Being there key to US success

By CHRIS BARTON

Dot and Mike Johnstone are facing reality. When you're poised to break into the big time in the United States packaged software market, living in New Zealand is living on the wrong side of the world.

The founders of Keylogix say that within 12 months, the Kiwi company will have transformed into a US-registered entity. Yes, software development will remain in New Zealand, but the real action - sales - will be run from offices on both coasts of the US.

Why? Because despite the internet breaking down the tyranny of distance, doing business from Downunder is just too hard.

"What you discover is that you need to be there [the US] all the time," says Mike Johnstone.

"New Zealand is not a brand and not a good place to do business from."

It's not just about having to fly for 11 hours to get to a meeting in Los Angeles the next day. It's also about outsiders cracking the US-centric market - like having to get special security clearance to visit key prospect Boeing because you're not an American citizen.

But the pair, who founded Keylogix in 1992, remain confident they are on the way to winning significant market share in the fledgling document automation market. The ActiveDocs template and "intelligent" document software have been sold to big US customers like AT&T, Perrot Systems, University of California and US Government departments. To date, 10,000 ActiveDocs licences have been sold in New Zealand, Australia, the US and Canada.

A second round of $3.5 million capital raising in December has the company well financed to realise its prospectus goals of $14.5 million in revenue by the end of March 2003. But the partners acknowledge that despite marketing to die for - piggybacking on Microsoft's Office XP launch and last week's Microsoft Tech-Ed business productivity award for the most innovative use of Office XP's Smart Tags - US sales are taking longer to bear fruit than expected.

"We underestimated the vastness of the United States. It took a while to realise just how big it was," says Mike Johnstone.

And how big is it? The market segment for ActiveDocs is referred to as the Office Suite market - predicted to grow to between US$10 billion ($22.4 billion) and US$11.7 billion by the end of the year. ActiveDocs 2.0, released in May last year, aims for a relatively small portion of the Office XP market, its key target being business organisations with 10 to 10,000 employees.

Keylogix is chasing mind share among 35,000 US value-added providers. At present they have four agents in the US to service this key channel, but expect to treble that by the end of the year.