File this under “no surprise there”: GlassHouse Technologies, the Framingham, MA, IT consulting company that filed for a $100 million initial public offering in October 2007, has now pulled the offering, according to an SEC filing cited by Reuters. The firm cited “market conditions” in its decision. GlassHouse has continued to raise money and add staff through the recession, however: it closed a $9.8 million Series F financing round in December and acquired a 12-person team of former Motorola network security experts in January.

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The Apple iPhone is perhaps the most powerful mobile phone ever built, so it’s no surprise that big enterprises want to use it, both to make their mobile workforces more efficient and to help customers access their products and services in new ways. But Apple, for a variety of reasons, isn’t interested in catering directly to businesses with the features and software they’d like. So enterprise adoption of the iPhone has been ginger and gradual; you’re far more likely to see sales reps, insurance adjusters, or delivery van drivers carrying Windows Mobile or Blackberry devices than iPhones.

To fill the void left by Apple, and to show how businesses can take advantage of the device’s capabilities, a team of former Apple executives and developers has split off from the company to form Apperian, a Boston-based, iPhone-centric software consultancy that opened its doors in January.

Apperian founder and CEO Chuck Goldman says the company has a two-fold mission: “Number one is helping companies leverage their existing technology investments in smartphones more effectively, by mobilizing workforces and bringing applications to handheld devices; and number two, and more compelling and exciting, is helping large companies really extend their brands and provide transformative, next-generation, point-of-service applications to customers.”

I’ll explain what Goldman means by “point-of-service” in a minute; it’s pretty interesting. But first a bit of Apperian’s back story. (The name is pronounced “Appear-ian.”) For eight years prior to starting the consultancy, Goldman was at Apple, where he ran the professional services division—the part of the company responsible for encouraging big, Fortune1000 companies to switch from Windows to Macintosh. Once the iPhone was launched in mid-2007, he took on additional duties as manager of Apple’s so-called “iPhone Enterprise Beta Program,” which had a dual focus: making sure that iPhones worked as “first-class citizens” in corporate data networks, to use Goldman’s words, and building actual applications that companies could run on the phones.

But Apple subsequently decided that creating enterprise applications “was not really a business that they wanted to be in,” Goldman told me in an interview yesterday. “They don’t really develop applications for third parties. And if they did, they’d be taking on the risk and liability of making sure that the software functions right, that it doesn’t crash anyone’s iPhone, that it doesn’t take down the network. Not that any of that would ever happen, but it’s something they really don’t want to get into, because of the liability.” (For the thousands of third-party apps distributed through the iTunes App Store, the developers themselves bear this liability, not Apple.)

That created “a fantastic opportunity to build a business that is outside of Apple and that would still be critical to Apple’s ecosystem,” says Goldman. Big software consulting and integration firms like IBM and Accenture haven’t traditionally helped their customers with Apple products, so they don’t have engineers who know the Mac OS X operating system (a version of which runs on the iPhone). And Apple’s existing network of consultants focus mainly on niches like desktop publishing and video production. “That leaves a real niche right now for a company like Apperian to come in and bring three things: knowledge of Apple and specifically Mac OS X development; size and scale, to the point where enterprises could work with us; and a real eye on next-generation applications—not just the thousands of kitschy, utility-based apps in the App Store, but higher enterprise-level applications.”

Apperian launched on January 15 with a combination of angel and “strategic” funding, according to Goldman. (He declined to say whether the strategic investors include Apple itself, but that wouldn’t be a bad guess.) The company has a staff of 12 executives, developers, and program managers, spread across offices in San Francisco, Reston, VA, and Boston, where …Next Page »

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If you ate on your best china every night, flew first class even on puddle jumpers, and habitually drove your Mercedes rather than your minivan to the grocery store, it would be a lot like what most big companies do with their data, according to Tom Cook.

More and more of the information that e-commerce companies and other data-intensive businesses collect sits on expensive “primary storage” devices from companies like EMC, Hitachi, and Hewlett-Packard. Those machines make the data immediately accessible to the company’s Web-based applications or enterprise management software. But on average, only about 25 percent of the data in primary storage is actually needed for day-to-day transactions, says Cook, CEO of Cambridge, MA-based Permabit Technology. “If you moved the other 75 percent to a lower-cost tier, you’d get much better efficiency and better cost savings,” he says.

Permabit, you may not be surprised to hear, offers just such a technology: what it calls “enterprise archive storage.” Enterprise archiving isn’t the same as the daily data backups that most companies generate. Those systems, which are often tape-based, are still needed to guarantee that companies can recover from disasters. The difference is that most companies never plan on using the data that goes into their backup systems, whereas Permabit’s systems are built to store the final copies of frequently used files—just at lower cost than primary storage.

Most companies pay $30 to $50 per gigabyte for primary storage, according to Cook, while Permabit’s systems list for $3.50 per gigabyte. If customers use compression and de-duplication (the weeding out of redundant data) to squeeze even more information onto Permabit’s hard drive arrays, they can get that cost below $1 per gigabyte, he says.

There’s a technical secret to how Permabit can store all this data cheaply and reliably, in a way that frees customers from having to “migrate” from one generation of storage technology to the next every few years. And there’s a business secret to how the company—which was founded in 2000 but has only begun to see serious market demand for its technology in the last couple of years, according to Cook—has stayed alive so long without an “exit” event for its investors.

The technical secret first. If you’ve ever wandered into a data center, you’ve probably heard of RAID—an acronym for “redundant array of inexpensive [or independent] disks.” This became the dominant technology in the 1990s for splitting up data across lots of PC-class hard drives (as opposed to the huge, expensive drives on 1980s mainframes). RAID is great for storing terabytes of data cheaply, and it’s somewhat fault-tolerant: if one drive fails, it’s usually okay, because the data is copied and stored on at least one other drive.

