DM: Why isn't the conference bigger than it is?
Mike Hickey (MH): We used to get 500-600 people and last year was right after 9/11. This year, for example, I was at one company that used to send 15-20 people, about a month ago, making personal invitations, who said that they would love to come, but we're just on travel restrictions. That's hurt a little, but in my mind, we should be in the thousands. So, we've done it the same way for a long time, and there has been a certain myopic approach to things. One thing we are going to do is investigate doing it completely different.

DM: A few months ago you realigned into vertical business units for LBS, government, etc. Can you explain why?
MH: It's actually a little different than that. It is not vertical. It is organized around customer need states. So they are Location based Services (LBS), Analytical Customer Relationship Management (aCRM), and Location-based Intelligence (LBI), which is more the traditional business. Now within each of those there is a particular vertical focus. So, LBI does have a real good focus on the public sector market. We're doing a lot of things in the public sector market. In fact, last quarter, public sector was our number one vertical. We have the Homeland Security grant programs; we getting involved into education.

DM: So it seems like you are coming back around to homebase of recognizing that you are really a GIS company. I did not get the impression that you were always felt that you were in the GIS “space” so much as you were in the “business marketing” area. But because of this resurgence in the public sector, for example, there seems to be more of an emphasis in GIS.
MH: I think for we did not want to say we were a GIS company because we did not want to get lumped into that. One of the things the business units have allowed us to so is that each of the business unit can separately say what business they are in. And when you do that, the LBI team looked at it and looked at the opportunities, looked at the use of the technology, and said, “we are absolutely in the GIS marketplace.” And by them saying that, it does not tie the hands of the aCRM people who are saying something different. We were trying to do “everything fits everybody” before.

DM: In the CRM space, we have talked to Kevin Antram (VP of aCRM). That is a huge area. Where do you see the “sweet spot” for MapInfo?
MH: I think it is definitely in the analytics. We're not an operational CRM player. We're not into marketing automation or sales force automation. In fact, our strategy is to be able to work with the systems that people have. We have always been about analytics and our leverage point in that space is around location analytics. But there are about 80 companies below $50 million (in revenue) in the analytic space, and prior to the recession, it had a growth rate forecasted of 35%-50% in that market. Who knows what it is now. But one of the things that is happening is that people are still spending money on analytical applications because they've cut costs in their business and they are refocusing on their top line again. So customer analytics and understanding who my customers are, to give you good intelligence to do the right programs, to grow that top line is something that somebody will spend money on. The operational stuff, where you have to turn your business processes upside down and implement something like a new sales force automation, or something like that, are where people are saying, “hold on, we are going to do with what we have right now.” Because the analytics can be somewhat separated and doesn't disrupt the business as much.

DM: Is there still a play in the traditional “business GIS” market? Do you see any uptake in the insurance services area, where you have been traditionally strong?
MH: We have always been good with businesses that have “end consumers” as their customers. In that analytic space, where we have all the detail information and the segmentation information as well as the projections, that's suits us well in retail and financial services and insurance. And that's what we are trying to do to broaden our vertical reach in those particular areas.

DM: Are you going to do more in the retail sector in the “high-end” analytics and modeling?
MH. Yes. Our plan for that space is to make moves that are tangential to each other. If you make a leap too far away from the core competency, it is too risky. Our plan is to use location intelligence within the analytical space and then to grow across the board. So, strategically to create a larger footprint in analytics is a natural step for us; to get more involved in high-end analytics. We want to pre-package models to reach a larger audience and that creates a customer base in which we can do more high-end modeling as well.
 

DM: Do you think that will be something you will develop internally or through acquisition?
MH: I think that those are two different ways we could go and maybe a little bit of both. I think we can be pretty aggressive with acquisitions in the analytical CRM space. It's part of our strategy in that space to broaden the product line and offering.

DM: Do you think the acquisition will be existing business partners or other companies?
MH: They have traditionally been business partners. You reduce the risk; you have familiarity with them. If you look at all the ones we did, except for SpatialWare® back in 1996, every acquisition has been a business partner.

