1.    Management Team (including expertise in field and proven financial and leadership ability)
2.    Market Opportunity (including the need, ability to meet the need and scale)
3.    Investment Opportunity (is the expected return worth the risk of investment)

Operationally, the Accelerator is a consulting business designed to serve middle market companies in Central Indiana. Teams of professional consultants, faculty and students work directly with these companies - helping them to grow and simultaneously providing a living laboratory in which undergraduate and MBA students learn and experience real business problems and situations.

Recognition of Market -> Recognition of Market Opportunity -> Ability to Meet Market Opportunity -> Meeting Market Opportunity at Profit

1. Content, Communications and Collaboration (CCC) - $2.6 billion
2. Customer Relationship Management (CRM) - $2.3 billion
3. Enterprise Resource Planning (ERP) - $1.2 billion
4. Supply Chain Management (SCM) - $826 million
5. Office Suites - $68 million
6. Digital Content Creation (DCC) - $62 million
7. Other SaaS offerings - $472 million

"These are all words and phrases that dumb people use to sound smart. It's ludicrous. I mean, if you are in a meeting and you say ‘From a 30,000 foot view, this looks like a great idea’, aren't you just saying that you are too stupid to look at the details of the proposal to figure out if it will actually work? Your employees lose all respect for you.  That's why when I take my chair in the Oval Office, one of my first orders of business will be to outlaw these inane words and phrases."

               

- President Obama

I understand the President's point, but personally I still like this phrase as long as it is not overused and used properly. 

Marketing Technology Blog by Doug Karr

Social Media Blog by Kyle Lacy

Silver Square Blog by Raquel Richardson

 

I recently just completed Ronald Cohen's book, The Second Bounce of the Ball (hat-tip: Greg Mark). The book is a great study in what it takes to be a successful entrepreneur. Perhaps most important in this regard is being able to read what Cohen refers to as the "the second bounce of the ball". After all, when we enter a market for the first time, it's easy to anticipate initial demand, interest, expectations, etc. But after the ball bounces a second time -- as it always does -- it's not always as clear which direction things will go in. Iasta is one of those companies that successfully read not only the second bounce of the ball, but the third as well. After migrating successfully from being a low-cost full service auction provider into a SaaS vendor with a strong e-sourcing mousetrap, they've once again listened to and read the market, moving in a new but logical direction.

Iasta's latest foray is into the world of what I'll term value-added sourcing and procurement services. Relatively speaking they're not breaking any new ground here. But just as they did in the past, they're copying and adapting an existing business model and delighting customers with both their price points and level of service. And they're doing so successfully, down to working with customers on broad- scale procurement transformations. Yes, you read that correctly. Iasta, that niche Indianapolis sourcing vendor, is competing against the Accentures and AT Kearneys of the world in the area of procurement transformation. And they're doing so successfully.

One of the secrets of their model is maintaining a relatively small full-time consulting team. In fact, nearly all of their team members are contractors with excellent reputations from past roles as consultants at major firms. Iasta is giving them far more autonomy and marking up their services significantly less than what other firms tend to do (e.g., I spoke with one of their procurement transformation leads with significant Big 5 experience who had also worked as a contractor for Denali and Accenture doing similar engagements). With Iasta, he was able to take home a significantly larger percentage of the overall client billings for his time and was also able to save the client material amounts over what bigger name firms would have charged (most likely to put in place more junior resources).

But what class of new services is Iasta offering specifically? For one, they're looking to define and bring to market offerings that, in their words, can help "new customers who aren't in a position to successfully use our software for 12 months until we can get them up to speed". If this requires dropping in more senior team members to drive initiatives in almost an interim management capacity, they'll do it. They'll also do more traditional opportunity and organizational assessments and follow through with customized programs designed to bring companies up to the next level of maturity (interestingly on this note, a number of other services providers in the market use Iasta as their sourcing platform and I suspect they might begin to see Iasta as potentially competitive -- the same problem that Ariba has had with its channel partners in the sourcing area).

In addition to procurement transformation offerings, Iasta is embracing the term "cloud sourcing" to describe a range of other services they bring to bear. These include what they're calling strategic initiatives in the form of energy sourcing and management, green supply chain consulting, MRO transformation and procurement outsourcing. But they're also productizing other cost reduction services based around what they're terming Zero Budget impact programs. These are, in Iasta's words, "8 indirect categories that are difficult to source and are not conducive to auctions".

Zero Budget categories include pharmacy benefits sourcing (delivered via a coalition / GPO model) which delivers, on average, 8-10% savings). They also include non-medical benefits and telecom (both delivered via sourcing events with 7-22% and 15-30% average savings respectively). Other categories that fall under this umbrella include software contracting, MRO/safety supplies, print, fuel management and relocation services.

Iasta has not abandoned more discrete service programs in the least, however. They continue to deliver what they term "tactical sourcing" programs in the form of spend analysis services, sourcing services, optimization services and user training. They're also offering spend analysis as service (including data classification, report and spend assessment surveys), fully managed source services, and staff augmentation around category-specific opportunities. To deliver all of these capabilities, Iasta is leveraging a network of "some 100 consultants" many of whom bring either specific category experience (e.g., print) or other areas of expertise.

