GLOBAL EXPANSION FIRST STEP – THE UK

GRAEME FROST •  Over 30 years IT, over 20 years developing software

for world markets

•  Developer à Designer à IT Manager

•  7 Years Wang New Zealand

•  12 Years Keystone

•  5 Years Cadabra

•  Now Brilliant Software

The

Story

BACKGROUND •  MBO of software divisions from Wang in 1990 – 12 staff

and around $1.5m revenues

•  Comprised of Travel and Legal Practice management software

•  Had major share of NZ legal market (the “big 5”) •  Russell McVeagh •  Bell Gully •  Simpson Grierson •  Rudd Watts (now Minter Elision) •  Phillips Fox •  50 smaller firms.

BACKGROUND •  Legal software based on proprietary Wang VS

hardware

•  Evaluated replacement products to represent

•  Best was judged to be 40% fit

•  Saw opportunity to develop Keystone…

•  Needed to solve NZ problem •  Realised the NZ legal market management vision was

well ahead of world market •  Had a world-class visionary “on staff”

A CLEAR DIFFERENTATION •  Targeted large firms

•  Top 6 NZ, Top 20 Aus, Top 100 UK, Top 250 US •  Global firm ready

•  multi currency, multi firm, multi machine. •  Design Target: Clifford Chance.

•  Vision was to make firms more profitable •  A Front Office rather than a back office accounting system

•  Online Time Recording •  Fee Earner Billing

•  Targeted the partners not Finance •  High Price tag •  Cultural change •  They get the profits!

A PLOTTED HISTORY •  Started development in early ’93

•  Initially funded from income from existing customers and custom development.

•  Started showing customers and prospects (NZ, Aus) part finished software in late ’93

•  Unsuccessfully tried to raise investment funding

•  Sold system to Phillips Fox late ’94

•  Lost 2 other NZ deals to US based competitors ‘95ish

•  Started “making noise” in UK in ‘95

The Keystone Solution

•  What are we? We develop, market and support highly-specialised application software for the professional services market.

•  What are we about?

Our products and services are designed to build profits for our customers - through online time capture and billing; improving productivity and client service; and enabling efficient management practices with real time forecasting, budgeting and business intelligence.

A PLOTTED HISTORY •  First sale in UK 4 months after first arriving •  4 sales within 12 months •  First Australian sale late ‘95 (Mallesons) •  First Angel investment ‘96 $400k •  Steady flow from Australia over next few years •  Rest of New Zealand over next few years •  Started looking for VC funding in UK early ‘97

AIM MARKET LISTING •  September ‘97

•  Reverse Listing

•  £4m for 38% of company

•  Tech boom just beginning

•  Raised over £20m during next 5 years

•  Purchased US Subsidiary March 2000

US MARKET STRATEGY •  Acquired company had 300 medium sized firms using

old legacy practice management system •  50-100 Keystone Targets

•  Acquired Company had 150 larger firms using Business Intelligence system •  Firms had already shown themselves to be visionary •  Leverage relationship for Keystone •  Take BI tools to the rest of world.

•  Combine existing sales staff with Keystone Kinghitter (ex Australia/NZ)

•  We were beating US based competitors around the world.

US MARKET REALITY •  One Keystone sale •  No imperative to innovate •  Partners wouldn’t engage •  Parochial •  Kiwi business ethic didn’t wash! •  Subsidiary cost too much and didn’t deliver. Our worst decision!

AUSTRALIA

Pros •  Travel Cost and Time Low •  Time Zone differential

small •  Medium sized market •  Easy to visit/relocate to •  Possible to service from

NZ •  Legal and Accounting

similar •  Similar Business innovation

Cons

•  Australians don’t like buying off Kiwis

•  Lesser business ethic •  Employments costs high •  Really need to employ

Australians to sell •  Medium sized market

UNITED STATES

Pros •  Huge Market •  Time Zone – some

overlap •  Tend to be behind in

business innovation •  Employ at will makes

employing people easier

•  Parochial •  Less efficiency imperative •  Geographically dispersed •  Travel Time medium •  Time zone – some overlap •  Big travel commitment to

service from NZ •  Visa required to work

there.

Cons

UNITED KINGDOM

Pros •  Large Market •  Like buying off Kiwis •  Compact market •  Good base for Europe •  UK T&I / NZTE very helpful •  Strong NZ community •  Selling Price higher •  Attractive for NZ staff •  Behind in innovation •  Similar business ethic •  A great “validation” market

•  Travel Time long, cost a bit higher than US

•  Time zone difficult •  On ground costs higher •  Big travel commitment •  Visas required to work there

but many kiwis qualify

Cons

UNITED KINGDOM – RECOMENDATIONS •  Commit to the market. •  Talk to UK Trade and Investment early •  Research kiwi connections (use Kea) •  Meet Trade Commissioner in NZ House •  Find a consultant to be UK presence •  Trade on kiwi innovation and business ethic •  Use kiwi novelty value (e.g. all blacks, NZ wine) •  Commit to be there often (1 week in 6 min) •  Relocate as soon as practical. •  Relocate kiwi staff in preference to local staff where

possible

BRILLIANT SOFTWARE ADVERTISEMENT! •  Brilliant Software is all about world class custom

software development •  Target technology companies •  Iterative, prototyping approach •  Only super star employees mean quick enterprise

quality product development •  Innovative ideas are free!

QUESTIONS!