What, when, why and WhereScape

By Christine Nikiel

The numbers have been good for Auckland software company WhereScape this year.

In September it was singled out as one of Asia-Pacific's 100 IT companies to watch by Red Herring magazine, the same outfit that once picked Google, Yahoo and Skype.

Software Magazine in the US picked WhereScape as one of its top 500 software service companies (out of thousands). And locally, CIO magazine chose it as one of its 25 rising stars. The company also signed up its 200th customer this year.

WhereScape develops data warehousing platform software. For the uninitiated, data warehouses are where market data is stored. WhereScape specialises in what is called "data lifecycle management" software - the software that allows customers to build data warehouses quickly, and the information in them to be easily changed when some of it no longer applies to the business or applies in a different way.

Founder and chief executive Michael Whitehead likes to give a plumbing analogy.

"We're like plumbers, so we need a really flexible plumbing system that can cope if suddenly you build an extra three showers in your house, and if the dishwasher needs to be located in the lounge, not the kitchen. We make sure you don't get your clean water pipes crossed with the sewerage."

A number of companies collect a load of data on a competitor or a market sector based on "now", says Whitehead.

"Then the competitor might introduce a new product and the company wants to know how it affects it - some of the data is still useful, but some is not. Rather than throw away all of the data and start again, we help pull the useful data out and combine it with the new."

It's a rapidly growing industry: in the past two years Hewlett-Packard, Oracle and IBM all made significant purchases, the biggest being Oracle's acquisition of Hyperion Solutions for US$3.3 billion ($4.37 billion), while business software developer Teradata will be spun out by parent company NCR this year.

Last year organisations worldwide spent US$5.7 billion on data warehouse platform software.

WhereScape has pulled some top-line local customers such as Fonterra, SkyCity, ASB, Vero and Vodafone, as well as Gillette in Britain, the New York branch of French bank BNP Paribas, and the Wells Fargo Bank in San Francisco.

The Auckland company has 20 staff in New Zealand and five in the US, but all software development is done in New Zealand. Whitehead won't give figures but when pressed says the company "certainly fits" in the US$5 million to US$10 million category.

Whitehead, a former data warehouse practice manager for IT company Sequent (later bought by IBM) for the Asia-Pacific region, set up in 1999 with Wayne Richmond as IT business software consultants.

As Whitehead tells it, Richmond (now based in the company's Taupo office) "got bored with telling people how to do the same things over and over" and reckoned it was smarter to build their own product and sell it instead.

The consultancy became WhereScape in 2002. Whitehead and Richmond decided their goals were to secure a large customer in the US, to get a Powerpoint page full of customer logos and to sign up a customer who had no links to them or their IT contacts.

The pair touted their software around a range of companies and consultants in the US, wanting to know if it had the legs to be a standalone product. Banker Wells Fargo thought so and bought it, giving WhereScape a strong foothold in what was to become its largest market, and much-needed market credibility.

A watershed deal was a licensing agreement with Ross Systems in the US which agreed to re-sell WhereScape software, giving the company a list of customer logos to show off in presentations. And after two years the company signed up its first "no-ties" customer, a hypermarket chain in Bulgaria.

Gaining credibility in the US is a huge issue, Whitehead says, because customers there see New Zealand and Australia as insignificant.

Grants from NZ Trade & Enterprise helped international expansion, but nothing helped like signing up Wells Fargo.

"US companies don't [want] references [from] your New Zealand customers, and Australia is just part of New Zealand so they don't matter either. [Having New Zealand or Australian customers on your books] is like going to the US and saying, 'Buy my product because we dominate the Norfolk Island market'."

By all means go to Australia, he says, but "do it on the way home" from the US.

The transition from consultant to software developer was smooth, but the pair found it hard to resist the temptation to take on the odd consulting job when things were quiet.

Software profits were the "good money", but financial gains were more easily measured in consulting work than software development, Whitehead said.

The pair scored a lot of business through their network of Sequent contacts but, in "soft-sell" New Zealand, failed to sharpen their sales skills.

"You don't know what competition is until you venture out of nice, safe New Zealand," Whitehead says.

They forked out US$30,000 going to their first US trade show but picked up not one scrap of interest.

"We didn't deserve to," says Whitehead. "We didn't know what to say to these people, we weren't prepared.

"You've got five seconds to attract someone who just might then stay and listen to your [55-second] elevator pitch."

The pair have also spent time trying to win the attention of influential market analysts such as Gartner and IDC in the US and their efforts are paying off: WhereScape has been mentioned in reports by both organisations this year.

The company's next product is data warehouse prototype building software, called WhereScape 24, to be released early next year.

WhereScape

* What they do: Develop software for data warehousing.

* Founded: 2002.

* Staff: 20 in NZ, five in the US.

* On the customer list: Fonterra, SkyCity Entertainment, ASB, Vero, Vodafone, Gillette (Britain), BNP Paribas (New York), Wells Fargo Bank (San Francisco).

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