Archive for the 'SaaS' Category

20 years on: Exonet – my first major software start-up exit

July 30, 2020

In July 2000 I was on top of the world. My co-founders and I had just sold “Exonet”, our New Zealand-based financial software start-up, to an Australian listed company called “Solution6” for AU $30M.

It was the culmination of a fast and furious two years since we started the business. I was the developer who had the outlandish idea to start writing an accounting system and bring in co-founders Maurice Bryham and David McKee Wright to help build a business around it.

Exonet was a “new generation” ERP client-server accounting system with a Windows interface, running on an SQL database. It was all new technology back then, when most accounting systems for SME businesses were still running on MS-DOS with proprietary databases.

Exonet opened offices in New Zealand, Australia and Singapore. Hwa Lian Tan led our business in Singapore and Simon Butler led our Australian business. Simon’s M&A experience was invaluable in our negotiations with Solution6.

Due to widespread fears about how old accounting software would handle the year 2000 and the market’s desire for the new technology that Exonet was built on, our sales “went ballistic” from the start and exhibited the upward “hockey stick” sales trend that software start-ups still aspire to. This was what attracted Solution6 to acquire us.

Exonet’s main investor was a VC company called IT Capital. At the time of the exit, I recall they had been with Exonet for about 18 months, had invested NZD $1.5M and effectively owned about a third of the business. A $12.7M return on an 18 month investment of NZD $1.5M – that’s still got to be one of the best investments ever made in the business history of New Zealand!

Following its acquisition of Exonet, Solution6 merged with another large Australian software business called MYOB (“Mind Your Own Business”) and so the Exonet software was renamed to MYOB-EXO. Today MYOB-EXO is perhaps the most widely used of the mid-market ERP accounting packages in Australia and New Zealand, with many thousands of companies using it.

Some of the lessons I learnt from the Exonet experience are;

  1. Success comes from a combination of skills, lots of hard work and lots of luck.
  2. Much of the skill required is in recognizing the luck that surrounds you, and knowing what to do with it.
  3. Business success invariably comes from a team of people; specifically, the combined skills, motivation and dedication of those people and the interplay of how they work together.
  4. It’s all about the journey, not the destination.

After the exit, I worked for the Exonet business within Solution6 for a short while and then decided to take some time out, away from business. It was during that time out I realized that, although I reached the destination of an exit, I still missed the journey of getting there. I missed the energy and engagement of the business world, so I dived back in again and co-founded two new software businesses; Enprise and Datasquirt.

Much of the skill required is in recognizing the luck that surrounds you, and knowing what to do with it.

Enprise became of a group of businesses, of which two operated internationally, with a particular emphasis on the United States. One of those was EMS-Cortex, a SaaS software provisioning system that we sold to Citrix in 2011 for US $11M. Also in 2011, we sold ASX-listed Datasquirt to Silicon Valley-based LiveOps for a similar price.

The international software business experience and contacts I gained through Enprise and EMS Cortex set me up for my current role as CEO of Datagate, where I am now based in Vancouver, Canada. Datagate is a SaaS billing solution for MSPs who sell telecom services, which we sell into the USA, Canada, UK, Europe, Australia and New Zealand.

Another thing I’ve learnt over the last twenty years since the Exonet exit; it normally takes much longer than two years to build a good business!

Conferences “go virtual”

June 30, 2020

IT industry conferences have always been a big part of our marketing strategy at Datagate, particularly in the United States, where there are so many great conferences that are very well attended.

Our target market is defined as “Managed Service Providers (MSPs) who sell VoIP and other telecom services”, so the conferences we target to market our telecom-billing solution are those that cater to MSPs and the telecommunications industry. Our regular favorites are; Channel Partners, IT Expo, Robin Robins and ConnectWise’s IT Nation. Our white-label telecom partner SkySwitch, also has an excellent conference, called Vectors.

These conferences are where we make new industry contacts, and meet with potential partners and clients. Meeting face to face with someone is the best way to start any kind of relationship where trust is required. After meeting at a conference, it’s more easy to continue the conversation remotely via email, phone or web conference.