Stay tuned for additional analysis of Iasta -- including software enhancements and pricing trends / observations / levels -- as this series continues.

PART I

While I'm not an old man just yet -- even though some might say that I have my curmudgeonly tendencies, not to mention liking to get to bed hours before Letterman comes on -- I have been around the provider side of the Spend Management world long enough to see dozens of vendors move from writing their initial business plans into their formative years and later into additional stages of maturation. Such is the case with what used to be a small provider I always enjoyed talking to and catching up with, Iasta. I've known the founders of Iasta since before they knew me. When I was at FreeMarkets, Iasta initially set out to copy our full-service sourcing model (and they did succeed in undercutting us on price and winning deals from time to time, as various salespeople reminded me when asking: "Who the heck are these guys from Indianapolis.")

Back in those years Iasta's three founders were heck-bent -- that's Bible Belt / Indy speak for hell-bent -- on creating a viable business model. And while they weren't sourcing guys, they knew a good business model when they saw it. As I got to know Iasta's three founders and became friends with David Bush at the time, it became clear that the Iasta business model was evolving from one of full-service capabilities into a self-service sourcing platform (along the lines of Procuri, Bay Builder and others). Early on in this migration, Iasta competed primarily on price, but as its features and capabilities grew, they started to win deals on more than just their willingness to undercut FreeMarkets, Ariba, Emptoris, Procuri and others. In fact today, they're often among the pricier options in certain deals. But they continue to win more than their fair share of deals in the areas in which they compete (primarily e-sourcing, spend analysis and optimization).

Last week, I had the chance to catch up with Iasta at their reSource event roadshow, as it swung through Chicago. In a series of posts this week and next, I'll dig into how Iasta continues to morph as it grows at one of the fastest rates in the overall market. In this first post today, I'll tackle some of the basics regarding their history and growth, sticking to the facts and figures. But perhaps most important, as a first question to tackle, is how did three guys from Indy create a thriving business in the Spend Management world without outside investment and with little or no initial knowledge of how the sector worked?

They listened to customers, that's how. And this remains a strategy they continue to employ to this day. In fact, starting out in 2000 through 2002, they followed their customer's requests to focus on fully managed auctions. Then in 2003-2006, they rode the SaaS e-sourcing wave. And more recently, they've grown through both customer and solution diversification, in addition to pushing a core sourcing platform that continues to garner accolades from users.

Today, Iasta has approximately 100 customers using their applications. Most of these are typically Global 1000 companies. They also have 50 services clients today (with a strong overlap between the two areas). These numbers not only represent what's been a strong level of customer acquisition in recent years, but also strong revenue growth overall (which is a signal that e-sourcing and related markets aren't seeing the type of pricing pressure that many initially hypothesized they would).

In fact, Iasta has realized a trailing three-year growth rate of 256%. This includes 77% growth in 2008. In Q2 alone, they saw 121% growth between the 2008 and 2009. And they've signed 32 new clients year to date. Moreover, 27% of the recent quarterly growth has come from software license sales (which represent what over 90% of the time amounts to a perpetual annuity).

Compare these numbers with Iasta's competitors and you'll quickly realize this is a company that is on the move. Moreover, the growth is all the more impressive if you consider they've done it without any outside cash infusions. Iasta remains 100% owned by the management team. They've also not yet hit a commercial inflection point, needing to bring in a truly heavy hitter in the sales area. So in other words, not only is all of this growth truly organic and real, it's evolved without the typical investments in sales, marketing and other areas that often require millions of dollars in a Series B financing round.

Stay tuned for the rest of this series looking at Iasta's growth. Next-up: a quick-hit investigation of Iasta's platform and related sourcing services.

 

4. Lawyer's blogging backfires

A California lawyer learned the hard way to watch what you say on your blog. His posts helped earn him a suspension from law practice. But the case has an unusual twist. The lawyer in the felony trial was there not as an advocate, but as a juror. Not only that, but he had not disclosed to anyone that he was a lawyer.

Even though the judge warned jurors not to discuss the case, the lawyer wrote about it on his blog. His posts identified the judge by name and described her as "a stern attentive woman with thin red hair and long, spidery fingers that as a grandkid you probably wouldn't want snapped at you." He gave the first name of the defendant and described his alleged crimes, referring to him as "a stout, unhappy man."

If the defendant was unhappy at trial, he later had reason to smile. When the lawyer's blogging came to light, the defendant's conviction was lifted and he was given a new trial. As for the blogging lawyer, he earned an 18-month suspension from the practice of law.

3. Blogging makes bad medicine

When a doctor decided to blog his own med-mal trial, it was a prescription for trouble. The doctor, known to his readers only as Flea, was already writing his blog when he was served with a lawsuit. As the case progressed, he periodically posted about it, describing his feelings when he was served with the complaint and reported on his own deposition.

