It wasn’t so long ago that we asked client/server financial software house The Dodge Group Inc (CI No 3,227) if it had finally decided what sort of a company it wanted to be – for some time we thought the company was coming to the marketplace for enterprise class accounting software as a full-function old-style […]
It wasn’t so long ago that we asked client/server financial software house The Dodge Group Inc (CI No 3,227) if it had finally decided what sort of a company it wanted to be – for some time we thought the company was coming to the marketplace for enterprise class accounting software as a full-function old-style one-size-fits-all McCormack & Dodge type effort, when in fact it really meant to be seen as a souped up General Ledger package for investment banks. We will ask the same question of another emerging client/server financial software house, SQL Financials International Inc, of Atlanta, Georgia. For when we first encountered the company, way back in 1994, we thought we’d heard the same message as Dodge started off with – and now we find the company three years on poised for an initial public offering, and we still none the wiser as to its ultimate raison d’etre.
By Gary Flood
With this background in mind, Steve Jeffery, the British-born president of the company these past two years (after joining from Hewlett-Packard Co as vice president of sales & marketing in November 1994), used the opportunity of briefing us on the company’s vision thing based on the launch of the ‘Denver’ version of the company’s Windows NT based financial and human resources packages, officially debuting Monday. (Denver because the firm rather cutely doesn’t use version numbers but US cities, roving from East to West across the Continent: ‘Las Vegas’ was the one before Denver, so natch ‘Chicago’ will be the next one after.) Denver boats fully 32-bit implementation and features including the so-say Financial Statements Accelerator, a tool incorporating OLAP technology from Arbor Software Inc’s Essbase. Our first problem was that when one thinks ‘business software’ in 1997, one naturally turns Teutonic (SAP AG) or at least Dutch (Baan Co NV). But SQL Financials is 100% adamant it does not compete with either outfit. Rather like Dodge, the company has been concentrating on the financial services and insurance sectors, deliberately focusing only on what Jeffery calls the ‘non-industrial’ sector. Its goal is to be the provider of choice for enterprise level financial management software at companies of $100m and up, with particular emphasis on organizations in the so-say middle market where the Windows NT, SQL Server combination is increasingly being found to be the platform of choice. We are not an ERP (Enterprise Resource Planning) player, he says. Instead of SAP and Baan, SQL Financials battles (in order of competitive danger) Peoplesoft Inc, Oracle Corp, and Lawson Software Inc. Somewhere next on the list he allows to (similarly NT-Microsoft centric) FlexiInternationals Software Inc, which he says the company most often comes into competition with in the North East of the US.
Hardly the most visible of companies
Now we’re all familiar with the doings of the first three, and some of us may even have heard of FlexiInternational, but who the heck is SQL Financials? Hardly the most visible of companies – and even Jeffery gives that the company probably has a pretty modest 7% or so of market share in its chosen niche. But just as the mid-tier market grows – by 30% a year in his view, a metric we have no real problem with – Jeffery’s outfit is growing too, and after beavering away in the dark all these years is finally set to make a real splash. The company has been awarded five rounds of venture capital since 1992, totaling around $20m, and is claimed to be set to make $25m-plus in sales this calendar year. If that is small beer compared to a Peoplesoft or a Lawson turnover, it still represents impressive testosterone-fueled growth rate. Just recently Inc magazine put the Georgia good ole boys as number 61 in the top 500 fastest growing companies in America, after all. And with reason: 1992 sales were $500,000, in 1996 they were $13.2m; and the company’s salary bill now covers 210 staff, 200 more than five years ago. The company has 12 offices now, with the somewhat unusual distinction of them all being in North America – the company has no international presence whatsoever, and plans none until the end of 1998 at the earliest. Instead, it has spent five years building products and infrastructure and making sure we get it right here first, he says, amassing a blue-chip account base of over 220 companies as it has.
The patience of the venture capitalists who have helped nurture it to this point is about to pay off, with Jeffery broadly hinting at an IPO sometime real soon, depending on market conditions (I wish I had a crystal ball so I could know the best time for a technology stock to go public, he jokes.) What should prospective investors and customers make of SQL Financials – what is it you actually get when you bite off the shrink wrap? Think ‘NT’ ‘Windows’ ‘Wintel’ and ‘We love Microsoft’ and you’re getting there. It offers a set of modules in finance and human resources that may either be bought one at a time or as a suite, covering GL, Accounts Payable, Purchasing Control, Accounts Receivable, Revenue Accounting and Fixed Assets (finance), and Personnel, Benefits, and Payroll (in HR). The Denver product iteration starts at $65,000, with an average sales point being $300,000 (in terms of both product license and consulting). The company is not just offering a product whose twist is that it runs well on Wintel though (yawn); its USP (unique selling point, as the salespeople say) is speed of deployment, very much an issue for today’s IS manager in the middle of implementing all those modern complex client-server accounting suites that were supposed to be making his life all so much easier. Its founder and current CEO Joe McCall comes from the consulting world, where he claims to have taken 1,000 sites live in 20 years of business software work, and McCall’s resulting design and delivery philosophy very much places the emphasis on getting the job done quickly. When you buy a ‘package’ today, what you get is something that to implement requires you diving down into the vendor’s proprietary development language or tools, claims Jeffery. By contrast, the company makes much of its so-called Active Architecture, a (Microsoft-style) object oriented layer that means changing application functionality simply means changing exposed business rules, not any underlying code. The company points to a survey of 260 delegates at its November user conference in its home town as proof of concept, citing figures that suggest 63% of sampled customers upgraded successfully in less than a week, with 47% in three days or less.
The point being made is really that even though the higher-end suite vendors, including the SAP’s and Baan’s SQL Financials says it isn’t competing with, are all moving to making implementing their software less complex, folk wisdom suggests it is still otherwise, even with the move to componentization of so much of these products into more bite-sized chunks. Our momentum is increasing and we are reinforcing our positioning, declares Jeffery of the message he is trying to give to press, analysts and observers with the Denver roll out. The biggest part of his problem is that in mind share terms many of the customers who would naturally be receptive to this story have already cut checks for his top three rivals, and the emphasis in 1998 must be less on the speed of delivery story, which is at the end of the day a technology deliverable, and much more on SQL Financials as a long term dependable partner, as much, probably in fact more, of a deciding factor for a Fortune 500 company regarding its IT supplier as how fast it takes to build stuff. The IPO will be the prime opportunity for doing that – we hope Jeffery’s bankers, if not he himself, have asked for those crystal balls as Christmas presents this holiday season.