But RAID has a weakness. If one drive fails and a new one is installed in its place, the data that was on the failed drive has to be replicated by locating it and reading it off remaining drives in the array. If an error occurs during that process—if, say, a storage block becomes corrupted and unreadable—there’s a small but real chance that the original data will be lost forever. And if a second drive fails before the reconstruction is complete—well, let’s just say you’re hosed. (In the case of a 16-drive RAID 6 array with two failed drives, Permabit calculates that there’s a whopping 50 percent chance that reconstruction will fail.)

To guard against that problem, Permabit’s founder and chief technology officer, Jered Floyd, led the development of an alternative storage approach called RAIN-EC. That stands for “redundant array of independent nodes—erasure coding.” The erasure coding is the key part; it describes how Permabit’s drives slice up data during the de-duplication process to make it “erasure resilient.”

The geeky details: For any given chunk of data, RAIN-EC first splits the chunk into four “shards.” It then uses a special algorithm to whip up two additional “protection” shards containing bits and pieces of the first four shards, in such a way that reading back any four of the six shards is enough to reconstruct the original chunk. Each of the six shards is then written to a different storage node in the array. (A node can consist of a single hard drive, or a cluster of them.)

In this way, very large files get spread across nearly the entire array. If any single node in the array fails, …Next Page »

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What recession? Two privately-held software startups on the Eastside announced today they are raking in the dough, boosted by record sales. Besides that common thread, though, they could scarcely be more different. One company (Motricity) is in mobile content delivery, the other (Winshuttle) in business-management software. The first is heavily funded by VCs, the latter is bootstrapped. Motricity was born and raised in the Southeast before moving to the Northwest, while Winshuttle is homegrown.

—Bellevue, WA-based Motricity, a mobile software firm, announced it generated more than $100 million in revenue in 2008 (no word on profits yet). The startup, which is backed by more than $400 million in venture funding from the likes of Carl Icahn, Technology Crossover Ventures, New Enterprise Associates, Advanced Equities, and Intel Capital, provides a software platform for delivering mobile content. Motricity was founded in Nashville, TN, by Ryan Wuerch in 2001 (it was originally called PowerByHand). The company moved to Bellevue in March 2008 to be closer to large wireless customers like T-Mobile.

—Bothell, WA-based Winshuttle, a business-software firm that helps companies move data between spreadsheets and other applications, announced its revenue doubled in 2008 over 2007, and its total sales increased by 34 percent in the fourth quarter of 2008 compared to the third quarter. The company didn’t give any absolute revenue numbers, but it did say it added 38 new customer accounts in the last three months of last year. Winshuttle also said it’s getting a new CEO—Lewis Carpenter, who was formerly Winshuttle’s president and chief operating officer. Co-founder and chairman Vikram Chalana is shifting from chief executive to chief technology officer.

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Cambridge, MA-based Mazu Networks, which makes software for optimizing the performance of enterprise applications over networks, will become a unit of San Francisco-based Riverbed Technology (NASDAQ: RVBD), according to an announcement yesterday. Riverbed, which focuses on wide-area-network optimization, will pay $25 million up front for Mazu plus up to $22 million in performance-based payments over the first 12 months after the acquisition closes. Mazu, founded in 2000, had raised $47 milllion in venture funding from Benchmark Capital, Greylock Partners, Matrix Partners, Pilot House Ventures, StarVest Partners, Symantec, and other investors, according to Private Equity Hub.

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You get home from a big business trip to San Francisco, you’re talking with a friend from out of town, and you find out that he was just there too. If you’d known, you could have met up! It’s a common scenario—and it shouldn’t happen as often anymore.

After all, you probably keep an electronic calendar that includes details about your upcoming trips. And most calendars these days allow you to share your appointment data with other people’s calendars, over the Web or corporate networks. There ought to be a central exchange where your calendar program can go to find out whether any of your friends (or colleagues, or potential clients or customers) are going to be in the same area as you at the same time.

Well, now there is. It’s called LuckyCal, and it’s being built by a Lexington, MA-based startup that’s one of the first 10 companies to receive a grant from Facebook’ $10 million “fbFund.” Announced last year, the fbFund is run by Facebook with money from Accel Partners and The Founders Fund, and is designed to support independent developers working on applications for the Facebook Platform (the subject of my interview last week with Facebook senior platform manager Dave Morin). LuckyCal got the largest possible grant from the fbFund: $250,000, to be doled out in installments as the startup meets usership milestones.

But, while LuckyCal’s Facebook application is an important part of its offerings, you can use the service even if you don’t have a Facebook account, by giving it access to your desktop- or Web-based calendars and address books and inviting friends to share their own data. LuckyCal’s matching algorithms suck in all this information, along with public event listings from sources such as Ticketmaster, and spit out what the company calls “lucky” events: confluences that you can then decide whether to act upon. Say you’re going to Minneapolis-St. Paul next weekend. LuckyCal might see from your address book that you have a cousin there, and suggest that you give her a call; and it might know from the interests you’ve listed on your LuckyCal profile that you love public radio, and send you a link to purchase tickets to a live broadcast of “A Prairie Home Companion.”

When I first heard about LuckyCal’s service, it reminded me of 1990s-era predictions about “intelligent agents” that would scour the Internet, making your travel arrangements, negotiating appointments, doing your holiday shopping, and the like. A full-blown agent would require a level of artificial intelligence that’s still way beyond what computer science can accomplish. But LuckyCal does something very similar, just by crunching together the standard data that can be extracted today from productivity applications like Outlook and iCal and Web platforms like Facebook and Gmail.

