NexPrise, Inc. (NXPS)
Interview with:
Ted Drysdale, Chairman, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
NexPrise nProcess Platform, which enables manufacturers to take the fast, direct path to more efficient and competitive processes.

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NexPrise Inc. provides secure web-based, business process applications adapted specifically to satisfy the needs of the customer

Rapidly deployed, these cost-effective applications can help leverage the investments companies have made in their ERP, supply chain and product data management systems


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Services
Business Services
(NXPS - NASD)

NexPrise, Inc.

5950 LaPlace Court – Ste. 200
Carlsbad, CA 92008
Phone: 760-804-1333


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Ted Drysdale
Chairman, President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
May 2003

BIO: Ted Drysdale is President, Chief Executive Officer, and Chairman of NexPrise, Inc. and is responsible for the management and strategic direction of the company. Prior to joining NexPrise, Drysdale acted as Senior Vice President of the Visualization and CSM Group of Parametric Technology Corporation. He was CEO and co-founder of Objectlogic, a developer of visualization and markup software, which was acquired by Division, Inc. Drysdale then served as President and CEO of Division, where he was responsible for finance, marketing, support, and sales in ten countries, and negotiated the sale of Division to PTC. He has more than 30 years experience including roles in sales, customer services, marketing, operations, and business planning with companies such as ComputerVision, Terian Technology Inc., Altos Computer Systems, and Microcom.

Company Profile:

NexPrise, Inc. (NXPS - NASD) enables manufacturers to take the fast, direct path to more efficient and competitive processes. Their goal is to enable companies to automate their processes expeditiously and inexpensively by building and configuring applications using the NexPrise nProcess Platform. While completely based on industry standards, it offers unique advantages for rapid solution delivery. The platform can also be licensed to corporations and systems integrators who prefer to develop their own process applications.

The NexPrise nProcess Platform enables any number of process applications to be built rapidly, inexpensively and without writing code. NexPrise process experts use it to develop and configure business process automation applications that precisely fit customer processes, as well as to change the software quickly and inexpensively as customers evolve their processes. A key application feature is intelligent workflow, including complete data and document management, role-based views to focus process participants on critical action and share information only as needed and authorized. The software also provides a secure internal/external collaboration hub for easily incorporating multiple organizational divisions as well as suppliers, customers and partners into your processes. Powerful, flexible reporting enables custom reports to be built from any and all data fields, and personalized reports can be generated based on user roles. Simple, efficient integration enables access to multiple data sources and increases ROI from existing enterprise systems and desktop software. It also facilitates rapid user adoption by requiring minimal training, and it enables fast, inexpensive process changes for continuous improvement.

NexPrise offers dozens of configurable process applications including Engineering Change Manager, Supplier Non-Conformance and Corrective Action Manager, Cost Estimation and Quote Manager, Supplier Materials Manager, CDRL & SDRL Contract Manager, Contracts Manager, Action Item Manager and Management of Change. Because NexPrise applications are all built on the nProcess Platform, they share valuable characteristics. These features come as “built in” extras, on top of the specific process automation functionality of each application. While NexPrise process applications are often deployed individually to fill gaps between enterprise systems, they can also be linked easily into compound processes. Since NexPrise applications are built using the same standards-based nProcess Platform, they can seamlessly share the same data and document management. Outputs from one workflow become inputs to another. Notifications from one process trigger actions items in another. All processes become more efficient, accurate and manageable.

CEOCFOinterviews: Mr. Drysdale, please tell us about NexPrise?

Mr. Drysdale: “The business that we participate in is the business of automating business processes for the discrete manufacturing industry; predominantly the aerospace industry and the automotive industry. The aerospace industry has had some serious challenges since 9/11, and the economy has retracted the automotive industry; it also has had serious challenges. Our customer base has been reducing their investments in enterprise solutions. NexPrise’s focus is on coming out and automating individual point processes where there is an immediate pain and gain. We look for situations where we can show a short-term return on investment, preferably six months or less, because, as I said, the industry is pulling back and reducing any expenditure that does not have short-term return on investment.”

CEOCFOinterviews: Will you give me an idea of some of the main products you are offering?

Mr. Drysdale: “We offer tools that automate business processes. We develop applications that automate processes around quality, procurement, and design collaboration. These are spaces in discrete manufacturing where the customer has complex products and requires a lot of interaction with suppliers and customers, who are not part of their immediate organization or enterprise. Web-based applications provide a significant amount of collaboration.”

CEOCFOinterviews: What is it that your solutions provide that others don’t?

Mr. Drysdale: “We provide business process applications that are low-cost, rapidly deployed, and solve a specific problem. The general method of providing software solutions to companies has been to go in and dictate a certain method. We go in and identify a customer’s process, and then we mimic that process in our application. The result is quick adoption of a working application and a rapid return on investment.”

CEOCFOinterviews: Are there still a lot of things done with paper that have not been translated?

Mr. Drysdale: “There has been an enormous amount of money spent on enterprise applications. However, in all of those applications there is some gap. Traditionally the applications have been used inside a corporation, so an automotive supplier may have a very good solution for an engineering change inside the corporation. But when that engineering change needs to move outside, it needs either customer approval or it needs suppliers to contribute to it. Over the last three years, a lot of manufacturing has moved outside the organization; not only the creation of the parts themselves, but the design of the products. When a change takes place, there is a lot of information that has to be shared outside of the organization. Traditionally, that is done with fax and e-mails, which are not exactly highly secure environments. Controlling those processes when they go outside the internal enterprise is where we fit, and there are enormous amounts of gaps between their legacy systems and a total solution.”

