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Software: Big Sleep (But Not Death) For Viaken Systems

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The “way to knowledge” was what Viaken Systems promised its customers — but instead, Viaken’s investors have been forced to find a way out.

After tweaking its business model in fits and starts over the past year, Viaken Systems has dissolved in response to pressure from its investors. The company’s IT infrastructure and hosting business was sold to Silver Spring, Md.-based Apex Digital Systems, while Viaken’s newer collaborative research business will be housed in Viaken’s former Gaithersburg, Md., headquarters, but will no longer bear the Viaken name.

The eviscerated entity, temporarily known as Viaken Systems Acquisition Company, plans to launch a new ontology-based data retrieval software tool called Paragon in the fall that will serve as the cornerstone of the company going forward; three to four 100-day pilots were slated to begin by the end of July. Paul Zoukis, a former GE Information Services executive, has been appointed CEO of VSAC, replacing Viaken founder and CEO Keith Elliston, who did not accept a position with the new company.

Nearly all of Viaken’s 45 employees have been retained. The nine-member infrastructure team has joined Michael Provance, formerly Viaken’s VP of discovery solutions, at Apex, where he now serves as COO. The remainder of Viaken’s staff, including those at its European headquarters in Cambridge, UK, will comprise the new entity. Only four or five employees were let go as part of the restructuring, according to Apex and VSAC officials.

Elliston notes that the reorganization, which happened very quickly over about two weeks, was not as painful a process as it could have been, given the scope of the change. He personally contacted each of Viaken’s customers to discuss the company’s split into two entities and to ensure a smooth transition. “We found a home for everything that Viaken was doing,” he says. “It’s not the same home, but everything we were doing is continuing forward. I’m very pleased with that.”

The driving factor behind the change, Elliston says, was the company’s search for a third round of funding from its investors. Although Viaken’s mixed business model had “good momentum,” it was not profitable. Eyeing a software project that has been in development for the past two years, the investors opted to raise cash by selling the infrastructure business and to focus the company’s remaining resources on the upcoming software launch. “They felt they could run at a lower burn rate by thinking of the company as an early-stage software company and to put the services business where it really belonged, which was in a services company,” Elliston says.

“It’s positive for both businesses,” says Steve Gardner, senior vice president and CTO of VSAC. Noting that the cost structures of the two sides of its business were “radically different,” Gardner says it was not only difficult to maintain the overhead costs associated with the IT infrastructure business, but the margins, staffing requirements, and product sets were entirely different.

— Bernadette Toner

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