Survival of the fittest

While software-as-a-service provider Yarris survived the tech crash of the 1990s and isn’t too bothered by the current downturn, the company is still adamant on avoiding past mistakes.

In fact, chairman Ian Goddard says the company is so careful in avoiding some pitfalls of the previous downturn, that it screens all of its job candidates through IQ and psychometric testing.

“Honestly, the best indicator of success is intelligence. First, you want an intelligent person and then you want a good personality. This is all done online, and it’s a very interesting field.”

The company has all of its candidates complete an online IQ test, as well as testing for cognitive abilities and problem solving, to determine whether they will be able to perform to a high standard.

Goddard says this is the only way to determine whether employees, and subsequently the company, will achieve success.

“I attribute a fair bit of success to our right people. It’s amazing what you can achieve just by having the right people around you.”

The company offers software-as-a-service to the insurance, telecommunications and utilities industries, and recorded revenue of about $10 million during 2008-09.

Pioneers in a popular market

Software-as-a-service may be all the rage now, (even Google and Microsoft are now offering free SaaS office alternatives), but Goddard says Yarris was one of the first to develop the technology back in 1995.

“Back then I saw the internet as a business possibility, but then seven million other people thought the same thing. We started off with software-as-a-service, which was pretty novel back then, but then we sold that business after a few years. It started us off in that space.”

The Yarris software is designed as a solution for sending contractors to do specific repair or maintenance work. Goddard describes the company’s products as an “on-the-ground solution”.

“So an insurance company may receive a claim about a tree falling on someone’s house. They use our software to contact the contractors on the ground who will then go to that house and begin working. If you see people on the street digging a ditch for a cable, they’ve probably been engaged by that type of system.”

“Utility companies are another good example. Power stations, gas pipelines, freeways, and so on. These are all assets managed by another company, and where maintenance and repairs are required, Yarris offers a solution for ordering that. All of our software works around that theme.”

It’s a niche market, but Goddard says it’s a growing one. The company has recently signed a deal with IBM to provide asset management services, while Goddard points to Gartner research that shows the SaaS market will grow to $150 billion by 2013.

“SaaS is going to grow, no doubt about it, and it’s because it’s just too expensive to do otherwise. In the IT world so many are using expensive in-house services, when with SaaS you get 80-90% of the service for under 50% of the cost, or for free.”

Surviving another downturn

Goddard says the company’s experiences in the tech crash have helped it survive the current downturn. Poor employee choices hurt the company during the late 90s, he says, so Yarris is determined not to make the same mistake twice.

“They certainly were hard years. The 90s were a glorious period where everything was going forward, and we probably hadn’t selected our people as well as we could have. We’ve changed that now, and as I said our hiring process is enormous. We spent eight months looking for a chief executive and interviewed over 90 people.”

“Yes, the downturn has slowed us down, but we foresaw these times and we’ve been very, very careful with our expenses.”

IT companies are among the first to feel the full effects of a downturn, with many companies opting to downsize IT services they view as non-essential. Goddard says this won’t change, but IT companies will do a lot better if they manage their margins and ensure they have a large amount of cash on hand.

“Having cash reserves is the key to surviving. We had money saved up during the last downtime, and you really just have to live on your cash for a while until people start spending again. That’s really a major part of surviving.”

“Also, you need a lot of determination. There are things that upset you when you’re a young company, but you have to be resolute about it. You have to be honest with yourself and get rid of things in your business that just aren’t working.”

Surviving in a growing market

As the software-as-a-service market grows, Goddard says more and more businesses will continue to appear that offer niche services similar to Yarris, forcing it to become bigger and more competitive.

But as the market grows, Goddard says the company’s main challenge is to ensure it focusses on the area of work it does well, rather than deviate into broader IT services.

“I think companies are working on more narrow solutions, and do them very well. The labour is becoming divided in the SaaS market, so it’s becoming a trend to do smaller things and do them very well…but of course more companies come along so it becomes harder.”

“The challenging thing is always making those sales and executing them in a growing market. We’re only 60 people at the moment, so it’s a challenge to retain our culture as we grow and make sure we’re not leaving anything behind.”