DM: The business partners seem “happier” than they have been in the past.
MH: I think the root cause is communication. We put a guy in there who has opened up direct lines of communication. Partners have always been part of our strategy. Where we have probably fallen down…and I don't think we are unlike many companies that have a balanced approach, is how you implement that…those partners into what you do everyday and how you execute on that. And I think where we have fallen down in the last couple of years is having somebody that could manage that execution. We have a guy now who is doing a fabulous job…we hired from Oracle two or three years ago and he has opened all lines of communication. That always seems to solve the problem when you “over” communicate.

DM: Does he have responsibility for a specific tech support area for partners?
MH: He has responsibility for all our business partners whether it is a Siebel, an Oracle, or a Spatial Data.

DM: Speaking of Siebel. How is that relationship going? Do they see location as a viable component of their analytics?
MH: Well they are obviously a big company. And the guys who we are working with are extremely exited about it. They believe it offers another dimension to what they are able to offer to their product line. To be realistic, because of the current environment and some of the things they are going through as an operational CRM company, I think it will be hard for us to get the traction than we would in a normal environment.

DM: How about Oracle? Are you going to continue to work with them on the database side or is there potential in other applications like CRM?
MH: They actually embed some of our technology on the “app” side, which is part of the old relationship that we had with them years ago. We got rather close to them for a while which may have caused some of our other partners to move away from us on the database side. But our relationship and strategy on the database side has changed with them. We deal with them individually with them on business opportunities.

DM: Seems like they have moved away from the spatial side of things when they decided to embed Spatial in their database product. They seemed to have lost the focus on spatial?
MH: They absolutely did. They lost the focus, and you still have lots of those people in the organization; they just are not on the same team…they are spread out. We work with some of those guys in different parts of the business. We bump into them now and then and they still say that they felt it was one of the more unique partnerships that Oracle has ever had. There was an intimacy and closeness that they usually don't have with other partners.

DM: With regard to the market conditions…do you see that our business will come out of the slump sooner or later than the rest of the IT sector?
MH: That's a good question. It's hard to come up with a lot of logic that says we are different than anyone else. There are things like Homeland Security that are driving demand higher. And in those particular areas, you will see more spending when it finally opens up and an opportunity to grow in that space. In the general, corporate IT spending, I think it would be hard to say that we are going to be away from the pack in a positive fashion. But we'll be in the front of the pack if we stick with analytical-type solutions that add value.

One of the things that we have found interesting was looking at customer need states. Let's understand who are customer grouping are; what are the business problems we solve. Part of that analysis was doing return on investment studies. And it was just amazing to us what we were getting back. It was 400%, 500%, 1000% return on investment, which says we are helping people and integrating into mission critical business decisions. It also means that we are also not getting enough for what we are offering. That does not necessarily just charging more but it is maybe tell you how you should package what you offer differently in the future.

DM: The move to .NET seems to signal a radical change in the development strategy architecture. I always thought that MI Pro was getting “long in the tooth” from the user interface standpoint. The change to .NET is a move to componentization and get away from the shrink wrapped product and a move to enterprise applications. Do you see it both ways? And in that context, what do you do with the business partners?
MH: I think business partners will be key because it is part of the new architecture. You have a set of components that could be collapsed into a desktop deployment or as a services offering in an enterprise deployment. So it gives them all the flexibility they need to creating features and functionality and applications that make it easier for partners as well as our professional services team.

.NET does a couple of things for us. Number one is we basically have to do it because that's basically replacing the Windows platform. We've always certainly believed that we are not going to bet the company picking Java or Windows. We need to support both. From that standpoint, it's a “no brainer”; you need to do it. It is also exciting because it gives you the opportunity to really architect your products around a web services architecture, which everybody knows is coming. Microsoft will accelerate the adoption of this approach.

DM: Is Microsoft a competitor or partner with respect to MapPoint?
MH: They are both. When we originally did our OEM deal with them years ago when we embedded our object technology in Excel…the reason for doing that was to seed the marketplace. In the GIS space, one of your challenges is that you have to turn that light switch on in somebody's head that says “oh I get this” and we saw that as an opportunity to educate a lot of people on mapping in the business environment. It didn't quite do that for us. But it certainly excited them enough that they decided they wanted to do that themselves and thus MapPoint. Up to this point, it has been more opportunistic for us than a risk. But we are not going to be naïve and say they are not on our radar screen and we should not be looking at them competitively.