It’s a no-brainer, in a way. But nobody had done it. “Calendars have been around for a very long time,” observes LuckyCal’s 37-year-old CEO and co-founder Sanjay Vakil, a Canadian-born entrepreneur and software architect who’s a veteran of local startups like Ambient Devices and PatientKeeper. “Electronic calendars have been around for a reasonably long time. And online calendars have been around for 8 to 10 years now. Yet nobody has tried to do this—to solve the simple problem of ‘Here’s where I’m going, show me what’s available while I’m there.”

Facebook, where members are already eager to make connections, is an obvious place to try out the model—and so far, a couple hundred Facebook users have signed up for LuckyCal. But ultimately, Vakil sees the software as something that could go beyond the social-networking crowd to become a money-saving tool for big organizations whose employees travel regularly. The fbFund grant comes at a key moment, helping the startup get its idea working first in a friendly environment (and perhaps helping it to earn a bit of money on Ticketmaster commissions along the way). But long-term, Vakil says, the business model is more about licensing LuckyCal’s services to big corporate customers.

Vakil says he’s been thinking about better ways to interact with event information for several years—ever since he worked at Ambient, a Cambridge, MA, startup that sells wireless information displays such as the Ambient Orb, which glows red or green according to the direction of the Dow Jones Industrial Average, and the Ambient Scorecast, which shows the progress of baseball games, hit by hit. (Vakil wrote the code for the latter device.)

“LuckyCal came out of a meeting with David Rose,” Ambient’s director and chair, Vakil says. “We had this idea for the Ambient Clock—a device that would take calendar information and show it on an analog wall clock. If you had an appointment between 2:00 and 3:00 it would fill in that pie piece. But we looked at the data real people put into their calendars, and on average it’s only about one event per day. What do you do with the rest of the clock? Why not try to …Next Page »

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If you’re a typical homeowner, it would probably be overkill to have a live-in plumber who spends all his time checking the pipes for leaks. But if your plumbing system were constantly getting new parts, carrying volatile new liquids, and fending off corrosive agents, it might not be such a bad idea.

That’s the basic concept behind automated penetration testing software, a corner of the computer security business pioneered several years ago by companies like Boston-based Core Security Technologies. Given the complex, ever-changing nature of most network-based enterprise software today, it’s unwise to assume that any network or application is totally secure. And by investing in software to attack your own systems, rather than waiting for hackers to do it, you might just discover vulnerabilities in time to prevent major data breaches.

Core Security’s whole business is to sell an advanced penetration testing software package called Core Impact—until this week, that is. While Core Impact has been adopted by more than 700 big-company customers, the startup wanted to make penetration testing even more accessible, so today it’s announcing a streamlined version called Core Impact Essential, with a simplified interface tailored for smaller businesses or branch offices of big enterprises. The company’s original product, now called Core Impact Pro, has also been upgraded to detect more types of vulnerabilities in Web-based applications and to deal with the new IPv6 improvements to the global Internet Protocol.

Core Security was founded in 1996, and is backed in part by Morgan Stanley Venture Partners, which contributed $4.5 million in Series B funding in 2005. We last wrote about the company in March, when it disclosed a security flaw in workstation virtualization programs from VMware that left the software vulnerable to takeover by hackers. The job of the company’s security lab, which is located in Buenos Aires, Argentina, is to seek out such vulnerabilities, design attacks that exploit them, and incorporate this information into the Core Impact software, the better to pinpoint related security holes in customers’ networks and applications.

One of the biggest reasons Core Security’s products appeal to IT administrators, says Core Security CEO Mark Hatton, is that penetration testing results help to persuade higher-ups that their companies should invest the time and money required to install patches for known vulnerabilities. “In a perfect world, all patches would be deployed, and things would be just fine,” says Hatton. But too often, he says, IT people “can’t get their own companies to agree there is a problem. Until they show that an attack can actually happen, they have disagreements about whether or not they are insecure. So one of the values of Core Impact is that it helps them to justify, internally, the need for patches.”

Automated penetration testing is gradually becoming standard practice in medium- to large-sized businesses, Hatton says; Core Impact Essential is designed to make it practical for small businesses as well. “There is independent research coming out of NIST and other sources that quite strongly advocates regular, automated penetration testing as part of a security process,” he says. “So what we are not doing today that we might have had to do four or five years ago is educate, educate, educate. We’re seeing customers say they want to do more with our product—so we’re moving quickly do address that need with different products and product families.”

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January, 2008: French bank Societe Generale discloses that it has lost $7.1 billion, thanks to unauthorized trading by a single employee, Jerome Kerviel, who apparently breached various controls on access to the bank’s computer systems.

March, 2008: UCLA Medical Center fires 13 workers and disciplines a dozen others for snooping in the confidential medical files of celebrity patients including Britney Spears, Farah Fawcett, and Maria Shriver.

April, 2008: Financial comparison shopping site LendingTree discloses that several former employees gave mortgage lenders passwords they needed to access confidential loan-request data from LendingTree customers.

May, 2008: Walter Reed Army Hospital discloses that personal information for 1,000 former patients may have been breached by someone using a peer-to-peer file sharing program on a hospital computer.

July 9, 2008 (yesterday): The Washington Post reveals that Supreme Court Justice Stephen Breyer and about 2,000 other clients of a McLean, VA, investment firm had their names, birthdates, and social security numbers exposed to the open Internet by an employee using the LimeWire peer-to-peer file sharing program on a company computer.

