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Niku: Serving the Service Providers

After working at Oracle for several years, Farzad Dibachi wanted to start his own venture. In October 1995, he co-founded Diba, a developer of information appliance software. It was a smart move. The company was sold to Sun Microsystems in August 1997. But he didn't waste time. Dibachi then founded Niku in January 1998 (Niku means "do-gooder" in Farsi).

The company's flagship product is eNiku. In late June, the company launched its latest release (version 4.0). eNiku is a sophisticated Internet-based software solution that manages all phases of a project - from idea to profitability.

There are five integrated modules.

1. The Business Development module manages leads, as well as the creation of proposals.

2. The Resource Management module allows employees to import project plans from Microsoft Project. The plans can also be published to the Web.

3. The Engagements module helps employees create the time-line for the project (of course, it accounts for holidays, standard workdays and weekends).

4. The Time & Expense module deals with billing (this is based on technology from Extensity).

5. The Project Accounting module allows employees to deal with the complex details of accounting for the revenues of a project.

All these modules use Niku's Intellectual Capital Management (ICM) solutions. Essentially, ICM makes it easier to manage documents, plans, graphics and any other unstructured data.

Niku also has online marketplaces. For example, NikuSource is a matchmaking service for sourcing professional services. The database has tens of thousands of vendors. There is also iNiku.com, which links together those who use Niku enterprise applications and extranet products.

In the next quarter, Niku expects to release a variety of new products, according to Josh Pickus, President, Vertical Markets. How can the company launch so many products? "Of our 900 employees," he says, "we have 300 developers."

This week, the company reported its financials. In the past quarter, the company had sales of $12.5 million, which was up from $8.6 million in the previous quarter (a 45 percent sequential increase). Losses were $12.3 million, which beat First Call estimates.

The company has a healthy cash position: $214.5 million. "We have enough cash to last 15 quarters based on our current burn rate," says Pickus.

However, the burn rate is declining. In fact, the company expects to hit profitability by the last quarter of 2001 (this target date was recently reduced by two quarters).

"Even though the services sector is the biggest part of the U.S. economy," says Pickus, "it is incredibly underserved." So far, Niku has been leading the way to serve this market. With its sophisticated product line and growing customer base, it would not be surprising to see the company reduce further its target for profitability.



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