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Kas Thomas

Vignette still in transition

11-Nov-2008

Tags: Web Content Management, Selecting Technology, Vendor Viability & Financials, Web Experience Management - Vignette

These aren't exactly the best of times for WCM/Portal/ECM vendor, Vignette Corporation.

Today we learn of the departure of Sarah A. Reed from Vignette. As Director of Global Analyst Relations, Sarah was our main point of contact with the company and she did a great job of making our job easier (which is saying a lot). We wish Sarah well in whatever life-after-Vignette holds in store for her.

This week is also the final week at Vignette for Alex Shootman, the company's SVP of Worldwide Sales and Service. His last day is November 14.

It's a bit too soon to tell if these departures mark the beginning of a trend -- after all, software companies typically have high turnover for sales and marketing staff.

But we note with interest that other restructuring is going on. For example, Vignette has lately been accelerating its transition to an Asian-outsourcing model for R&D. In the company's SEC 10Q filing of September 30, 2008, we learn that Vignette (which currently gets half of its R&D done overseas) has "decided to establish a development center in India" and will "phase out our primary third-party service provider over a twelve month period." The third-party provider is Virtusa Corporation, which Vignette has been paying $7 million per year (approximately) for offshore services. The phase-out (which began last August) calls for the payment to Virtusa of a $1 million termination fee, because there is still a year to go on the Virtusa contract. In an August 2008 SEC filing, Vignette notes that it is entitled, over the next twelve months, to "solicit for hire as full time employees of the Company [Vignette], the Virtusa personnel who are currently performing services as part of Virtusa's center dedicated to the Company."

We also know from a 2006 slide show put together by Leo Brunnick, Vignette's then-SVP of Engineering and IT, that "full lifecycle product development in the Offshore Center is a prerequisite to attract the real talent," meaning Vignette has tried (and abandoned) the typical "do your best R&D in the U.S. and ship QA-and-maintenance grunt-work to India" model. The company will seemingly ship the real R&D jobs to India.

This is also a fortuitous time for Vignette (and other companies) to send jobs to Asia, because in just a couple of months, when Mr. Obama takes office, Congress will likely enact legislation that will penalize (or at least not reward) companies who ship jobs overseas. For companies like Vignette, it's now or never.

Meanwhile, Vignette continues to be severely punished by Wall Street. For the year, VIGN common stock is down 50 percent, and in today's trading action, it made a new 52-week low of $7.24 a share on the Nasdaq. You shouldn't acquire software (or not) based on stock prices, but Vignette's transition is worth following. We'll keep watching....