Hackers aren’t the only threat to computer-system security and confidentiality rules, many security professionals say. The common elements in each of these recent, high-profile data breaches were rogue insiders with inappropriate levels of access to their organizations’ IT systems. And while you might think it would be easy to control who gets access to these systems—the LendingTree debacle, for example, could have been avoided if the company had simply invalidated the former employees’ passwords when they left the company—the reality is that many big organizations are overwhelmed by the problem of managing their employees’ network access.

Or so says Kurt Johnson, vice president of corporate development for Courion, a company in Framingham, MA, whose “identity management” software helps large organizations automate the once labor-intensive task of administering thousands of computer accounts. “You want to make sure that information gets into the hands of the individuals who need it, but there have to be controls and security over who should get access. You can’t have one without the other,” says Johnson. “Courion’s goal is to enable organizations to increase security with tighter controls—but without requiring more bodies to do the administration.”

The privately held company, which has 130 employees spread across offices in Massachusetts, Georgia, Texas, California, New York, and the U.K., offers a menu of software products—upgraded just two weeks ago—that can be matched to an organization’s specific needs. PasswordCourier—the product that helped to launch the company in 1996—is a basic self-service password management system that helps employees who have forgotten their passwords to obtain a new one after brief, online challenge-and-response session. ProfileCourier allows users to set up the authentication questions used in these sessions—for example, “the name of your favorite childhood pet.” AccountCourier automates the creation and deletion of user accounts; it knows, for example, that ex-employees should have their passwords revoked. CertificateCourier manages the public-key-encrypted digital certificates that many companies use to manage access to internal websites and applications, and ComplianceCourier lets managers quickly review who is using which corporate applications and purge users who’ve been granted improper access. (In that last area, Courion’s product overlaps with those from Ecora, a Portsmouth, NH startup that makes software for tracking and auditing configuration changes in corporate IT systems.)

The company’s newest product, RoleCourier, automates the whole process further by letting organizations define standard job roles that involve access to a predefined set of applications or networks. New collections specialists in a big corporation’s finance department, for example, might be …Next Page »

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Bedford, MA-based Progress Software, which makes software that allows companies to tie legacy business applications together into so-called service oriented architectures (SOA), said yesterday that it has acquired smaller competitor Mindreef. The Hollis, NH-based company, which makes software for building, testing, and maintaining SOA systems, had raised $4 million in a 2003 venture funding round led by Kodiak Venture Partners and will operate as a separate product unit of Progress.  The terms of the deal were not disclosed.

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Software developer Aveksa, based in Waltham, MA, announced today that it will open a headquarters for Europe, the Middle East and Africa in London.  Aveksa’s business is “enterprise access governance solutions”–in other words, controlling who has access to what information inside a company.

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Nathan Kaiser is connected. His office is wherever he feels like working. He walks into shared startup digs on Alaskan Way, and people flash him knowing hand signals. I probably shouldn’t even be talking to him, given my lack of an iPhone; my Nokia brick looks like it’s from 1998. (I’m 10 years behind when it comes to consumer tech—don’t ask.) We’re sitting in a Downtown Cups cafe in Seattle, across from the ferries, enjoying a nice latte (7.8 on the Huang scale) and iced chai, respectively (”I can’t drink coffee,” he says).

While I wolf down a sandwich, Kaiser tells me about his Seattle-based company, nPost, which runs a resource site for tech entrepreneurs. It is dedicated to promoting startups and matching up companies with talent via networking events, online interviews with entrepreneurs, and a job board that covers major tech centers from the Northwest to New York City.

Kaiser’s own entrepreneurial story is a good one. In the late 1990s, he studied microbiology at the University of Washington, then went into marketing at Medtronic. Around 2000, he began putting up online Q&As about the entrepreneurial experience, on the side—the genesis of nPost. “I started calling up CEOs, doing informational interviews. ‘How do you engage a sales team? How did you deal with restructuring the company as a leader?’” he says. “I found I had a passion for early-stage startups.”

Those networking chats with CEOs led directly to new jobs for him—first in Austin, TX, at United Devices. Then, in 2001, he went to New York City to join LinkShare. (He was a block away from the World Trade Center on the morning of September 11, 2001, attending what he calls a “Web 0.0″ conference, when he felt the impact of the first plane.)

In 2003, Kaiser moved back to Seattle, still running nPost on the side. Two summers ago he went full-time, bootstrapping the company and selling sponsorships. In February 2007, nPost started making money, thanks in large part to its job board. The company’s networking events have been getting “bigger and bigger,” says Kaiser, and now draw up to several hundred participants. The next big one is July 15 at the Columbia City Theater in Seattle.

So what are the tech trends Kaiser is looking at these days? A common lament among recruiters seems to be the local labor market. “Recently, recruiting has been really difficult,” he says. “It’s essentially a poaching market.” On the bright side, he’s seeing a lot of activity in two emerging areas: startups that use Web 2.0 tools to help large businesses connect with users and sell more products; and companies that filter online data, helping people and businesses manage their vast amounts of email, RSS feeds, and search information. What isn’t hot, at least for local Internet startups, is consumer retail and search sites. “It’s hard to make money until you get to scale. Advertising is really hard,” he says.

What Kaiser thinks the Seattle area needs most at this point is infrastructure to support risk-taking—lawyers with entrepreneurial expertise, and more depth in executive management talent, for starters. “It’ll take time, and we need to recruit people,” he says. It would also help, he adds, to build up collaborations in the Northwest, with places like Portland, Spokane, Boise, and Vancouver, BC—and to become more established as a tech innovation center for the region.

As we wind down, he leaves me with a page-long list of early-stage entrepreneurs and networking experts to tap into. “Just the tip of the iceberg,” he says.

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Virtualization software company VMware today announced that it will buy B-hive Networks of San Mateo, CA.

