Chordiant Software, Inc. (CHRD)
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Chordiant Softwares strong management team, focus on
financial services and expanding their global reach has helped them come out of the
downturn in a strong position
addition to his Chordiant experience, Mr. Kelly brings more than ten years of senior
management experience with Oracle where he held a variety of roles directing the vertical
markets organization, including financial services, telecommunications and retail;
European alliances organization; and government sales. Mr. Kelly also worked with British
Petroleum and ICL after graduating with an honors degree in business administration and
accounting from the University of Bath, England.
Chordiant orchestrates the unique processes of an organization from the point of customer interaction, through the front and back offices to multiple transactional systems, corporate applications and data stores. Our solutions integrate existing infrastructure to orchestrate the assembly, enhancement and delivery of optimal role based business processes to the appropriate channels. Business value is realized through improved employee productivity, savings in operational costs, and increased business adaptability.
Headquartered in Cupertino, California, Chordiant maintains offices in Boston; Chicago; Mahwah, N.J.; Manchester, N.H.; New York City; London; Paris; Amsterdam; and Munich.
CEOCFOinterviews: Mr. Kelly, what is the current focus of Chordiant and how has the company changed over the last couple of years?
Mr. Kelly: We came into 2004 setting some goals for growth and the company. I am pleased to say that we have seen the company grow at 25% year-on-year. We set some other goals in terms of penetration in North America and with the desire that we would end the year with a 50/50 mix between North America and international. We are well on track to achieve that. At the end of quarter-three, 67% of the company has been driven from North American revenue. We have won some customers and have gone live with them such as Time Warner Cable (a division of Time Warner TWX: NYSE) and we have also won some large customers in the financial services sector. We will continue to focus on the consumer verticals especially financial services and telecom. We are growing, winning new customers, and delivering new projects very successfully.
CEOCFOinterviews: How are you doing this?
Mr. Kelly: There are a couple of things that we did during the downturn in terms of focus that have served us well. We concentrated on the core geographies of the U.S., Canada, Germany, France and the UK, as these represent the biggest market opportunity for us. We focused on retail financial services - about 70% of our business is from this sector and we serve some of the biggest companies in the world like Deutsche Bank AG, Barclays Bank PLC, and Metropolitan Life Insurance Company (NYSE: MET). The other factor is that we have focused on core partnerships with IBM (NYSE: IBM), Accenture Ltd (NYSE: ACN) and CapGemini to drive market coverage and also use their services organization to provide rapid deployment for our customers. These are the strategies we are seeing played out and fuel the way for continued growth in 2005.
CEOCFOinterviews: What is the process; do companies decide they need a change and look for someone or do you go show them the way?
Mr. Kelly: It is a combination of both. Normally these large corporations have very diligent processes around evaluation and purchasing decisions. Invariably they will go through a strong due diligence process that can last six to nine months from inception to the contract and even down to multiple customer references. In that example, the customer initiates it. There are situations where our direct sales force and our partners find opportunities through their marketing and our own marketing that allows to get engaged in conversation with customers. Customers will go through due diligence or look to custom build before completing contracts with us.
CEOCFOinterviews: What do you know about this process that sets you apart from others in your area?
Mr. Kelly: We have just held a major customer symposium where we got our worldwide customers together with many of them presenting case studies. Customers such as Time Warner Cable, CIBC (Canadian Imperial Bank Of Commerce) Barclays, and ING were represented. They gave great testimonies on three things: the process based technology; rapid deployment and payback; and finally, Chordiants ongoing commitment to their success. Chordiants process driven solutions works incredibly well in their business and integrate well with their existing infrastructure. Second, they have deployed applications very successfully and received rapid pay-back and return on investment (within a year). Third, whenever there is a bump in the road (as there inevitably is in any large program) Chordiant sticks with the customer until the implementation is successfully completed ,.
CEOCFOinterviews: Chordiant recently demonstrated some breakthrough process-driven applications; what are process-driven applications and what is breakthrough about what you have?
Mr. Kelly: Process driven applications are a completely new type of out of the box solution which is constructed around an organizations unique processes, as opposed to their data. Traditional applications are all based on data which is one important part of the business requirement. The other key elements are processes (how work gets done) and business policies (which rules need to be applied and when to make decisions). Many of our customers are retail banks; an example of a core process is account opening of a checking or savings account. Through the process of verification and security checks, through gathering customer data to get to opening the account, Chordiant has reduced the time this takes from 45 minutes to between three to six minutes. When you think about a major retail bank with twenty or thirty million customers opening tens of thousands of accounts a month, those economics in terms of time savings and efficiencies, it is very significant in terms of productivity improvements and dollar savings.
CEOCFOinterviews: Will you tell us about the financial condition of Chordiant?
Mr. Kelly: We have made significant progress this year and last quarter we achieved profitability. Revenues have grown and the balance sheet is very strong with over $60 million dollars of cash. The strong balance sheet reflects stronger demand careful management of expenses, and a focus on profitable growth. We have a strong operating margin; a worldclass customer base and we are winning significant new business.
CEOCFOinterviews: What is ahead for Chordiant?
Mr. Kelly: As we plan for 2005, our strategy has become more expansive in continuing to do what we do very well while growing our business in North America, U.K., Germany, France and Spain. Geographically we are looking at potential new territories in Europe. Our solutions focus is on service industries and we have developed new financial services process-driven applications. The other key area is where we are looking to become the market leader is in real time, predictive decisioning for services companies. We are seeing demand from consumer organizations for enabling the real-time office, with real-time predictive decisioning playing a critical role. A good example is when you go into your retail bank branch. As well as undertaking services transactions and moving money around different accounts, the system can recommend to the customer representative or teller the most appropriate action for the bank to take at this time reflecting your needs, lifestyle and where you are in terms of life management. We are witnessing strong demand for this new capability in banking, telecom, and other service industries.
CEOCFOinterviews: In closing, what should investors know about Chordiant that they might not realize when they look at the company?
Mr. Kelly:I think investors should consider the following. We have now come out of the downturn, are growing successfully, and the Company is profitable. We are very focused on expanding the top-line while diligently managing the bottom-line. We have an experienced management team with members that have been here in many cases, since the get go, 7 years back. We have further strengthened the team with some new key hires. If you look at our pedigree over the years; many of us have experience in building high-growth software companies. The results for investors should speak for themselves as Chordiant is taking an increasing share of a multi-billion dollar marketplace with a new class of process based applications.
We have an experienced management team with members that have been here in many cases, since the get go, 7 years back. We have further strengthened the team with some new key hires. If you look at our pedigree over the years; many of us have experience in building high-growth software companies. The results for investors should speak for themselves as Chordiant is taking an increasing share of a multi-billion dollar marketplace with a new class of process based applications. - Stephen Kelly
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