1Mby1M Incubation Radar 2010: Techcello

By guest author Praveen Kumar

Techcello is a SaaS company that focuses on the engineering layer of computing. This is the layer between the technology layer (.NET, Java) and the application layer (domain-specific features, functions, and user interfaces). Techcello’s mission is to provide a robust and strong engineering foundation for a company’s product or application so that the client company’s developers can focus on building business-related functionality.

Techcello’s main product, celloSaaS, is a ready-to-use, on-demand application development framework with all the necessary plumbing blocks and components required for a robust engineering layer. Built on standard technologies, it presents no learning curve. SaaS characteristics such as configurability, customizability, personalization, role-based security, performance, and scalability have been engineered into the framework. Developers can use and extend features such as multitenancy, tenant management, product management, role management, data-level access restrictions, licensing, and metering.

The Durham, North Carolina-based company’s leadership team comprises senior architects and SaaS specialists led by founder and CEO Gowri Subramaniam. The lead architect, R. Jothi, has extensive knowledge of and experience in SaaS. Director of product management Ram Kumar has over twenty-one years’ experience in technology, marketing, and management.

Kumar says that the various SaaS platforms have a focus on productivity improvement and time to market. He believes that they are not taking the time they should to develop products that meet customers’ needs because they’re in a rush to get those products out, which results in customers struggling with shortcomings such as lack of flexibility and control, vendor lock-in, and the need to redo the entire product, or part of it, if they decide to disengage from a vendor. The only alternative was custom development, which was costly and time consuming. This led Techcello to develop a productized engineering framework using standard technologies such as .NET and Java. The goal was to create a framework that had flexibility and control and did not require vendor or platform lock-in, while at the same time avoiding the headaches, risks, complexities, cost, and time of building the SaaS engineering stack from the ground up.

When Techcello entered the market, there were (and still are) many existing players in the PaaS space. The most important is Force.com. LongJump and SaaSGrid are other notable players. There are also services companies that offer solution accelerators to speed up time to market. But the space for a productized SaaS framework has been created by Techcello, where Orangescape is the real competitor. Transparent pricing, simple licensing, annual maintenance and care (AMC), and the option to license source code at a later date for a preagreed price are some of the factors on which Techcello has created a new category in the market space. Platform providers often look for “customer stickiness,” and it is considered normal to make it difficult for a customer to move. But Techcello aims to give customers the freedom to take their product anywhere, develop it anywhere, host it anywhere, and maintain it anywhere and also not have to worry about vendor disengagement costs.

The increasing adoption of service-oriented architecture and SaaS are likely to affect the entire IT industry. Gartner estimates that software revenues from SaaS delivery will be $8.5 billion in 2010, a 14.1%increase from 2009 revenue of $7.5 billion. Techcello plans to license the framework as a product to customers along with bundled support. Kumar says that the price of product development  for a typical customer could vary from$10,000 to $30,000 and is targeting AMC revenue of 18% from the second year.

The company has focused primarily on customers such as independent software vendor (ISVs), innovative businesses, software-enabled businesses, Web companies, and enterprise IT teams that want to do SaaS-like deployment of their internal applications across multiple geographies and strategic business units (SBUs) and to provide vendors and business partners with access to their apps. Techcello offers a thirty-day free trial pack along with support for customers who want to evaluate celloSaaS and build their products on top of it.

Two customers are already live with Techcello products, and more than ten are at various stages of evaluation. The founders launched the company in April 2010, and it is still in prerevenue stage. The initial focus is on getting the first few customers to build on top of celloSaaS.

Product development and support for Techcello are self-funded. The founders plan to raise funds only after building traction and will wait till they cross the $1 million in revenue before doing so.

At present, Techcello will maintain its focus on the engineering layer and will continue to offer products and frameworks in this space. It is trying to partner with solution integrators and product development companies to increase the breadth and depth of its market reach. The company is also relying heavily on the Internet for marketing, sales, and delivery of its products and plans to use the Web actively to deliver support services to customers. As of now, there are no exit plans. The founders want to build the business to keep it.

Techcello presented at Sramana’s 1M/1M roundtable on June 3, 2010. The recording of the session is here [38:00–58:00]. You can also find Sramana’s recap here. Sramana advised the presenter, Kumar, to continue with the strategy of focusing on the horizontal layer. She also pointed out that Techcello has a great opportunity to use an open source go-to-market strategy as a means to acquire customers, and she suggested that the company offer a free version along with the paid version, as outlined in the story about Dimdim. It should also explore partnering with outsourced product development companies such as Persistent Systems. Sramana thinks that Techcello will find the enterprise IT companies harder to reach without systems integrator intermediaries.

This segment is a part in the series : 1Mby1M Incubation Radar 2010