When the trial finally got underway, he continued to blog, relaying his impressions of the plaintiffs' lawyer (whom he nicknamed "Carissa Lunt"), describing his "dress rehearsal," and accusing jurors of dozing off. While he may have thought his blogging had gone unnoticed by others in the courtroom, that was anything but the case.

During cross-examination of the physician, the plaintiff's attorney – the very one the doctor had described on his blog – surprised him with the question, "Are you Flea?" Yes, he sheepishly admitted. It was, according to one news account, a "Perry Mason moment."

The next morning, the parties entered into a confidential settlement reported to be "substantial." Ironically, jurors probably had no sense of the import of the question. But it was enough to signal that the plaintiffs' lawyer was prepared to delve into the blog in open court. Given some of what Flea had written there, settlement no doubt seemed the wiser course.

2. MySpace, my downfall

When an attractive New York model sued a high-profile billionaire claiming he had pressured her into sex when she was only 16, the tabloids were in a tizzy. Soon, the story was all over the gossip pages.

But it did not take long before reporters at one newspaper discovered the model's MySpace page. Based on what they found there, the newspaper reported that she was in fact a he. It also reported a graphic description taken from the MySpace page of the model's sexual fantasy involving multiple men and women. Further snooping revealed evidence that the model may have been much older than 16 at the time of the alleged affair.

After the MySpace page came to light, the model's lawsuit against the billionaire seems to have fizzled. But the model filed a second lawsuit, this time against the newspaper that discovered the page. She alleged that the newspaper's description of her fantasy defamed her by portraying her as a "promiscuous slut."

An appellate court disagreed. Because the newspaper reported only that the model had a fantasy – not that she actually engaged in the conduct – it did not defame her, the court reasoned. "The references to the Myspace pages merely served to highlight the ambiguity regarding the sexual identity of the person who sued the billionaire," the court said.

1. YouTube, Your Honor

Nothing, it seemed, could derail the nomination of Sonia Sotomayor to be the first Hispanic on the Supreme Court. Nothing, that is, but the resurrection online of her own long-forgotten words.

First it was that now-famous YouTube video. It showed a 2005 speech by Sotomayor to law students interested in becoming law clerks. The difference between serving in a trial court and in an appellate court, she told them, is that a "court of appeals is where policy is made." Conservatives jumped on the comment, saying it showed her to be a judicial activist.

As if that was not enough of a blow, next came the resurfacing of her 2001 speech, published by Berkeley's La Raza Law Journal, in which she said, "I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn’t lived that life."

Fortunately for now-Justice Sotomayor, neither her comment about judicial activism nor her "wise Latina" remark was enough to derail her track to the nation's highest court. But both serve as reminders that no matter what might be at stake, in the age of social media, the shadow of one's past is never far behind.

7. When jurors tweet

After jurors in an Arkansas case awarded a verdict of $12.6 million against a building materials company, one juror boasted on Twitter, "I just gave away TWELVE MILLION DOLLARS of somebody else's money." And that was only one of at least eight tweets he posted from his cell phone during the trial. Another said that the company would "probably cease to Exist, now that their wallet is 12m lighter."

Upon learning of the juror's tweets, the company promptly moved for a new trial. The defense lawyer contended that the juror's tweets showed he "was predisposed toward giving a verdict that would impress his audience."

Surprisingly, the trial judge denied the request for a new trial. The judge conceded that the juror's posts were in bad taste, but he ruled that they did not amount to improper conduct sufficient to warrant a new trial. Given that it is otherwise out $12 million, we have to assume the defendant will appeal the case and ask a higher court to weigh in on the twittering juror.

6. Two-faced on Facebook

You never know who may be watching you online. Remember that the next time you give a judge a made-up excuse for why you need a continuance.

A lawyer learned that lesson when she told Susan Criss, a trial judge in Galveston, Texas, that she needed a continuance because of a death in her family. Criss recounted what happened in a recent speech for the American Bar Association Judicial Division that was reported by the legal newspaper Texas Lawyer.

Having already given the lawyer a one-week continuance, Judge Criss was surprised when the lawyer's partner came into court and said that this time she would need a full month. But as a regular user of Facebook, Judge Criss had a surprise of her own up the sleeve of her judicial robe.

"I knew from her bragging on a Facebook account that she had been partying that same week," Criss said of the supposedly grieving lawyer. The judge told the surprised partner about what she had seen on Facebook. You can guess what she said about the continuance.

5. Careful who you 'friend'

While meeting in chambers with the judge during a North Carolina child-custody trial, the conversation turned briefly to Facebook. The wife's lawyer did not use it, but both the husband's lawyer and the judge did.

That evening, the judge logged on to Facebook and "friended" the husband's lawyer. As the trial proceeded, the judge and the lawyer commented about it to each other through their Facebook pages. At one point, the lawyer posted, "I have a wise Judge."

After the case ended, the wife's lawyer found out about the "friendship." She immediately moved for a new trial and for the judge's disqualification. The judge promptly removed himself from the case and the wife got a new trial.

The judge got something too – a lesson in judicial ethics in the form of a public reprimand from the state's Judicial Standards Commission. It seems his Facebook messages violated that irksome little prohibition against a judge engaging in ex parte communications.