Four local tech firms fly under the radar, but they perform valuable work for major players.
When news reports began circulating last week that Google Inc. was contemplating buying a little-known Cambridge software firm for $1 billion, it highlighted how a valuable company can go relatively unnoticed in the Boston area.
But in fact, companies like ITA Software Inc., which are not well known to the general public, are a major part of Boston’s technology culture. While Silicon Valley hosts consumer-facing brands like Google, Yahoo, and Facebook, Boston is home to many tech companies that do the heavy computational lifting behind the scenes.
Here are four local companies that, like ITA, are dominant players in their sectors, and growing, but still flying under the radar.
Parametric Technology Corp.
One of the first stops for a new visitor to the Needham headquarters of Parametric Technology Corp., or PTC, is often the corporate theater for a screening of an in-house movie that employees call “A Day in the Life.’’ In the film, a young man is shown going through his day interacting with products that were designed with the aid of PTC software: from putting on his sneakers (Nike), to driving to work (in an Audi TT car), to taking an elevator to his office (Otis) to booting up his computer (Dell).
PTC, which has been around since 1985, initially made its reputation in computer-aided design, but it has since segued into a sector called product lifecycle management, which uses software to help companies tightly manage the design of their products.
The company employs about 1,200 people in New England and expects to hire about 500 over the next 18 months globally, including 150 in Massachusetts. Wall Street values its market capitalization at $2.3 billion. In PTC’s last earnings report, for the period ended Jan. 2, it reported revenue of $258 million, an 8 percent rise over the previous year. Software license revenue was up 48 percent over the previous year.
Roy Wildeman, a senior analyst with Forrester Research Inc. in Cambridge, said that product lifecycle management is growing. “PLM is achieving parity with the other big business acronyms like customer relationship management (CRM), supply chain management (SCM), and enterprise resource planning (ERP) — and that’s very good for PTC,’’ he said.
Wildeman added that PTC has successfully positioned itself within the PLM space to help companies work on product development. These companies can use PTC’s software to manage teams all over the world that are working together to develop or refine products.
James Heppelmann, PTC president and chief operating officer, said, “We’re pretty ubiquitous, but in a secondary sort of way.’’
“You’ll see our fingerprints on many of the products that you use every day: your cellphone, the engine of the car you drive, the computer you use, the airplane you fly in. These products have been designed and developed by companies like Boeing, AirBus, Dell, Motorola, and Nokia using the products that PTC has developed,’’ he said.
Alan Trefler, founder and chief executive of Pegasystems Inc., located in Cambridge, does not subscribe to the idea that visibility doesn’t matter.
“I actually think that visibility is important,’’ he said.
But Pegasystems is not well known outside the technology community, in part because of what it offers corporate customers: “business process management software,’’ frequently referred to as BPM, which enables firms to quickly make changes in the way they do business to respond to new regulations or changes in the marketplace.
Pegasystems now has about 1,100 employees (half in Massachusetts), up from 850 last year. The company’s stock has more than tripled in the last two years, even after a rough day on Friday, when it tumbled $4.60, or 11.7 percent, after it reported first-quarter results were below analyst estimates.
“BPM is a very big market; we estimate $1.9 billion in 2009,’’ said Teresa Jones, a senior research analyst at the consulting group Gartner Inc. “Pegasystems is one of the leaders in the space.’’
Trefler explains Pegasystems’ product this way: “We help companies become more agile operations.’’
Pegasystems software works by automating a company’s policies and procedures. These include process flows, business rules, information models, user interfaces, and integration.
If this seems complicated, Grant Johnson, director of marketing, said Pegasystems customers — which include JPMorgan Chase, ING, and New York Life — understand the value proposition.
“Our marketing is framed and communicated in the language of the businesses that use us, from financial services to insurance and health care,’’ he said.
Although the company’s software is difficult to understand for those outside the industries it serves, Trefler said Pegasystems deserves a higher profile in the general business media.
“Isn’t this central to the economy, to help make organizations work better?’’ he asked.
Constant Contact
Constant Contact, an e-mail marketing firm based in Waltham, has yet to announce a major brand-name customer, and it’s not likely to.
“We’re not chasing Nike,’’ said chief executive Gail Goodman.
Instead, the company is focused on a very specific market: small businesses interested in sending regular e-mails to customers and prospective customers. To grow its business, Constant Contact has been focused on “reaching and teaching’’ the millions of small businesses that make up its market. That means free presentations at Chamber of Commerce meetings and helpful online tutorials and workshops.
The strategy has worked. Constant Contact, which went public in October 2007, had revenue of $129 million in 2009, a 48 percent increase over the previous year. Its market capitalization is $744 million.
The company now has 350,000 customers, 70 percent of whom are businesses with fewer than 10 employees. Locally, Boston Duck Tours, the Yawkey Way Store, and the Boston Public Library Foundation are Constant Contact users.
E-mail newsletter consultant Michael Katz, president of Blue Penguin Development Inc. in Hopkinton, said he has watched the company grow, and has been impressed with their “laser-like focus.’’
“They know how to reach the guy who has a small business and doesn’t know anything about all this e-mail technology, and doesn’t want to know about it,’’ Katz said. “Constant Contact makes it very easy for that person to have an e-mail newsletter.’’
Katz said that when he speaks to business groups and polls the audience about what service they use for e-mail marketing, “Constant Contact is the clear winner, always the top choice.’’
Recently, the company’s visibility has risen slightly because it is expanding from grassroots small business networking to advertising in newspapers, on radio, and even on television.
“But only because that’s where we can best reach the small business owner,’’ said Goodman.
The company is also now making it easy for its customers to interact with social media services like Facebook, Twitter, and LinkedIn.
“Any way we can help small businesses promote their business and connect with their customers,’’ said Goodman.
Endeca Technologies Inc.
“It’s to be expected that consumers haven’t heard of us,’’ said Paul Sonderegger, chief strategist for Endeca Technologies Inc. “But the funny thing is, many of them have used our software.’’
Sonderegger is probably right. If you’ve ever searched for a product on homedepot.com, walmart.com, or Target.com, you’ve used software created by this private Cambridge company.
Endeca, which is located in the same Kendall Square building as Pegasystems, has landed these customers by offering an innovative approach to search that “guides’’ users toward focused results, rather than just returning a list of results, Google-style. Endeca’s software helps people find what they need by blending structured, database-style searches with the more unstructured style of the kind offered by the large consumer search engines.
Hadley Reynolds, director of search and digital marketplace technologies at IDC, the technology market research firm, said Endeca is one of the leaders in the enterprise search market, which he said is “absolutely growing.’’
Reynolds defines enterprise search as “helping companies find what they have and what they need, and helping customers find what they want on the company’s site.’’
“This is not your traditional single search box site with a list of links,’’ Reynolds said.
Endeca’s Sonderegger said that “we are right at the heart of business intelligence and search.’’
And how do they reach their customers? Sonderegger said the company depends primarily on references from other companies, which are shared at conferences and meetings that the company arranges around the country.
“If we’ve made things easier for Whirlpool, they will share that with other companies. And that’s the best recommendation you can get,’’ Sonderegger said
Source:http://www.boston.com/business/technology/articles/2010/04/25/backstage_theyre_stars/?page=3
