Princeton Softech Pines for Partners

Princeton Softech Inc., which claims it doubled sales of its database-archiving software in 2002, is now trying to line up closer partnerships with storage vendors to drive further growth.

Lisa Cash, president and CEO of Princeton Softech, says teaming up with storage vendors like EMC Corp. (NYSE: EMC) represents the next phase in the company's go-to-market strategy. "All the storage companies want to get closer to the application layer," she says. "That's where we come in."

The 180-employee company has been tapping a relatively small -- albeit fast-growing -- niche of the data management market. Its software extracts data from relational databases based on user-defined rules, pruning out older data so the production-environment database doesn't get bogged down. Think of it as hierarchical storage management (HSM) specifically for databases. Princeton Softech also sells archiving tools for enterprise resource planning (ERP) and customer relationship management (CRM) applications.

Enterprises are especially receptive to this story these days, as IT spending remains stagnant. "People can't just keep throwing hardware at the problem," Cash says. "And data is growing way, way faster than CIOs' budgets."

But what happens if the major database vendors like Oracle Corp. (Nasdaq: ORCL) or Microsoft Corp. (Nasdaq: MSFT) look to add archiving features directly into their own software? That won't happen, says Cash, for two reasons: It's complicated to do, and those vendors aren't interested in helping customers reduce the size of their databases because they make money from selling software-license upgrades.It's been a nice little business so far. Princeton Softech, based in Princeton, N.J. [ed. note: where else?!], cleared $30 million in revenue for 2002, and Cash expects that to increase to around $35 million this year. Of that projected 2003 revenue, $15 million to $16 million is expected to be from Princeton Softech's database archiving software, she says. The company's other line of business is relational database testing tools, which in effect funds the R&D for the archiving products.

The company is profitable, says Cash, and is trying to manage its expansion carefully. "Our biggest challenge is growing pains," she says. Founded in 1989, Princeton Softech last March received $21 million in funding from Apax Partners Inc and LLR Partners, spinning off from its former parent company, Computer Horizons Corp., to focus solely on the active archiving market (see Princeton Softech Sharpens Its Tools).

Next on the agenda for Princeton Softech, then, is expanding its sales channels. The software vendor already has been working to adapt its database-archiving tools to work directly with EMC's Centera, a massive data archiving system that uses ATA disks to store and retrieve fixed content (see Princeton Softech Taps EMC Centera).

But Princeton Softech hasn't actually closed a deal in conjunction with EMC yet. Cash, however, says the company has between 20 and 30 deals in the pipeline that represent about $18 million worth of business. "EMC has been a terrific partnership for us. They bring us into CIO-level discussions to get these deals."

To better integrate with storage systems -- and hence forge reseller and OEM deals with those vendors -- the company is developing what it calls Next-Generation Archive (NGA). (No fancy-schmancy code names for this group!) NGA is supposed to make it easier for Princeton Softech's software to control third-party storage and, in part, may use Storage Networking Industry Association (SNIA)'s CIM-based management standards to accomplish that, Cash says.Nancy Marrone, senior analyst at Enterprise Storage Group Inc., says partnering up with storage hardware and software vendors is definitely a smart strategy for Princeton Softech, because it's the IT managers who deal with storage that are feeling the most pain. "For anyone who's trying to attack this data-lifecycle management piece, database archiving is a critical piece," she says.

Besides pursuing storage alliances, the No. 1 priority for the company is filling gaps in its product lineup.

In the third quarter of 2003, Princeton Softech expects to deliver a product for archiving data from Oracle's E-Business Suite (a.k.a. Oracle Applications), giving it an offering that will be competitive against two startups, OuterBay Technologies Inc. and Applimation Inc., that have been successfully exploiting the segment. Cash notes that there are 12,500 installations of Oracle Apps worldwide, a customer base Princeton Softech will eagerly pursue.

Another obvious area Princeton Softech has so far ignored is email archiving. Players in this space include KVS Inc., Legato Systems Inc. (Nasdaq: LGTO), Tumbleweed Communications Corp., and Veritas Software Corp. (Nasdaq: VRTS).

Cash says email doesn't play to Princeton Softech's strength in relational database technology. However, she says, the company does plan to enter the email archiving market, probably via an acquisition, although it's not as big an opportunity for the company as database archiving is. Gartner Inc. estimates the email active archiving market to grow to $134 million by 2006. That's just a fraction of the $4.7 billion market opportunity Princeton Softech estimates currently exists for its database, ERP, and CRM archiving software."Email archiving has gotten a lot of hype because of the Enrons, but the ASP [average selling price] is much lower," Cash says.

Todd Spangler, US Editor, Byte and Switch