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Serene Serena Wants to Kick up a Storm

Posted on Wednesday, Aug 1st 2007

I had breakfast with Rene Bonvanie earlier this week, who confirmed my hypothesis that for a high level executive, Salesforce.com is no longer a great financial opportunity. But the reason he really wanted to meet with me is to tell me why Serena is anything but boring.

Serena Software offers Application LifeCycle Management (ALM) products, and was bought in November 2005 by Private Equity firm Silverlake Partners. Serena is a sleepy company, albeit with over 15,000 customers.

How does this become exciting? Well, the hypothesis is that Serena will use its cash cow ALM business, and fund a transition to a SaaS play. In particular, they have some very cool Business Process Management (BPM) technology and products, including a workflow engine and the works, which, delivered as a SaaS, will infuse the necessary excitement to the company.

Now this smells like bringing innovation to market, which Private Equity funds are not exactly known for. They are good at squeezing costs out, profits in, breaking companies up, and such. Overall, they do a good financial engineering exercise over an 18-24 month period, and take the company back out into the public market at a substantially higher price than what it was purchased at.

That is not what will be happening at Serena, it seems. Within a relatively short period of time, Serena’s management is being asked to re-energize, re-position, and re-invent the company, before going public again.

It’s almost a Viagra model, as opposed to Surgery.

Is this going to work? We shall see. I am, however, thrilled to see some of the Viagra thinking though, from Private Equity firms, who have traditionally been really boring themselves, having steered clear of innovation!

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