US giant shows the Lovey with buy out
NZ Herald March 9
People often don't realise that very large software companies are not that quick at developing things.
The sale of EMS-Cortex to United States software giant Citrix shows Mark Loveys has become one of New Zealand's most successful serial IT entrepreneurs.
Of course there's more to it than the softly spoken chief executive. There's the management and governance team that has grown around him, and the developers who have cracked problems some of the world's largest software firms still struggle with.
Those 20 developers will stay with the product, forming the core of a new Citrix New Zealand research and development centre.
Loveys and the parent company Enprise will move on. Or rather foster parent. The EMS assets came to Enprise five years ago, as part of a $2 million funding package from TMT Ventures and the Government's New Zealand Venture Investment Fund.
EMS had started out promisingly enough, making a tool to add new users and applications to computer networks. Its foundation customer was the dot.com era e-solutions joint venture between Telecom, Microsoft and EDS, but the company's attempt to expand overseas almost killed it.
"It was a business before its time. The cloud-computing model was in its infancy, and by the time the company came to us there was just the development team left," Loveys says.
The team was left servicing existing customers while Enprise got on with its main business, selling exo-net accounting software to mid-sized Kiwi customers as a complete ERP (enterprise resource planning) system.
A short history lesson.
Back in the 1980s, when Loveys wasn't writing songs for his band Satellite Spies he wrote business software under the name Orbit Computers. One of his customers, PC Direct, was so impressed it bought Orbit and took Loveys on as information systems manager.
When PC Direct was sold to Gateway, the accounting software found new life as exo-net - which after a complicated saga involving greed and hubris and companies like IT Capital and Solution Six, ended up in the hands of MYOB.
As well as selling exo-net on steroids, Enprise also had a brief spell selling SAP's Business One package to small and medium businesses who wanted a foreign brand on their accounting software.
That brought him into the orbit of one of the world's largest business software companies - and its worldwide reseller network.
Spotting that many customers bought exo-net because of Enprise's job-costing module, Loveys wrote a similar module for SAP.
After a couple of years Enprise judged New Zealand didn't need four Business One resellers and sold its agency to Eagle Technology, keeping the software-development business.
The job-costing module isn't a big-ticket item - just under $1000 a seat - but lots of firms use Business One.
Loveys and his team used their venture funding to build the relationships the business needed to grow, spending a lot on airfares.
He was elected to the SAP Business One customer advisory council, which he now chairs.
As more implementations of both Business One and Enprise systems became hosted rather than installed on customer premises, the EMS-Cortex product came into its own.
Citrix came into the picture when Loveys was working on a proposal by Canadian telco Telus proposal to expand its hosted services business.
"Citrix wanted to analyse what we added to the mix with our control panel, so they took it into their labs in Florida and their engineers got all over the product and really liked it."
The price is confidential, but an industry analyst who has tracked Enprise reckons $18 million.
And lessons for other Kiwi firms?
Listen to the customer. "With Orbit, I used to customise by doing the job on the customer's site. ... It helps me relate to how much upset you can give a customer if you get it wrong. So get it right first time."
The name of a product is important. "For a long time we called Cortex a provisioning product, which is the correct term, but as soon as we started calling it a 'cloud-control panel', it gelled with the surge of investment going into cloud computing."
Kiwi companies should stop trying to do everything. "We can play well in niches. People often don't realise that very large software companies are not that quick at developing things."
Surround yourself with good people. "EMS-Cortex has a lot of talented people who made this happen. My job as CEO is to talk about it and represent the company, but I could not do that without passionate and hard-working people."
Know when to sell.
Ant Howard, the chair of Enprise's board and head of technology investment and advisory firm Howard and Company, says New Zealand capital only goes so far. "Cloud technology is taking off, but we don't have the distributions channels in place for New Zealand-built software nor the capital to create them.
"The lifecycle for New Zealand technology is to create market credibility, then find a home for it."