Cloud Bursts as Coghead Calls It Quits

It's been a stormy week in Northern California with torrential rain and power cables downed. People used to flicking a switch and getting electric power have been deprived of that utility.

Coghead, a web-based service for building and hosting custom online database applications and a software as a platform 'utility computing' company, announced it was going out of business today, leaving customers scrambling for alternatives within a tight timeframe.

Customers have until April 30 to extract and export their data from the various applications. This is a sharp reminder that entrusting your business processes to hosted applications you can rely on like an electric light always being there is by no means the case in this economy.

Coghead had been trying to sell themselves since January after going through ten million and with at least a million owed to Western Technology according to a filing with the US Securities and Exchange Commission.

SAP, one of the investors, has bought the IP and hired engineers but is only planning to use the service internally.

"Faced with the most difficult economy in memory and a challenging fundraising climate, we determined that the SAP deal was the best way forward for the company," CEO Paul McNamara, a former Red Hat and IBM executive said in a letter to all customers that went out today.

It's easy to be flippant about software as a service being precarious but the fact is software vendors of all shades go out of business all the time, whether you are hosting on premise or paying seat fees for software as a service.

The fact is that the current business climate is a war of attrition, with burn rates and profitability of companies like Coghead being anxiously watched by users.

Coghead was in many ways a classic web application development platform - from their website:

1. An efficient Adobe Flex-based drag-and-drop editing environment that dramatically reduces development time by allowing you to get out of the code and focus on your user experience.

2. Powerful workflow and logic capabilities give you the ability to model and automate any unique business process.

3. Integration capabilities, a REST API and Coglets allow you to weave your applications into the existing data infrastructure and build dynamic web capabilities for the business.

4. State-of-the-art platform, Coghead has invested millions of dollars to build an industrial-strength infrastructure, all hosted on Amazon.com, to deliver a highly scalable, secure and robust platform.

While customers can download their raw data, the applications they built on Coghead aren't as available. "Customers can take the XML out that describes their application, but the reality is that only runs on Coghead, so customers will need to rewrite their app with something different" Coghead CEO McNamara said in an interview with Information Week.

Competitors such as TrackVia, Caspio and Intuit are offering help to Coghead customers, with Intuit offering six months of free service on QuickBase and help converting customer data.

Bill Lucchini, Vice President and General Manager, Intuit Platform as a Service Group, wrote this blog post with the attractive offer details for these windfall new clients, commiserating with the Coghead team and encouraging them to apply for work at Intuit.

Caspio are also offering two months free service.

My earlier point about attrition is highly relevant now in the depths of the recession; with Oracle quietly on a buying spree and substantial business entities like Intuit able to withstand the storm, it may be a case of the last man standing picking up the spoils and profiting from the pioneering work of companies like Coghead.