Internet Financial Systems – Enterprise Software Application
A developer of specialized tracking and financial analysis software for banks, brokerages and securities companies had been successfully selling their software, on a per seat basis, for more than 10 years. Their software provided financial analysts, credit and risk management departments a platform, through which to collaborate and share sensitive information on prospective clients, and evaluate the finances of publicly-listed companies covered by their analysts. As the investment market continued to evolve, the age of the day trader took hold, and an increasing number of retail investors turned to the Internet to conduct research and execute share purchase transactions, the company realized that they could and should scale their software to capture a greater and more diverse share of the market. The company had to re-engineer their software, make it more affordable for the non-corporate user and find new ways to market and sell it. At the same time, the company had to contend with the following:
- The company’s existing installed base of large institutional users had entered a period of NIL growth and their revenues were in decline.
- The overall market for analytics software solutions was being challenged by the entry of new technologies and competitors as well as by providers of other software solutions, such as business intelligence engines.
- The company needed to overhaul their software, add functionality, and yet make it more user- friendly.
The company engaged FinanceNorth to assist with a review of those markets which would provide the company an opportunity to validate its new software deliver model, namely Software as a Service (SaaS), manage all of the financial and budgetary aspects of the company’s design and application development process, seek and establish new sales and marketing relationships and revenue sharing models with channel partners, and develop a transition strategy for retaining and converting the company’s current installed customer base
Within 14 months, the company had completed development and was successfully beta-testing a pre-commercialization version of the new software. The development process had come in under budget by 17.3%, and more importantly, was completed 4 months ahead of schedule. By adding new security features and protocols to its engine, the company retained and converted approx. 76% of its installed base; the software was licensed by two online brokerage firms and incorporated into their online service offerings, the product was featured on MSNBC, and in the years since, hundreds of thousands of independent investors have purchased the software. NOTE: Prior to a scheduled IPO of its securities in 2011, the company was acquired by an international software developer.
Case Study Summary:
|The Company||The Challenges|
|Developer of tracking and financial analysis software for banks, brokerages and securities companies and financial institutions.
Solid management team with background in software development and strong ties to the financing services industry.
10-year history of sustained business and earnings growth and large installed base of loyal corporate users.
|Company recognized that they were entering a period of transition where business growth was slowing, and revenues were starting to decline.
Competition in their market was increasing; new entrants were threatening the company’s core business with new software technologies.
The company needed to broaden and increase the size and scope of its market.
A new product and software delivery model was required; however, the company’s existing user base had to be maintained.
Company needed to maintain strict financial oversight over development process.
|FinanceNorth’s Role||The Outcomes|
|Established new markets and strategies for marketing the company’s products.
Preserved existing revenue streams, existing clients and develop new client opportunities.
Provided financial oversight for software development process and new markets development.
Served as the company’s lead M&A advisor – prepared initial public offering (IPO) strategy and discussions with institutional investors.
|Established strategic partnership and licensing agreements with two industry leading online brokerage / trading companies.
Our financial oversight resulted in delivery of new software under budget and 4 months early.
Achieved a client retention rate for existing users of more than 76%.
Managed sale of company in successful 2011 pre-IPO acquisition.