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Pumping a new delivery model

A Calgary solution provider believes offering software as a service products to niche markets is the road to fast growth

Six years ago Pandell Technology was a small Calgary software development shop.

But in May it took a leap in size by swallowing In House Software, a local company that specializes in applications for junior oil and gas firms, for an undisclosed price.

Now it boasts of having 200 customers in the oil patch using In House’s JV Nexus and GeoNexus back-office suite of products.

The combined company has annual revenues of $3 million, with Pandell president and CEO Greg Chudiak aiming for $20 million by 2012.

It’s part of the evolution of Pandell from a provider of e-commerce solutions into a company that delivers software as a service (SaaS) to niche markets.

Solution and service pro-viders have to take a look at the model, say industry analysts.

Business is buying
According to a new study by Forrester Research, 26 per cent of enterprise-sized North American and European companies are already using SaaS applications. A year-old survey of SMB firms found just over 50 per cent were seriously considering SaaS applications when buying software.

Pandell took a long route to the model. Started in 1997 as a custom programming shop, it’s tempo stepped up in 2000 with the hiring of Chudiak from Microsoft Canada, where he’d been a technical manager in its consulting group.

He helped turn the company to creating e-commerce solutions such as online purchasing systems, of which it still has a number of major clients.

Then it developed a set of tools for quickly building and managing Web applications it calls Liquid Intelligence, which evolved into an SQL Server-based platform that also lets companies manage data through any business process.

Increasingly, it found customers wanted it to host the applications Pandell built for them. With a toe-hold already in the oil sector, Chudiak went after In House, which only sold its software as a service.

Now three-quarters of Pandell’s revenue comes from monthly software payments, with the rest from consulting and application development fees.

“We’re going to grow the business through a combination of organic growth and acquisitions in targeted industry sectors where there aren’t a lot of big players,” says Chudiak. Using Liquid Intelligence, he believes Pandell can update older products and adjust them to its business model.

Forrester analyst Liz Herbert cautions that SaaS providers have to guarantee reliability, either buy building a data centre or partnering with a hosting specialist.

“Know what your core competencies are, what the product is and who it’s for,” adds George Goodall, an analyst with Info-Tech Research of London, Ont.