ARN: What motivated your recent acquisition of [UK ISV] Select Software Tools?
Gerard: We introduced a product called CyncPoint last year which was our first entry into the e-business world.
CyncPoint synchronises data between disconnected databases. The idea is that if you have a portion of your corporate data on the laptop of a salesperson and you have say 500 salespeople, they will be able to update that data, take orders, do business and connect back to their home office knowing that the data is synchronised in both directions.
We started selling this product and discovered that we needed to have a dialogue with customers when they're designing their applications. That was a bit of a shift in focus for us, so we made a strategic decision late last year to broaden our product line by adding design and development tools. This led us into the acquisition that we made a few months ago. Select produced some excellent technology for designing and building e-business applications. They're very much on the leading edge of technology - they have object-oriented modelling tools, capabilities to generate Java, C++ and Visual Basic programs, and perhaps one of the more leading-edge products that they have is Select Component Manager that can be used by organisations moving into component-based development, which is a relatively new way of building applications. Not many companies have adopted it yet - it's getting a lot of attention, but not a lot of adoption.
Analysts such as GartnerGroup believe that over the next five years the majority of organisations will go into component-based development.
In short, we acquired Select because we wanted to be helping companies del-iver new e-business applications, to design them and help solve the problem of getting to market quickly. The acquisition of their tools product line has put us right in the middle of major e-business development projects that are going on.
Are there going to be any more acquisitions from Princeton Softech in the coming months?
There are other potential acquisitions that we can make in the same basic technological environment where we already are. Software companies need to be very careful about growing their business along the lines that it has to be complementary to what they already have, because they go through all this trouble to develop a relationship with a buyer, with a company and then what you really want is more products to sell to that same buyer. If you make an acquisition that's in a completely unrelated area, the cost of sales in such an environment can drive you out of business. So, I would predict that we could make more acquisitions in terms of getting new products we can sell to our clients.
How do you intend to drive the market penetration in Australia?
We're going to do so in two ways: one is through a direct-selling model, but we are also looking for a number of partnership arrangements. However, these are areas where discussions are still in progress and I can't make any announcements. In this marketplace, it is apparent that partnerships are more important to success than in other software marketplaces. We are also actively investigating ways to get our modelling tools bundled with very popular software products that people use to develop e-business applications. There will actually be more than one avenue whereby our products could wind up on the desks of people in IT and give us an opportunity to expand our relationships with them.
There has been a lot of talk about how much business can actually trust vendors, service providers and this emerging community of `e-business magicians' with their business . . .
You've brought up an excellent point. At the end of the day it's still their business and they are responsible for what happens to their business. Just like with any other popular technology, you've got all sorts of people out there who just put a little e in front of whatever it is that they sell, like the Barbie-ware. It is important for companies to check that there are organisations that are actively using the products they're considering bringing in with all due diligence. Those at board level are these days more interested in what's happening in IT than they ever have been and a lot of that is driven by fear. Senior business levels are rightly seeing the Internet as something that is not just a way of speeding things up, which has always been the primary focus of IT and the primary justification for IT spending. IT has now switched from being a cost-reducing to a revenue-producing feature of a business and a lot of senior management figures are concerned that if they do not jump on the Internet wagon they're going to miss revenue-producing opportunities that will never come again.
So, in such an atmosphere of uncertainty, providing consulting services to the business sector becomes very important, doesn't it?
The provision of services is an extremely important part of selling the kind of technology that we do to organisations that are building e-business applications, because they are new technologies and new techniques that they are not familiar with and so buying the tool doesn't solve their problems. What they need is mentoring, consulting and training to help them be successful with the tool. So, absolutely, we need to expand our ability to provide services. In Australia we provide services through partnerships, but we also feel that we need to develop internally a certain level of service capability ourselves because people often want to have direct linking to the vendor when it comes to services. But we will definitely be expanding our services capabilities.