VMware, a Palo Alto, CA-based subsidiary of Hopkinton, MA, storage giant EMC, makes software for both desktop machines and servers that can make a single computer appear as a number of different virtual machines. These can be run simultaneously, and even have different operating systems. In this way, you can, for instance, run some applications in Windows and some in Apple’s Mac OS X on the same piece of hardware.

Data centers use VMware’s technology to assign different virtual servers to different users and different tasks. This form of virtualization helps companies save money on computer servers—if , that is, they can manage the complexity of having all these virtual servers as an extra layer on top of a network of real, physical hardware.

B-hive, which is based in California but has R&D labs in Israel, has developed programs that help monitor and control this virtual infrastructure. If a virtualized application starts to run very slowly, for example, b-hive’s software can automatically allocate more resources such as an extra virtual machine to help handle the task.

VMware made a similar acquisition in January when it bought desktop virtualization company Thinstall. The San Francisco company makes a system that lets users in large organizations run Windows programs on their computer, without having to install them locally.

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Being the leader of the pride, it seems, doesn’t guarantee you a nice meal everyday. Waltham, MA-based Lionbridge Technologies (NASDAQ: LIOX) may be the world’s largest provider of localization services, helping hundreds of other companies from Microsoft to Merrill Lynch to Pfizer go global by translating their websites, product manuals, software programs, and drug warnings into other languages. But it sure isn’t getting rich doing it: On May 6 the company reported a net loss of $4.4 million for the first quarter—its third straight quarterly loss—and last Friday Lionbridge stock dipped to $2.37 per share, its lowest point in more than five years, and down 61 percent compared to a year ago.

That’s lower than even the most pessimistic analysts were predicting at the beginning of 2008. As the financial website 24/7 Wall Street put it in a catty post recently, “It looks like the lion’s roar is a meow, at best.”

It’s a frustrating reversal for a company whose CEO, Rory Cowan, was being lionized (that’s the last cat pun, I promise) just three years ago for putting together a $180 million deal to buy one of its main competitors, the Global Solutions unit of New York-based Bowne & Company. That acquisition vaulted Lionbridge into the ranks of Boston’s 60 largest companies. And it’s a puzzling state of affairs, given that the company’s revenues are large and growing—a record $117 million in the first quarter, up more than 8 percent from a year earlier. But no matter how high the company’s revenues go, its expenses seem to go higher.

One answer to the puzzle seems to be that Lionbridge’s expansion has put it at the mercy of the same twin forces—technology and globalization—that drive demand for its services.

Analysts who follow localization services—a $12 billion industry in 2007—point out that translation is still a labor-intensive process, and that Lionbridge’s strategy of employing hundreds of managers, engineers, and translators in expensive regions like Europe may be backfiring with the weakness of the U.S. dollar against the Euro and many other currencies.

And while Lionbridge has made a significant investment in technology—especially on work-flow automation and memory systems that save labor by identifying material that’s already been translated—it hasn’t really profited from that spending. “What has happened is that the benefits of the efficiency gain that Lionbridge has been able to produce through the use of technology have been handed right to the client” in the form of prices that have stayed flat despite global inflation, says Ben Sargent, content globalization strategist at Common Sense Advisory, a localization market research firm in Lowell, MA.

It wasn’t supposed to be this way. Lionbridge, founded in 1996, has spent hundreds of millions of dollars on acquisitions and other growth strategies, and has the client list (Bayer, Cisco, DuPont, GE, Google, IBM, Merck, Merrill Lynch, Microsoft, Morgan Stanley, Nokia, Pfizer, Sony, and Wal-Mart are a few of the big names) and revenues ($452 million in 2007) to show for it. With 4,600 employees in 45 offices around the world and a network of 25,000 freelance translators skilled in more than 200 languages, the company is three times the size of …Next Page »

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MozyHome for Mac, a program that backs up your personal files online, went into full production today after a long period in beta testing. For several weeks now, I’ve been using the service—which, for the moment, represents one of the only ways everyday computer users can tap into the emerging “cloud computing” phenomenon—and I’ve found it to be an easy and nearly foolproof way to avoid losing data in the event of theft, hardware meltdown, or some other disaster.

MozyHome is a service of Mozy, which is based in Salt Lake City and is part of the Cloud Infrastructure and Services Division at Hopkinton, MA-based EMC (NYSE: EMC). If you want to back up 2 gigabytes of data or less, the service is free. But for $4.95 per month, MozyHome allows you to back up an unlimited amount of data, which flows up into the cloud (i.e., Mozy’s secure storage servers) over a broadband connection while you use your computer for other tasks. It’s the first unlimited online backup service that works with the Mac operating system.

Vance Checketts, chief operating officer at Mozy, stopped by Xconomy’s offices last week to fill us in about the production release, which he says will be followed sometime this summer by Mac versions of MozyPro and MozyEnterprise, the business versions of the company’s service. All three versions have been available for Windows computers for some time (MozyEnterprise was the most recent addition, in January). But getting them working on Mac OS X has presented some unique challenges, according to Checketts.

“We hear different things from our Mac users than we do from our Windows users,” he says. “Storage requirements for the Mac users are higher. People tend to have more rich media on their Macs. And the way Macs store mail, in thousands of individual files rather than the single Outlook files on Windows, is something we weren’t optimized for before. So in some ways it’s a more challenging platform for us, which is part of the reason we’ve taken more time to deliver this product.”

While the end user license agreement for MozyHome technically limits users to backing up personal, non-business-related files, many people (myself included) are already using it for both work and personal backup. Checketts says the company isn’t particularly worried about that. “We’d rather have you as a user than turn you away and say, ‘Sorry, come back when the business product is available,’” he says.