As a general rule, it’s easier to do business with someone you’ve met in person. This is not to say that meeting someone in person is essential to doing business.

Datagate at the IT Nation Connect Conference in Australia, 2019

Having an exhibitor booth with good clear signage about what you do, is the best way to meet relevant industry contacts. When you don’t have a booth you are more limited to seeking out relevant people who have booths, but when you have a booth, relevant people will come to you and you can still go and talk with others who have booths.

The advent of COVID-19 this year has seen all of the 2020 conferences we’ve been booked into since early March 2020, get initially postponed from their original dates, and then finally switched over to become “virtual conferences”. A virtual conference is an event held over the Internet using a software platform that mimics and enables many of the activities that happen in an “in person” conference.

From our perspective at Datagate, there seem to be positives and negatives with virtual conferences compared to real in-person conference, which I’ve listed below:

Positive aspects of
Virtual Conferences
Negative aspects of
Virtual Conferences
Greatly reduced COVID-19 infection riskHuman interaction is reduced. Relationship building ability is compromised.
No travel and accommodation costs. Less time away from the regular business environment. Some attendees like visiting conference destinations as a vacation, for them and/or their families. This attraction is lost.
Attendees can split their time between the conference and their regular work.Attendees will split their time between the conference and their regular work, adding the risk of distraction and forgetting about the conference.
Less cost or no cost to attendees.Less commitment and buy-in from attendees.
Larger potential audience, because people can attend from anywhere and cost is not such a barrier.It’s harder to make the conference “special” and differentiate from other Internet/web content.
Positive and Negative aspects of Virtual Conferences

With all the necessary restrictions in place to slow down the spread of COVID-19, real in-person conferences are not going to be able to be held in North America for at least the next six months, possibly longer.

The conference industry is still the early stages of learning how to make virtual conferences work. I believe we will see significant improvements over the coming months and years, which may well make virtual conferences a permanent and viable option.

For now, businesses will make the best of the options available to them and many of these options, including virtual conferences, might become a more permanent option beyond the COVID-19 era. However, I’m confident that the “good-old” in-person conferences will come back with a vengeance as soon as the COVID-19 situation permits.

Software product design and staying in your lane

April 30, 2020

In designing a software product, it’s fundamentally important to be clear on your answers to the following questions:

  • What is the software’s primary purpose – what need does it meet?
  • Who is the software designed for – what is the target market?
  • What other systems will your software need to interact with?
  • Who are your competitors – how will you differentiate?
  • Who are your partners?

We say we are “staying in our lane” when we ensure that all design decisions for the product remain true to the answers to the above questions.

In the case of Datagate, our answers to the above are;

  • Primary purpose – Telecom billing and distribution of those bills to customers and other software systems used by customers in our target market.
  • Target market – Managed Service Providers who resell telecom and related services.
  • Other Systems – Professional Service Automation packages, such as ConnectWise Manage; and Accounting Systems, such as QuickBooks, Xero and others.
  • Competitors – other companies that provide telecom billing systems. These are different in each country we operate in. We differentiate by being true to our target market and integrations to systems that are important and used by our target customers.
  • Partners – include white-label wholesale telecom providers, telecom tax engines, telecom tax & compliance partners and vendors of products that align with Datagate and appeal to our target market.

The best way to ensure we stay in our lane is to closely monitor feedback from our target customers, provide integrations to other systems they commonly use and avoid replicating functionality that those other systems and partners already provide. It’s important to ensure the software serves its primary purpose and works well as a component of the total software solution.

Prime examples of how this approach works for Datagate clients are given in our extensive set of case studies, and in particular our two most recent case studies for In-Telecom and DS Tech.

Software product development is always a race to stay ahead of competitors, by bringing new features and functionality to market faster, and providing the best customer experience. Staying in your lane means that you only invest precious development resources into what is relevant and beneficial to your product and customers.

So in closing; for any kind of race, it’s always more efficient to stay in your lane.

