Innovation Loves a Crisis

I thought I'd share a note I sent this week to Quantum's Staff, about the turmoil we're seeing in the world markets, and how I want our team focusing their efforts in the next few quarters.

Based on similar correspondence from one of our vendors, Sun Microsystems.

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Begin forwarded message:

From:	Jon Strabala
Date:	October 23, 2008 09:02:29 AM PDT
To:	All Quantum Staff
Subject:	Headlines, Financial Crisis, etc.

You can't have missed the last few months of headlines . first the American Congress first failed and then succeeded in passing a pork laden 'critical bill' authorizing the Treasury to put a floor under the US banking sector. The market swooned, and politicians in the US, and across the world, are bickering over the right long term answer - jump in and take action to save the troubled institutions, or step aside and let the market sort it out. Several more banks/insurers were shuttered or bailed out in the last few weeks with staggering losses on the major indices as the problem spreads across the world - I'm confident we haven't seen the last of these collapses and rescues.

And I know there are questions about "how does this affect QuantumSI?" Well, I believe almost all our core customers will be affected - not just the banks, but the telcos, airlines, manufacturing firms, interactive media players, startups, you name it. Every customer that depends upon credit as a means of financing their business - whether it's a university or a Fortune 100 transportation company - is going to be under severe stress.

It's also going to create a huge opportunity - if we're on offense. Not on defense, not worried about the impact on QuantumSI, but driving the outcomes for QuantumSI's customers and shareholders.

And here are a few important things to remember.

1. Our customers look to technology as a means of driving value and productivity.

You're not going to hear from any of our customers, "let's stop buying technology and hire more people to do the work." They're going to default to the opposite - automating work, and finding answers and opportunities with technology, not headcount. And in that process lies an opportunity for QuantumSI - to engage with customers in driving down cost, driving up utilization, and driving the changes that yield immediate and long term benefit. The right question for every customer you meet is - "how can I help?" I assure you, they'll have ideas for us. And we have no shortage of ideas for them. Personally, I'm reaching out to customers and partners just to check in and offer help - I'd recommend you do the same.

2. That said, we are aggressively expanding our customer base.

Our concentration in telecommunications, aviation and manufacturing is exactly why we're working so hard to expand our customer base. We're dramatically underpenetrated in the global market - and that represents a great opportunity. I need every staff member to think seriously, esp. in the market-facing portions of the organization, about growing our current relationships and growing new customers. The 'and' is important - growth matters in both contexts.

And why do I think we have permission to grow new customers?

3. Because innovation loves a crisis.

Remember the bursting of the internet bubble? The initial wave of open source adoption followed that collapse some six or seven years ago. That same zeal for breakthrough, game changing economics is back with a vengeance - and this time, QuantumSI's positioned as the single biggest potential beneficiary. Want proof? As companies (specifically telcos) move to lower the cost of performance management reporting, data/mediation management, and billing management platforms levering on both open source and also constantly evolving proprietary high performance software, their number one choice is: CROME, MCB and CCM. The number one choice to lower spending on expensive single vendor monolithic software offerings is to use agile proprietary solutions from companies like QuantumSI.  There's opportunity everywhere I look.

We can, and should, be on offense across the board. From our newest alpha software for fault management (XFM), to our best in class performance management reporting platform (CROME) used in iDEN, CDMA and GSM across the world to leveraging our amazing MCB software systems to perform in novel unforeseen environments - we have the most powerful offers we've had in years. Imagine if our portfolio had been this strong when the dot com bubble burst - we'd have swept the floor, and been in a dramatically different spot.

Which is all to say, there will be no end of opinions surrounding what the US, or the EU, or the Asian governments should be doing to bolster economic performance. I'm not that interested in the public debate - I am infinitely more interested in the private debate - going on inside every one of our customers surrounding .What do I need to manage my systems?", .Which server and software platform will we pick?", "What's my open source strategy?", "How can I radically reduce spending on software acquisition, time to market, and items like proprietary storage?", "How can I save on power and space?", .Which vendor understands my problems?", and most importantly "Which vendors are asking if they can help - which are truly my partners?".

In times of crisis, we have a big opportunity to stand apart from our peers, to be better connected to the market, even if it's in turmoil. Yes, our customers are going to be under stress, but that's simply another way of saying "open to change." And I want QuantumSI to be the company engaging them in the transition - with our ideas and our roadmaps. The door is open.

And yes, we may even see some customers disappear - we will also see many emerge even stronger. And the market, as it's done for the past 30 years, will return to growth - led by the companies that took advantage of the downturn to become even more valuable, to grow even faster.

So I want to assure you, we are watching the market very carefully, working with our customers proactively, to understand the impact on both QuantumSI and our customers, and the challenges in front of us - on a macro and micro level. But I and my leadership team know the drill, we've seen this before when the last bubble burst and that previous opportunity was exploited to grow Quantum into the leader NMS/OSS software that it is today in the telecommunications segment - *now is the time* to get in front of the opportunity, and firmly establish new ground. Now's the time our customers will be most open to change.

Let's be sure we're there to help - and to take advantage of the opportunity by keeping the door open.

Jon A. Strabala.

Posted on October 24, 2008