The company intends to fully embrace enterprise Mac users as soon as it can. “We’re seeing that in higher education, K-12, graphic design, industrial design, writers, anyone in a production-type environment, there is an increasing number of Macs out there,” says Checketts. “The most frequently asked question about MozyHome for Mac is, ‘Cool, but what about the business version?’” (Enterprise versions of the Mozy’s service, in case you’re wondering, allow IT administrators to configure which files on each employee’s computer get backed up, and how often.)

MozyHome isn’t the only online backup solution for home computers. Boston-based Carbonite, for example, offers unlimited online storage for $49.95 a year. Like Mozy’s software, Carbonite works in the background, uploading all of your sensitive files over a period of days the first time you use it, then doing incremental backups, uploading only the material on your hard drive that has changed since the last backup. But unlike MozyHome, Carbonite isn’t yet available for Macs. (Technology reporter and columnist Hiawatha Bray has a nice point-by-point comparison of MozyHome and Carbonite in their Windows incarnations in today’s Boston Globe.)

Checketts says Mozy currently enjoys an interesting position within EMC. It’s the only part of the company offering a true cloud computing service to either home users or businesses, and is therefore leading the company’s cloud infrastructure design efforts. “Mozy is the on-ramp,” Checketts says. “We’ll get customers into the cloud through Mozy and a few other options, and once they’re in the cloud, we’ll be able to lots of other great things with their data. Meanwhile, we’ve built out this infrastructure that the whole company can interoperate on.”

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Netezza (NYSE: NZ) sells high-performance data warehousing appliances to companies such as Neiman Marcus, Amazon, and TJX that need to analyze terabytes of customer data quickly to detect fraud or help with marketing decisions. Thanks to new compression techniques being rolled out next month as part of the latest software upgrade for Netezza’s appliances, they’ll be able to sift through that data more quickly, and store more of it.

“These are big companies with datasets that are growing 20 to 50 percent annually,” says Phil Francisco, vice president of product management and marketing at Framingham, MA-based Netezza, which went public last summer in one of the Boston area’s biggest technology IPOs. “The ability to make that data actionable in a low-latency way [i.e., faster] has become a fundamental competitive lever in their businesses.”

Data warehouses are like staging areas for the raw information sitting in the transaction databases large companies manage to compile data on sales, customers, suppliers, and employees. The business intelligence software used to make sense of all this data can’t query the transaction systems directly, since they store data in many different formats. Data warehouse appliances extract the information and store it in a uniform way.

The new “Compress Engine” feature of Netezza’s servers, unveiled yesterday, will double the speed at which that stored data can be extracted from the devices’ disk drives, while at the same time allowing companies to store four or more times as much data on each machine. And all of that will be achieved through a simple software upgrade—one bonus of Netezza’s hardware-intensive approach to data warehousing, in which each storage server is actually a powerful computer containing special chips assigned to speed query-answering by filtering out irrelevant data as it streams off of hard drives.

Netezza calls those custom chips “FAST Engines.” FAST Stands for FPGA Accelerated Streaming Technology; FPGA, in turn, stands for Field Programmable Gate Array, connoting the fact that the chips aren’t designed for any specific application but can be reprogrammed on the fly to carry out any logical function. With the software upgrade, Netezza is assigning a portion of each FAST Engine just to handle data decompression, which is normally a CPU-intensive task that slows down everything else. “We’re able to do decompression at the same rate that we read the disks—so if your data is compressed at a 2-to-1 ratio and the read rate of your disk drive is 60 megabits per second, effectively we’re hitting a scan rate of 120 megabits per second,” explains Francisco.

In the end, that means companies can get answers to crucial business questions faster. (Netezza has a fairly informative blog post about the whole thing.) The new technology will be an optional feature available to Netezza customers for an extra fee as part of the 4.5 release of the Netezza Performance Server software.

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Kalido, the Burlington, MA-based data warehouse customization company we profiled in March, said yesterday that it’s opening a product development and servies office in Bangalore, India. The office will complement rather than replace Kalido’s existing operations in Massachusetts and London, the company says. “We’ve doubled our product portfolio in the last year and demand for our ‘Information Engine’ has grown significantly,” said Kalido president and CEO Bill Hewitt. “This new Center will serve as a regional hub for Asia as well as contribute to our development efforts worldwide.”

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PowerSteering Software, a Cambridge, MA, startup specializing in programs that help companies manage large business and technology projects, said yesterday that it has raised $3.5 million in additional financing.

The company’s products, delivered using a subscription, software-as-a-service model, are focused on helping clients comply with the Six Sigma standards for process improvement first formulated at Motorola in the mid-1980s. PowerSteering claims that its software can help companies reduce administrative overhead and improve success rates for big projects such as implementing new IT systems. But lately, the company’s somewhat complex software products have faced increasing competition from newer, cheaper Web-based project management systems such as Basecamp from 37 Signals, whose products Xconomist Bill Taylor calls “shockingly easy to use.”

Privately-held PowerSteering was founded in 1998. (In an earlier incarnation as Cambridge Interactive, however, the company dates back to 1994.) It’s attracted a total of about $18 million in venture financing, according to Mass High Tech, which also reported that the company plans to use the cash infusion to beef up its sales staff and upgrade its own IT infrastructure.

The latest investment round was led by Toronto-based technology and life sciences finance company MMV Financial, with participation from existing investors Hudson Ventures and Advent International (which we happened to write about earlier today).

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Lots of folks are excited about the movie 21, a semi-fictionalized account of the exploits of the MIT blackjack team in the 1990s. That’s clear not just from the film’s box-office-leading performance last weekend, but from the fact that so many people are coming out of the woodwork and identifying themselves as members of the team.