The new normal: Now is a good time to review and upgrade your IT & communications systems

March 24, 2020

It is certain that the Covid-19 pandemic is driving immediate and potentially long-term, changes to the way the world does business.

As always, it’s those businesses that adapt and change to the new situation and the new future that will survive and prosper best. This is an ideal climate for small businesses to become large businesses and for large businesses to to potentially fail if they don’t adapt quickly enough.

If you haven’t done it already, now is the time to move off old systems that require on-premise hardware (on premise servers, computers, PABXs etc) and move onto Cloud-based systems, that you can access from anywhere you have Internet access. Remote working is the “new normal”.

Remote working is the “New Normal”

Your phone system should be a “Unified Communications” system that you can access via an app on your smartphone, tablet or laptop computer. That way you can advertise a single phone number that can always reach you, and you are always in touch with your business and your staff.

Standardize on a collaboration platform, such as Microsoft Teams or Slack, which will enable you to have meetings with your staff, share documents and communicate more easily. Microsoft Teams can also be connected to a phone system, which is a powerful combination for integrating your outside calls with your internal processes.

Move from desktop Office apps to Office 365 or Google’s “G Suite”. This will ensure you have access to your work platform from a range of devices, instead of just one.

There are plenty of Cloud-based accounting packages to suit your business, including QuickBooks Online, Xero, MYOB, Microsoft Dynamics and others.

Popular Cloud CRM systems include SalesForce, Microsoft Dynamics CRM and others.

Now is the time to review your systems and upgrade where needed, to ensure your business can work from anywhere. Contact your Managed Service Provider. This is the new normal.

There’s never been a better time to work from home

March 10, 2020

The argument in favor of working at home has been getting stronger and stronger, year by year, as a result of the following factors;

  • Major advances in communication and collaboration systems
  • Major advances in Cloud-based business systems
  • Increased congestion on roads and public transport
    • Increased time wasted on travelling to a work place
    • Increased awareness of environmental issues
    • Costs associated with travelling, parking etc
  • Increasing costs related to buildings (in many geographies)
  • Increased productivity due to less distractions and less wasted time
  • Increased staff retention (studies show most staff prefer working from home)
  • Increased potential profitability due to decreased costs and increased efficiencies

Now, adding the current coronavirus crisis to the list, the argument for working from home has just become more compelling than ever.

Working from home is now more practical and compelling than ever before

If all or most of the staff at your business are still working from a business premise and the nature of your business is not dependent on your physical location (for example, shops, warehouses, factories and other businesses dependent on location and/or physical goods or equipment), I suggest considering the following actions;

  • Review the advantages (if any) of having your staff located in your business location and how these advantages stack up against the above list of reasons for working at home.
  • Implement a Unified Communications system. This enables your staff to be accessible and on-line to your business via their smartphone and/or computer, no matter where they are, from a single phone number.
  • Implement a team collaboration system for your business, such as Microsoft Teams or Slack, to enable fast and efficient communication, collaboration, meetings and co-working between your staff. Microsoft Teams can also be configured as a Unified Communications system, and also be used for communicating with customers and other people outside your business.
  • Switch to using Cloud based business software, such as Office 365, Google Apps and on-line accounting systems that can be accessed from anywhere, including staff working from home.
  • Establish regular catchup-up meetings (stand-ups) with your staff to ensure your team(s) gets to communicate and know what’s happening around the business.
  • Arrange social activities periodically where practical, so that your staff have opportunities to interact in a social setting. This contributes to maintaining a healthy team culture.

Working from home is the way of today and the way of the future for many businesses. If you need help in setting up your business for remote working, contact your Managed Service Provider (MSP).

Datagate at IT Expo and Channel Partners 2020 conferences

February 28, 2020

These days, so much business is getting done over the Internet, where the parties involved don’t even get to meet each other in person.

I believe there is a lot of value in meeting in person, and for that reason I like to attend industry conferences, because that is where I get to meet in person with Datagate’s customers, prospects and partners – all in one place!

