KEY POINTS:
Fledgling Auckland web software-maker Sonar6 has won an Indian contract targeted at 5000 users.
What began as a resale agreement with Indian technology company CMC, a division of the sprawling Tata group of companies, has turned into a revenue-generating deal as CMC chose to use the web-based talent
management tools developed by Sonar6 to keep tabs on its own employees.
Sonar6 co-founder Mike Carden says: "We just don't get 5000 head implementations in New Zealand."
The Indian market wasn't on the Sonar6 radar until the company became involved in CMCTEC, an initiative designed to build stronger links between New Zealand and Indian companies. Now it is eyeing up the potential for more work in the wider Tata Group, which employs nearly 300,000 people.
"India isn't the most advanced place for talent management," says Carden. "But there are a lot of companies up there, especially in technology, with 5000 or 10,000 people."
A second big win proved to Carden how important search engine rankings are. When human resources managers for cosmetics giant L'Oreal went trawling Google in search of talent management software they came across Sonar6.
Now the company will use Sonar6 to monitor the performance of a few hundred managers spread across the 60,000 staff of the multinational.
"The day we signed L'Oreal is the day we also signed Rodney District Council. Very different businesses but they both see the relevance," says Carden.
What draws the companies to Sonar6, he says, is the ease with which the software allows managers to get a "helicopter view" on their staff, able to see graphically which ones are performing, who the stars are, and who needs further management or a pink slip.
"We want to democratise talent management, which is still a high-faluting, academic thing," says Carden.
A recently completed funding round has also brought a stable of high-profile investors into the Sonar6 fold.
Trade Me founder Sam Morgan has increased his stake, while Morgan's former technical deputy at Trade Me, Rowan Simpson, has also come on board.
Wellington businessman Lloyd Morrison, the founder of Infratil, has put money into Sonar6, as has John Holdsworth, the group chairman of IT services company Datacom.
A quarter of the company is now held by Morgan, Simpson, Holdsworth and Morrison, with the rest owned by Sonar6 founders including Carden and Mark Hellier, employees and other minor shareholders.
Carden, a veteran of the PC industry where he once headed up Hewlett Packard's consumer PC business across Asia Pacific, leaving as the computer-maker merged with Compaq in 2002, says the new shareholdings represent some of the best business minds in the country.
Morgan remains the most hands-on investor.
"Sam's a very active investor. We were his first investment outside of Trade Me," says Carden.
"We are fully funded for at least 18 months and we're not unprofitable."
Sonar6 has 17 staff, mainly based in Auckland, with one working in Santa Clara, California, near the Silicon Valley companies Carden sees as ideal customers.
"Tech companies are great for use, they're very people dependent and they tend to be meritocracies.
"They also don't have two-year sales cycles."
Sonar6 makes money by charging subscription fees for its software on a per-head basis.
"We're a subscription business, so you have to get a churn rate as low as possible," says Carden. "The proof of a good idea is whether you can make money out of it."
After breaking even within 12 months of being in the market, Sonar6 was profitable, but may dip into the red this year as it expands further overseas.
It has more than 50 companies locally using its software, including The Warehouse, Fletcher Building and the Ministry of Health.
"If there's a weakness in our software it's that some of our larger competitors have more functionality," says Carden. Some of the dominant players in the market serve talent management software to companies with staff numbering in the tens of thousands. "But we're on a journey to make HR simpler."
