Analytics, data aggregation and ERP from some up-and-coming private companies
As a software securities analyst for investment banking firm Canaccord Genuity, Richard Davis spends 200 days a year on the road visiting companies. He goes to public companies such as Oracle and Salesforce.com, but he also visits up-and-coming software companies he thinks will go public in the near future.
PowerPlan
2012E Company Revenues: Less than $75 million
I got a heads up on this company from really good guy and former CEO of PROS Holdings, Bert Winemiller (who is now working with other good guys at JMI Equity). PowerPlan helps asset-centric firms manage their accounting, tax, budgeting and analytics. PowerPlan has developed a next-generation software suite that links into ERP systems and makes legacy Enterprise Asset Management systems more flexible and, frankly, useable. In some ways, PowerPlan is a next-generation version of MRO Software and Datastream, with a little bit of Pegasystem BPM mixed in.
For example, Southern Company, a 26,000 employee utility, deployed PowerPlan’s software to help it manage capital accounting, depreciation, income & property tax and feed that information into department budget systems. PowerPlan’s software integrates with Southern Company’s Oracle financials and IBM’s Maximo (MRO Software unit). Southern Company has 5,500 users. We believe there is every reason that the firm will be able to grow at least 20% per year for the next several years under a somewhat new senior management team.
PowerPlan is a company to watch.
Retail Solutions
2012E Company Revenues: Less than $75 million
In 2008, Retail Solutions shifted from an RFID focus to a Point of Sale data company for consumer packaged goods companies. The firm has developed a SaaS platform that collects downstream data from the end point of the supply chain into actionable visibility into what’s selling at the store level. This is a big improvement because the data that firms like Kellogg, Novartis, Smucker’s, and Bayer typically get from firms like Nielsen is both anecdotal and upwards of two weeks old.
Retail Solutions has developed a series of sophisticated algorithms that, when linked with real-time POS data, produces sell-through figures that, according to conversations we had with friends at two CPG firms, are 20-50% more accurate than legacy systems. The result is a win-win for manufacturers and retailers.
Until recently the two groups have not been especially cooperative when it comes to data sharing. This has begun to change. Indeed, we’d argue that Retail Solutions has had a positive influence in this greater cooperation. That good news notwithstanding, Retail Solutions sees plenty of growth headroom because less than 20% of the market has been penetrated. Meanwhile, the firm’s continued efforts have begun to pay off; Retail Solutions is several times larger than any of its competitors.
Halogen
I flew up to Ottawa a couple of weeks ago to visit with a company about which I had always heard great things, but I had never had a chance to visit. I wasn’t disappointed. For investors who may have become jaded about the consolidation in the HR business, we suggest they consider the fact that Halogen’s mid-market customers are still quite underpenetrated with performance and talent management HR systems. Company-wise, we’re talking about firms like Jellybelly, Dole, TDK, Princess Cruises, San Diego Zoo, L3 Communications, MSN and the World Wildlife Fund. On the functionality front, Halogen offers eAppraisal, e360 Multirater, eLearning Manager, eSuccession, eCompensation, Job Description Builder and eRecruitment.
The firm posted strong growth in 2011 with a 37% increase in annual recurring revenues overall and 86% from the firm’s emerging international effort. Industry consultant Bersin & Associates ran a survey recently in which Halogen was rated highest in terms of customer satisfaction. Towers Watson PageUp was number two, followed closely by Ultimate Software, Stepstone and Cezanne Software (SuccessFactors and Cornerstone, in this study at least, were middle of the pack).
Not so surprisingly, SAP, Oracle and Kenexa received relatively low marks. Inasmuch as this was my first meeting with the senior management team I plan to come back up to Ottawa to do a bit of a deeper dive into the technology. Until then, it seems very likely that Halogen will continue to grow quite rapidly.
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