Once you’ve met someone in person, your understanding of them and your ongoing remote communication steps up to a much more improved level.

Datagate’s Greg Robinson and I attended ITExpo 2020 in Fort Lauderdale, Florida earlier in February. The event was very well supported, with many of the key players of the IT and Telecommunications industries there, including many of Datagate’s industry partners.

A photo opportunity with SkySwitch’s Harlon Hamlin, Eric Hernaez and Ben Macalindong

At the conference we announced our new partnership with SkySwitch, where they now offer Datagate as a billing solution for their reseller clients. Datagate and SkySwitch are both ConnectWise Invent Partners, which means our solutions are designed to integrate with the ConnectWise platform, which is so popular with our MSP clients.

It was also great to meet Shawn and Jimmy from In-Telecom at the conference. They are a top Datagate client, who had just traveled in from Louisiana that morning.

Meeting Shawn Torres and Jimmy Burns of In-Telecom

In March, Datagate will be an exhibitor at Channel Partners in Las Vegas, being held at The Venetian this year (booth #1253). We are offering reduced price entry passes at this link (before March 6th), if you’d like to meet us there.

On April 23rd, Datagate will be an exhibitor at the Canadian Channel Partners event in Vancouver. Contact us at Datagate if you’d like a free pass to meet us at this event.

Stay tuned for more events!

Partnerships, Integrations and Game-Changers

January 28, 2020

It’s rare to find a business application these days that can work as an island and doesn’t need to integrate or inter-operate with other business applications. The 2020’s is shaping up to be a decade where we will see the integration of businesses and applications continue to accelerate, to define a new set of winners with a new set of disruptions to the existing ways of doing business.

At Datagate, our focus is on bringing new options and capabilities to our Service-Provider clients as quickly as possible, and we don’t do this all on our own. Bringing in new partners and integrating with their products and services opens up exponential new possibilities for our clients.

The Datagate SaaS product is designed to automate and streamline the billing of usage-base and subscription services. Our vision is to empower our clients in all of the countries we operate, to bring new services and products to market faster and make their own decisions and strategies for what they sell, how their price it and who they sell it to. Speed to market is all-important.

Datagate Integrations

Currently, the biggest area of market disruption for Datagate clients, is the Cloud VoIP revolution. All over the developed world, businesses are looking to their local MSPs (Managed Service Providers) for their voice communications or UCaaS systems. Datagate makes telecom billing, tax and compliance easy and automatic for our MSP clients.

This year Datagate will announce a number of new and exciting partnerships to extend the markets, the capabilities and the scale at which we operate. We will also be announcing new team members throughout the year, starting very soon, to maintain and lift our levels of services as our client-base continues to rapidly grow.

An exciting year decade ahead!

Business benefits of a laser-sharp focus

October 21, 2019

At some point, whether consciously or unconsciously, every business must decide on the range of products and/or services they will provide to their customers and what type(s) of customers they target.

If the accessible target market of a business is small, then the business will likely need to offer a wider range of products and/or services in order to generate sufficient revenue from its relatively small customer base. Conversely, if the target market is large, then the business can afford to specialize and focus it’s products and/or services to a narrower band. Thereby they remove a lot of complexity from their operations, while offering greater expert value to their target customers.

I have found this correlation between market size and business focus is especially valid in the software industry, while it also applies to many other business categories.

My company, Datagate Innovation started its life in New Zealand as a SaaS billing and reporting solution for businesses that sell usage-based services, such as telecommunications, electricity, water, Software as a Service etc. Given the relatively small size of the New Zealand market, our initial approach was to apply our sales and marketing efforts across all the various industries for which our software could be used. I call this having a “wide focus”, which seemed logical at the time, to win as many customers from our small New Zealand market population as we could. In hindsight, it was a great opportunity to test and evaluate the various different industry opportunities within a small and accessible population.

The downside to a wide focus is complexity, and complexity generally makes it harder to scale-up a business.

Datagate found that there was plenty of demand and opportunity for our product in each of the industries we engaged with, but we soon realized that each was pulling us in a slightly different direction. Each direction involved a different learning curve, more costs, different marketing, different pricing, different language and slightly different functionality and integrations in our product.

