ARCHIVED  October 1, 1996

Software a niche industry

Specialty software makers along the Northern Front Range every day tackle the same dilemma: how to please a small number of customers and still make money.If the software is too specialized, the market for it will be very small, and because the process of developing software is expensive, the product will be unlikely to turn a profit. The broader the software’s application, the farther it moves from the “specialty” category.
One way most of the region’s software developers solve the niche/profit dilemma is to market nationally, and even internationally.
Roger Ison’s Mantic Software Corp. in Loveland is designed to turn highly complicated financial-investment data into easy-to-use pictures and graphs. Ison said he set out to produce a tool for individual investors.
“We were surprised at the population who bought it,” he said. “What we found was first, there was a substantial international market, and second, there was a substantial institutional market É”
His experience has led him to conclude: “It’s very hard to have a product that isn’t international.”
Ison is currently at work on “strongly internationalized” financial-modeling software that has labels in several languages, and can deal with multiple currencies and contract requirements that vary from country to country.
InfoAmerica Inc., a Fort Collins company of six people, serves big corporations, developing touch-screen software. President Paul Knight said the company’s last venture was developing Automated Teller Machines for the banking industry.
In the last four or five years, it has turned its attention to the fast-food industry. Anyone who has stepped up to a computer and ordered by touch-screen at a certain Fort Collins Taco Bell has tested InfoAmerica’s newest product.
Similarly, Aspen Tree Software Inc. in Laramie provides employee-selection systems “primarily to Fortune 500 companies,” sales and marketing director Even Brande said. One of these companies – a major hotel chain – has 400 branch offices using Aspen Tree’s software to help it choose employees.
Thus, producing software for the big – national and international – fish can be lucrative when the service is highly specialized.
A second answer to the niche/profit question is a matter of conservative business management. Because almost all of the cost of producing software is in creating the first unit, many of the companies save money by investing time in only those products for which they have buyers. As Aspen Tree’s Brande put it, “We used to spend time developing things nobody had asked for, and what we found is nobody wanted them.”
Companies have ignored more-obvious lessons to their peril.
A third part of the answer to the niche/profit question grows from the nature of software itself.
“Software is the most malleable substance mankind ever invented,” Ison said. The ability to easily mold software to an individual customer’s changing needs is the key to pleasing many customers within a tightly defined market.
However, the degree of flexibility software makers are willing to exercise varies from “create an open program and customize” for each client to “vertical integration – understand a specific niche well and create one product to address all its needs.”
Mantic Software may be situated at one extreme of the adaptability continuum. Ison follows a path seen as the Microsoft Corp. model. That is, create a core or infrastructure that is adaptable, and field customers’ requests for specific adaptions. The model requires 1) a great deal of time put into developing a sufficiently adaptable core, 2) the ability to hear customers’ needs, and 3) the tools to quickly write new code to meet those needs.
Another company that meets all three criteria is Fort Collins-based BGIS Systems, which creates specialized accounting software for heavy construction projects (roads and bridges mostly), marketing throughout the United States and the United Kingdom. Its product, called StreetSmarts, starts with a basic accounting core and adds fully integrated construction management, materials management and equipment-management modules.
A major selling point of StreetSmarts, president Scott Mead said, is its adaptability. For construction companies that don’t produce road materials, modules such as plant/scale communication interfaces can be eliminated. For asphalt companies that don’t do paving, job-costing modules can be eliminated. The customer keeps track of only the profitability questions that matter to that company.
Aspen Tree Software’s ApView product also lends itself to customizing – a point that is essential to its success.
“There are lots of companies making pre-employment testing tools,” Brande said, “but there are very few who are customizing systems.”
BGIS has an unusual program, Mead said, to constantly listen to customers: a user’s group, an elected council of clients who represent BGIS’s customer base.
“They are a sounding board to tell us what directions we need to take our product,” Mead said.
BGIS goes a step further, incorporating a Unidata Inc. product called Fourth Generation Language into its software.
BGIS office manager and programmer Doris Brown said this tool allows the customer to adapt the program, creating, for example, simple report forms.
“It’s really visual,” Brown explained. “As I’m designing a report, I can see how the layout’s going to be. Then it actually goes out and writes the basic code language.”
Such a tool greatly increases the ease-of-use of a product. Even when it is not offered to the customer as part of a product, the existence of such software-writing tools makes it possible for small niche companies to exist and profit.
“It’s possible now for small companies to do, as adaptors, things which large companies couldn’t do a few years ago,” Ison said.
Even software designers such as InfoAmerica that reject the Microsoft model respond to customer needs and make changes after releasing their product. The difference is that they must work within unwieldy organizations that may have thousands of workstations. An upgrade in such an environment must be completely consistent across the board.
Another important difference may be that there is as yet little competition in this particular niche.
“There are a couple of other (competitors), but it’s a large field, and they serve other customers,” Knight said. “We never run into them.”ÿ

Specialty software makers along the Northern Front Range every day tackle the same dilemma: how to please a small number of customers and still make money.If the software is too specialized, the market for it will be very small, and because the process of developing software is expensive, the product will be unlikely to turn a profit. The broader the software’s application, the farther it moves from the “specialty” category.
One way most of the region’s software developers solve the niche/profit dilemma is to market nationally, and even internationally.
Roger Ison’s Mantic Software Corp. in Loveland is designed to turn…

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