versus the ’02 Year that will bring more revenue dollars to bear in trying to make our business plan for ’03.

Other assumptions are that, indeed, IT organizations will have a clear understanding of what an Information Application Platform brings to them as a platform for building applications versus BI tools, thus, we’ll be able to capitalize on that further, once again, from a sales productivity standpoint.

There are assumptions that we should grow faster outside of the U.S. then inside of the U.S. based on the numbers being smaller outside than inside - so more revenue from new customer names outside of the U.S. More revenue from current customer names inside the U.S.

The other assumption is that the OEM channel business is going to remain fairly flat and not as virile specifically for Actuate as it was during the bubble years of ’98 to 2000 - where people got $50 million dollar rounds of funding and could spend $3 million with us the next day because they thought Actuate reporting was a really cool thing to have within their application. Those types of application companies are not operating in that manner and fashion any longer.

Angel Mehta: Do you find that investors have adjusted their expectations accordingly? Are they finally starting to get it?

Peter Cittadini: I think so. There is no question they certainly value business solidity more than business speculation and they value staying in the black versus saying you’re going to stay in the red for an extended period of time because of market share purposes. So ultimately I think the investor climate is a much more realistic and appropriate one for a trajectory of a company like Actuate associated with those investors. Of course, we’re in a time where we must be focused and patient because of the reality of the doldrums specifically associated with IT spending.

Angel Mehta: What keeps you up at night when you think of Actuate in 2003?

Peter Cittadini: They’re all rather tactical worries to tell you the truth. In other words, I don’t have the nightmares a lot of CEO’s have when they’ve invented a technology that’s seeking out a market. All the fundamentals from a strategy standpoint are here in spades at Actuate. The market is just in a BIG way requiring what we have. Now, the issue is when will they spend on that requirement? Do we have the right talent? Are we disciplined enough when we don’t think we have the right talent to move the wrong talent out and the right talent in everyday? Are we doing the right targeting to the appropriate audiences that will be extremely great contributors to Actuate from a partnering and customer-base standpoint for decades?

It’s the tactics that keep me up at night, it’s the little nits and nats that each, in and of themselves, are not that worthy of worrying about but, as a whole, are the difference between life or death in the software business.

Angel Mehta: What were some of the surprises you had? How was the experience of becoming a CEO different then what you had expected coming in?

Peter Cittadini: There wasn’t that much of a difference to tell you the truth. There was probably a bigger surprise and experience when I took over as President and Chief Operating Officer because of the development aspects - like having engineers reporting to me. If you know about my career, I came up through the sales ranks, although I started in technology a long time ago; I always wanted to get into the business of technology. Technology folks are interesting people…obviously much smarter then your average sales rep, if you will. For me, I’ve always been very tightly tied in with creating good culture with which field organizations feel real good about being part of. I guess when I took over early on as President and COO I would assume that everything was the same as a field organization. I put my foot in my mouth a number of times saying the wrong things to an engineering audience which is drastically different than a sales organization. A lot of those experiences have happened over the years. My communications are more appropriate depending on the business unit that I speak to; I can also now create communications that cross business units. In other words, we do have a lot of events that happen on an annual basis where there could be 4 or 5 business units present in the audience. That’s something you learn through osmosis, you learn through making mistakes, you learn through a number of founders and principle engineers coming up to you saying, “We took that communication this way. We know you didn’t mean to say it but 200 people out there think that’s what you said.” So those were some of the challenges I had is how do you bring the leadership aspect of communications to very diverse groups within the confines of one enterprise.


  Home | About | Recent Issue | Archives | Events | Jobs | Subscribe | Contact | Terms of Agreement
© 2006 The Sterling Report. All rights reserved.