We wanted to scale-up our Datagate business as quickly as possible, but the complexity of supporting multiple customer categories made this difficult, with extra costs and less repeat-ability and re-use of existing resources, the wider we went.

The answer to our scaling-at-speed challenge, was to narrow our industry focus, while at the same time increasing our geographic focus. So to do that, we picked one target industry, while expanding our target market beyond New Zealand, to other larger economies such as North America, the United Kingdom and Australia. The industry we chose was telecommunications and more specifically, we focused in on the fast-growing segment of MSPs (Managed Service Providers or IT Services Companies) who are now selling telecom/voice solutions, due to the convergence of computers and phones.

The widening of Datagate’s geographic focus did introduce “some” extra complexity to the business, with the slightly different language, tax and compliance requirements of each country, but the complexity was far less than that of targeting different industries.

As our software product matures, we continue to add functionality that is more specific to telecom billing and integrations to other software products, such as ConnectWise, QuickBooks and Xero, that are commonly used by our MSP target market. This gives us a high level of efficiency, where everything we do in product development and marketing is mostly relevant to our whole target audience. This would not be the case if we had a wider focus and were targeting multiple industries.

We have found that customers (and investors) in the larger economies, such as North America, generally expect software solution companies like Datagate to be very specialized in what we do.

There is less need to go wider in a larger economy, especially when it can be more efficient, lucrative and easier to go deeper instead.

The as-a-Service partnership as a long-term journey

September 21, 2019

As an XaaS (Anything as a Service) provider, you engage your customers for at least the term of your contract, but your real goal is to keep them with you for much longer than that.

If your billing model is fully or partly usage-based, then not only are you motivated to keep your customers longer-term, but you are also motivated to ensure their successful and increased usage of your product or service, because more usage translates to more revenue for your business.

This is why I like the usage-based billing model. It motivates service providers to provide better long-term service to their customers, whilst it also gives more power to the customers, where they can take their business elsewhere, if they’re not getting the service levels or value for money they desire.

When my company Datagate signs up a new client for our billing solution, we view it as a commitment to a very long-term partnership. Our own charge model is based on a small percentage of what our clients bill, so our success is mathematically linked to their success.

We invest heavily in providing services and support for our clients and the ongoing improvement of our product. I see this as an investment in generating more business for our clients and us, rather than as just an overhead cost. The average Datagate client grows their business by 22% per year and so as long as we keep our churn rate to be minimal (as it is), then our revenue would grow by about 22% each year, even if we didn’t make any new sales.

My recommendation to any business that has a recurring revenue model, is to include at least some usage-based component to your billing, because it will drive better behavior in your client relationships and increased revenue growth opportunities for your business.

Good luck on your XaaS journeys!

Integrations key to business software success.

July 25, 2019

These days it seems like most, if not all technology products are getting smaller and more powerful, smaller and faster, smaller and less expensive, smaller and smarter, smaller and better connected.

In business software we’re seeing the same trend, away from the large monolithic systems of old, towards smaller, more targeted “apps” with a specific purpose. These apps connect to other apps and work together to form a larger overall “integrated solution”.

I first noticed this “smaller and connected” trend a few years ago when I worked in the ERP industry. We started seeing smaller accounting systems being used by larger and larger businesses. How could this happen? The answer was and is that the smaller accounting system is plugged into add-on solutions that enable the combined solution to cater to the specific requirements of the industry or user.

In the case of my company’s Datagate Billing Solution, we’ve decided on a product strategy where we focus on the rating and billing piece of the solution for telecom and other utility resellers, and leave the accounting, CRM, and business management functions to other popular solutions dedicated to those purposes. This means each software company focuses on what it’s good at and the integrations between the software packages enable them all to work as a single “integrated” solution.

Being integrated with other popular software products also increases our appeal to prospective customers who already use those products. This in turn leads to partnerships with those software vendors, as per the topic of my previous blog article.