In fact, there’s a bit of a controversy brewing in the comments section of Bob’s piece last week about team member John Chang, one of the models for the Micky Rosa character in Ben Mezrich’s 2002 book Bringing Down the House, upon which the movie is based. Bill Kaplan, who co-founded, trained, and financed the blackjack team, commented that, “While I know John likes to say he’s Mickey Rosa…the fact is he’s a dead ringer for the character Choi.” (Note: the book spelled Rosa’s first name “Micky” but everyone routinely adds an “e.”) And later Kaplan e-mailed Bob the following note:

“The Mickey Rosa character as developed in the book and the movie is fictitious. But as he represents the founder and leader of the team who made everything happen (e.g. supplied/raised the capital; determined the original playing strategy; structured the compensation terms and incentives for investors, players, and management; put the business processes, training rules, checkout procedures, player tracking and supervision, etc. in place; gone out as a player on top), that would be me.”

We aren’t about to take sides on this one. But it’s obvious that the Rosa character (played by Kevin Spacey in the movie) is likely even more of a fictionalized amalgam than has previously been reported. And what’s also becoming clear is just how many of the people who did time on the blackjack team have gone on to become prominent members of the Boston technology and innovation scene. Kaplan is a prime example of that, as I learned in an interview with him this week.

Kaplan is a 1977 economics graduate of Harvard College (the same class that included Steve Ballmer, and that would have included Bill Gates, had he not dropped out). Among the many feathers in his cap are a former world ranking in professional squash and a 1980 MBA from Harvard Business School—he had to fight to get his initial admission to HBS reinstated after the school found out about his history as a card counter.

Kaplan says he co-founded the blackjack team in 1980 with MIT student J.P. Massar (who went on to be a well-known LISP programmer, an employee at Danny Hillis’s pioneering computer company Thinking Machines, and a professional-level poker player). Kaplan ran the club as a limited partnership bankrolled by outside investors; at its peak in the early 1990s, it “employed” as many 80 players, Kaplan says. He departed around 1993—before most of the events depicted in Bringing Down the House—to focus on his Boston-based real estate investment company, Linden Properties, which he had started in 1980 and which has acquired and developed over $100 million in commercial real estate, most of it within a two-hour drive of the city.

And for his latest act, Kaplan has remade himself again, this time as an Internet entrepreneur. The problem Kaplan and his Newton, MA-based company, FreshAddress, are trying to solve is one endemic to the net, where people are even more transient than in the physical world. It’s the fact that people switch e-mail addresses every three years or so, on average. While that may not seem like such a big deal from a consumer’s point of view, it causes fits for any organization that depends on e-mail to communicate with its customers, donors, or alumni. It means that if a company assembles a database of 3 million e-mail addresses, after a year only 2 million of them will be usable. And that’s something companies are willing to pay to prevent.

When Kaplan and business partner Austin Bliss started FreshAddress in 1999, however, they were thinking of it as …Next Page »

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As frustrating as it is to call a customer-support line, navigate the automated voice-response system, then wait on hold for 15 minutes to speak with an actual human, the call-center experience can be even harder for the people on the other end of the line. A number of trends are making life more harried for call-center reps and their supervisors, including ever-growing call volumes, the pressure to work through the queue faster by spending less time on each call, and the countervailing pressure to spend more time placating angry customers (since it’s so expensive to acquire a new ones). But to make even small changes that might lighten the load—for example, rerouting some calls from overloaded call-center agents to idle front-office workers—call center managers usually have to get help from IT staff.

Can more technology provide the answers to problems that technology created? Rex Doricott, CEO of Exony, thinks so. The nine-year-old company, which has offices in Boston and Newbury, outside of London, makes software for managing “virtual call centers,” large customer-service operations where agents themselves are scattered across several facilities. The latest version of Exony’s software, launched last week, gives call center managers direct control over call routing changes and other operations that used to require technical staff. It also gives them what Exony calls “customer interaction intelligence”—data on the performance call center workers who may be located in corporate offices spread across many time zones, or may even be working from their homes. The so-called Virtualized Interaction Manager (VIM) software automatically produces reports that help managers figure out which agents are productive, which ones need help, and which ones need to be disconnected.

“Our system is about empowering people with management tools,” says Doricott. The old metrics used by call-center managers were rigid and counterproductive, he explains: for example, it was common to penalize agents for being on the phone with a customer longer than five minutes. “So agents used to put the phone down at 4 minutes 50 seconds, even if the call wasn’t finished,” Doricott says. “Now you can track that, and be more fair and flexible in the way you manage people. It’s unfair to penalize someone for spending 6 minutes on an important customer-retention call if they haven’t handled that type of call in a month.”

Exony’s VIM sits on top of and interfaces with the voice-over-Internet-Protocol software from companies like Cisco Systems and Genesys that typically handles the nuts and bolts of call switching in modern call centers. It’s used widely by financial-services companies, especially European firms like HSBC, BNP Paribas, Lloyds TSB, Alliance Leicester, and Yorkshire Bank—businesses where “there’s a good service culture,” in Doricott’s words. Prudential UK, a pension administrator, recently adopted Exony’s system to manage 1,800 agents in contact centers around the world. “The financial services industry is extremely competitive and our customers rightly demand a high level of service,” Al Jeffrey, a planning account manager at Prudential, said in Exony’s announcement of the sale. “The Exony VIM system enables us to manage this expectation more effectively.”