CEOCFOinterviews: Is security a major element of the solutions you provide?

Mr. Drysdale: “The basic background of NexPrise was providing the Department of Defense access to information from its suppliers on various projects that they were working on, so it is a highly secure environment. That is a starting point. If you cannot provide information that is secure, then you are no better than the current paper-based process that is in play. The key component and starting point is that it has to be highly secure, and it has to be completely web-enabled because that is the least expensive delivery vehicle and probably the only common delivery vehicle for information today.”

CEOCFOinterviews: How do you reach your potential customers and how do you do it differently in the current environment?

Mr. Drysdale: “As a company, we have both a direct sales organization in the field and an internal telemarketing group to call on specific individuals in a targeted corporation and discuss with them whether they have identified problems. Many people have problems today, but the pain is not so great that they are willing to spend money to solve them. We are only interested in a pain that they can quickly identify and attach a dollar amount to solving that pain.”

CEOCFOinterviews: Please tell us about recent changes in your business.

Mr. Drysdale: “We have increased our business significantly. We are up 50% quarter-over-quarter, and for the previous quarter we were up 100% over the same quarter a year ago. The reason for that increase in business is because of the focus on meeting these gaps, finding areas where a customer has a specific pain and has funding in place for solving it, and then NexPrise having the ability to come in and solve it quickly. The major change in our business today is that we target solutions that we can provide in two weeks to thirty days, not solutions that are going to take a lifetime of deployment. We have developed a technology platform that allows us to rapidly create these business process applications with sophisticated workflow tools and a set of user interface tools, which enable us to mimic an existing process and automate it in short order; our goal is two days. Our biggest challenge is the customer identifying the process in the beginning. If the customer can clearly identify a business process, then our goal is to be able to satisfy that. Right now, it is running between two weeks and thirty days and we are driving toward the two-day solution.”

CEOCFOinterviews: What is the revenue model, and what do you see changing?

Mr. Drysdale: “NexPrise has had a subscription model from the beginning. It was an ASP (application service provider) that provided these services on a subscription basis and did the hosting. As these applications become more complex and more tightly wound, customers no longer always want us to host it. They would prefer to host in some cases and prefer to own the application in others. As we moved away from generic collaboration to specific applications, it has made more sense for the customer to own the application and pay a maintenance fee for owning it. We then load the software on their servers, and they support it going forward. Some 60% of our revenue this past quarter came from subscription license, and 40% came from moving to a perpetual license. We continue to offer our customers both options, and at this time our customers have elected to purchase on both scenarios.  However, it was a change in our business, and as it has moved from 20% to 40% of the new revenue, we are obligated to notify the public of that.”

CEOCFOinterviews: Tell us about your recently announced contract with Iomega Corporation.

Mr. Drysdale: “The solution for Iomega Corporation (NYSE: IOM) was a contract management solution. Iomega outsources most of the products that they manufacture or distribute. They were managing the contracts and the relationship with the contracts management team. This allowed them to manage all the different components of a contract internally and with suppliers and providers, and manage the intellectual property, as well. It is a collaboration around multiple documents with people all over the world.”

CEOCFOinterviews: Is that a growing area for you, and what else are you doing?

Mr. Drysdale: “Our business is really managing information for manufacturers and there are various applications, which we have expanded from. When we started, we were predominantly doing project management, and now we are doing a lot with managing quality. We also are delivering applications for contract management and procurement. There is information being shared and workflows in process required across people who are not part of the internal organization. It could be attorneys, financial people or an engineering organization collaborating with a supplier around a change.”

CEOCFOinterviews: There appears to be plenty of opportunity.

Mr. Drysdale: The technology does not only apply to the discreet manufacturing market; in our case it is our domain expertise. We have fifty customers and numerous other contacts there, so leveraging our customers and customer contacts has been the first stop.

CEOCFOinterviews: Why should potential investors be interested, and what should they know that perhaps is not readily apparent on the surface?

Mr. Drysdale: “We have a very strong team, and that is not readily apparent. Today the challenge is in business alone, so we have been able to go from selling enterprise solutions to point solutions quite rapidly. That is because of an outstanding development team. I think that is the key component. In order to be successful today, you have to be able to provide a rapid return on investment, and with technology changing quickly and the economy being a challenge, the ability to provide solutions that deliver obvious short-term benefits is really what sets NexPrise apart. That is only available because of an outstanding development team.”

CEOCFOinterviews: Any final thoughts for our readers?

Mr. Drysdale: “I think the future for a company like NexPrise is that we will see more companies looking to solve these gaps with automated business processes. I think it is going to open up enormous amounts of opportunities for a company like NexPrise to be able to come in and help leverage the investments that they have made. The companies have made huge investments in their ERP systems and in some cases product data management systems. There are many gaps where they are not getting full benefits out of those investments, and by being able to come in and leverage that information, which they paid enormous amounts of money to create, and to be able to share it as outsourcing becomes a requirement on everybody. I think it will create an enormous opportunity for a company like NexPrise to come in and solve these point process demands.”

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