Financial systems software house The Dodge Group Inc claims it has finally worked out what kind of company it wants to be. The answer turns out not to be the general purpose accounting vendor it said it was going to be when formed, mainly with cash from namesake and chairman and former chief executive officer […]
Financial systems software house The Dodge Group Inc claims it has finally worked out what kind of company it wants to be. The answer turns out not to be the general purpose accounting vendor it said it was going to be when formed, mainly with cash from namesake and chairman and former chief executive officer and accounting software veteran Frank Dodge, way back in 1991. Now the company is focused wholly on a niche but profitable sector of financial services, namely the investment banking community, whose members – if only so far mostly their European branches or representatives – make up the bulk of the company’s 32 paying customers for its OpenSeries suite. In the US we tried to spread out and diversify beyond banking, and that didn’t work very well, admits UK-based co-founder Alan Hambrook, now president and chief executive officer, marking Dodge’s removal to the largely symbolic role of chairman only. We are not a generalist financial systems house, and we are vastly different from those products.
By Gary Flood
The company seems to have spent a very long time arriving at this conclusion, but does seem to have finally found a model for growth. The company was set up by a chance meeting between Dodge, who was searching for a new challenge after quitting Dun & Bradstreet Software in 1989, and Hambrook, who had been tooling around in London with some ideas for a next generation relational database financial software solution. The trans-Atlantic company was founded with Hambrook’s technology and Dodge’s name and cash, in effect. But success has come much more slowly than first anticipated. For example, Dodge and Hambrook spent about two years talking up the product, which was the then revolutionary idea of a full-scale accounting package on Unix (heretical since most up to that time, long before Baan Co NV or SAP AG, were mainframe only), finally getting it out the door at the end of 1993. A change in database horses midstream, from Ingres to Sybase, probably didn’t help. The first sale was an omen of the company’s eventual true path to righteousness – to French bank Banque Paribas’ London office – but in the US Dodge seems to have run away with the idea of mainly winning back his old customers at McCormack & Dodge, or M&D, (the company merged by then owner Dun & Bradstreet into Management Science America to form Dun & Bradstreet Software in 1990). This may have been both a sensible business decision – as head of M&D he’d built strong relationships with many of these clients, so it made sense they’d at least take a call from him – but also, perhaps, wounded pride at the fact that he had been ousted as head of D&BS by long time rival John Imlay, and there may have been an element of emotion in all of this. To this end, in any case, Dodge Group sales offices were set up in New York, Massachusetts (where Dodge senior still resides), Chicago, San Francisco and Atlanta. But as SAP and Baan and Peoplesoft Inc stormed into the client/server software market in the mid 1990s Dodge faltered, then in effect disappeared, especially in the all-important American market.
In late 1995 it told us it was up to 75 staff worldwide, looking to employ 120 by October 96 and with plans to go public by 1997; following its abandonment of the replace M&D strategy last September it is down to 72 worldwide, with 50 based out of London, and most offices in the US (bar New York) closed down. However, it is still talking up IPO plans, with Hambrook indicating it may be only six months away. That offering is being made on the back of four successive quarters of profit, and a sales graph showing revenue increase from $3.2m in 1995 to $7.7m in 1996, with claims of up to $12m this current financial. Dodge says its attraction to banking clients lies in the fact that its software can better handle specialized transaction-based activities, such as dealer numbers and maturity dates. It claims that banks which use traditional relational databases for such functions are forced to use the database as a general ledger, from which daily trading or sub-ledgers (which hold the real financial data) need to be off loaded. Not only does OpenSeries avoid the need for such a problem, claims Hambrook, it can also co-exist with, for example, SAP applications at this sub-ledger level. Plus, the software is said to be extremely multi-currency friendly, owing to its European nursery, and is also EMU (European Monetary Union) and Year 2000 compliant. All well and good, in terms of features and functions; but why should a US investment bank customer buy from what is still effectively a semi-obscure British firm? Hambrook counters that its client base is all blue chip, often multinational, that it is now placed for indirect growth in Japan (through a deal with NEC Corp), whose financial markets are undergoing deregulation the next two years, suggesting possible growth opportunities; and it is hard at work figuring out how to build more mind share in the US – where, it must be noted, it does have significant wins in the form of Merrill Lynch and Bankers Trust. To this end, it may buy a local specialist banking consultancy (40% of revenues are from consulting fees associated with implementing its systems at the moment) to better penetrate that market. Yes, in some ways it’s going to be a long hard slog, but we don’t see any major cultural differences in the back room needs of a financial institution in the US versus London, comments worldwide VP of sales and marketing Jeremy Wood. In product terms, Dodge is up to version 2.2, with 60% of sales now on Sybase, 30% on Oracle, and 10% on Microsoft SQL Server: the company says it is exploring the use of ActiveX and OCX components at the front end, but due to the conservatism of its client base it sees no pressing need for any further internet-ization of its portfolio as yet. Niche Dodge may be, but it points out that this is a fairly well-capitalized niche to be in, and Hambrook sees no problem in the company growing to between $50m and $100m – the challenge might be beyond that. We’ve heard it before from Dodge – but maybe this time it means something.