Doricott and three colleagues started Exony in 1999; all four, and another six who joined the startup later on, were defectors from the software R&D wing of Sony’s professional broadcasting technology division. (In fact, the name Exony is short for “ex-Sony.”) The switch from a television technology lab, where Doricott and his coworkers were building systems that put digitally recorded TV programs into the right time slots in broadcast lineups, to a company that makes call center software might sound like a stretch. But according to Doricott, “the technology skill set around the infrastructure—for example, the role of databases—is almost 100 percent overlapping.” But such a radical change of business domains did involve “a bigger learning curve,” Doricott admits.

Exony set up its Boston office recently to sell the Virtualized Interaction Manager and the company’s other services to more North American users. Landing Microsoft, which bought seat licenses for 12,000 employees in 65 call centers around the world, was one big success. The company’s has engineered its expansion on a relatively tiny amount of capital: Kennet, a venture firm with offices in London and Silicon Valley, gave Exony $5 million in 2003 and then another $2 million a couple of years later, Doricott says.

Exony faces serious competition: Aspect Software in Chelmsford, MA, for example, sells “unified communications” software that includes workforce monitoring and management tools, and just this week Aspect formed an alliance with Microsoft that will integrate its software with Office Communications Server, the system many companies use to manage the information systems that call center agents use to look up answers while they’re talking with customers. (Apparently Microsoft still needs Exony’s interaction intelligence software to keep tabs on its call center agents.)

But Doricott believes the overall market for call center management technology is still expanding. “Total interaction volume is going up,” he says. And while company websites offer more customer-support options these days, such as forums, FAQS, and chat-based help, “You can’t beat the customer satisfaction of talking with a human,” Doricott says. “If they want to buy something, if they just want to shout at you, you have to take the call. Losing customers is very expensive—so if you can convert someone ’round to being happy, it’s much, much better.”

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I’d like to explain what’s cool about Kalido, a Burlington, MA, software company spun off five years ago by Royal Dutch Shell, but let’s start with a story about beer.

Labatt Breweries is Canada’s largest beer producer, brewing 60 brands of ale and distributing them in stores, bars, and restaurants across the great North. Because Labatt has bought up so many regional brewers over the years, and because every province in Canada regulates the sale and taxation of alcohol differently, the company has inherited dozens of different sales databases and reporting systems, making it extremely difficult to figure out exactly which Canadians are drinking what kinds of beer.

Typically, big companies get a grip on their sales data, customer information, departmental budgets, and the like by buying a “data warehouse” where all of the most important information from lower-level transaction systems can be organized for fast retrieval; then they use “business intelligence” tools to transform the information in the data warehouse into charts and graphs that give historical, current, or predictive views. Labatt was deep into all of these technologies. It had enterprise resource planning software from Oracle, customer relationship management software from Seibel and SAP, data integration tools from Informatica, and business intelligence tools from Cognos. But when Labatt itself became part of Belgian beverage conglomerate InBev a few years ago—meaning that it would have to start feeding business performance data up the chain to managers in Europe—the company realized that its various divisions were still counting the same things different ways.

That’s when Labatt turned to Kalido, which is the product of a similar but even more severe crisis at Shell. During the 1990s, the petroleum giant acquired some 75 companies using 110 different reporting systems, according to Kalido CEO Bill Hewitt. “The guys in Beijing would call a brand of oil ‘A’ and the guys in Cincinatti would call the same product ‘B’, and the process of rationalizing the data every year was taking far too long,” says Hewitt. “So they built a data warehouse and generated reports off that—but the problem was that every time they wanted a different report or brought in a new company they’d have to rebuild the data warehouse, which would take months. Finally they ended up separating the rules that governed the data warehouse from the data itself. Instead of building a new warehouse, they built a business model”—a graphical representation of Shell’s business, with active links back to the raw data.

With this new interactive tool, the graphical model didn’t simply depict but actually controlled the way data was piped between the company’s low-level operational systems and its business intelligence software. So adding a new subsidiary’s data to the mix would be almost as simple as drawing a new box in the org chart and connecting it to the proper parent divisions. Other changes in the organization could be replicated in the model simply by dragging boxes around and redrawing the arrows between them (more details on that below). And not only that, but because the data was now tied to a flexible model, analysts could store snapshots of the model representing different points in time, then run the clock backward and forward to examine different what-if scenarios.

Back to Labatt. In 2005, the company hired Kalido to build a new data warehouse that would bring together data from 93 transaction systems databases holding 16 years’ worth of records on products, customers, suppliers, employees, and so on. A real-life test of the Kalido installation and its flexibility came almost as soon as it was completed, when Labatt acquired yet another brewery. Labatt’s field sales staff wanted to integrate the new company’s product information into the sales database right away, so they could see how Labatt’s new sales totals would look. But the company’s accountants didn’t want to integrate the new information until the end of the fiscal year, fearing it would mess up the books. “In a traditional data warehouse you’d never be able to have it both ways,” says Hewitt. “But because we have the ability to recreate a view at any point in time, the data warehouse managers could give the sales people the view they wanted and still wait until the end of the year to consolidate the financial information.”

Okay, you may have a hard time getting excited about a new data modeling tool that reconciles incompatibilities in a company’s database infrastructure and brings out the full potential of business intelligence software. And admittedly, developments in enterprise software can seem deathly dull to outsiders who aren’t enmeshed in the complexities of running a big business. But if you follow the larger world of software engineering, then you may appreciate the novelty and power of Kalido’s idea, which builds on more than a decade of R&D on graphical models that define and drive underlying data structures.

The linking of graphical models to actual software code and data is the core concept behind the Unified Modeling Language first developed in the early 1990s by Rational Software, which went on to be acquired by IBM and is now at the epicenter of Big Blue’s software development platforms business. Suffice it to say, business data modeling is an idea that’s picking up steam, and that’s likely to become more important as …Next Page »

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