As I have recently pointed out, the finances of your software vendor do matter. Unfortunately, as an existing customer or potential buyer it can be quite difficult to look behind the numbers and find the relevant information. When it comes to financial numbers, many vendors are far from as open and transparent as they claim to be.
In an attempt to assist customers, I propose a challenge to all software vendors:
Publish the following numbers clearly on your website/blog:
1) Revenue and earnings (profit) and their growth over the last 3 years by:
- Licenses and product lines (% or absolute)
- Professional services revenue (% or absolute)
- Support and Maintenance (% or absolute)
- Who is the majority owner of the business (or is it public)?
- How long has the business been around and how long have the current owners owned it?
- How is the company's capital structured? I.e. is the business sufficiently funded?
- What finance has the company raised over the last 3 years?
3) Precautions in case of bankruptcy
- Describe in narrative, e.g. use of escrow service or open sourcing old versions.
Some of this is already available in press releases and earnings announcements, but we hope vendors will help buyers by posting it in one place. We will then collect the links and create and maintain a free and publicly available spreadsheet with the financial information. We will do our best to convert currencies and take different methods and periods of accounting into account. This would enable buyers to use the data freely and engage in more informed conversations with their vendors.
In addition, we will rate the vendors giving them 1 point for each answer. With 9 questions, this means that even though the numbers might not all be satisfying, a truly open vendor will get 9 points.
The challenge is open to all software vendors, including open source and proprietary vendors. Here the ones we have written most extensively about, which I hope will participate: Day Software, Dynamicweb, Ektron, Episerver, eZ, FatWire, Google, IBM, Microsoft, SDL, Sitecore, Umbraco. I hope others will pitch in as well.