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Firstwave Technologies, Inc. (FSTW) |
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CEOCFO Current
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This is a printer friendly page! Firstwave
Technologies provides Customer-First Solutions -a clear competitive advantage in the CRM
market Bio: Firstwave® Technologies, Inc. (NASD: FSTW), has been
an industry leader since 1984. Originally founded as Brock Control Systems, Firstwave has
more than 18 years of experience in CRM, Customer Relationship Management. The
introduction of CRM has provided companies with a communication tool that helps create
invaluable, knowledge-based relationships, by integrating and leveraging information that
is collected through various marketing, sales and customer service channels. Companies who
harness this information are more agile, more profitable, and continue to build and
enhance relationships with prospects, customers and with strategic partners. Firstwave Technologies, Inc. is the first company to
offer a totally Web-based CRM solution. Firstwave has built a suite of products that are
easily adaptive and scalable. They support three product lines: a Web-based CRM solution,
Firstwave eCRM; a client-server solution, Takecontrol, and Firstwave for Unix. The Company
also offers an array of specialized professional services on a fee basis. Firstwave's
services consist of education and training services, implementation and customizations and
customer support services Firstwave's solutions utilize XML or Extensible Markup Language to allow your company's software to talk with partners', customers', distributors' or other third-party's software. XML technology erases the line between applications and eliminates expensive and lengthy integrations. In addition, Firstwave eCRM components may be used in other applications to access data while enforcing security and business logic. Firstwave solutions utilize a sophisticated, optimized data-locking mechanism. Firstwave allows application components to be secured, as well as individual data components. CEOCFOinterviews: Mr.
Brock, what was your vision for Firstwave? Mr. Brock: “When Firstwave was founded almost twenty years ago, we had a vision that was somewhat ahead of its time. We knew we should apply new technologies and create new ways to solve old problems, such as providing timely and accurate communication to those that want to hear the information and those that need to use the information. For example, you could provide computer systems for the information flow around sales organizations. That is a simple way of saying that you cannot automate selling and you cannot automate your customer relationships. You can only automate the flow of information.” CEOCFOinterviews: What is Firstwave today? Mr. Brock: “We have seen several integrations to the technology that have changed everything. We are a leader in the market in the multi-user units arena. Now we have Internet based technology and what is so exciting about that is the deployment issue has been solved. We can put information in people’s hands however, whenever and wherever they want to access it. We help people access information when they need it. A facilitator of communication is one broad way of talking about the CRM (Customer Relationship Management) market.” CEOCFOinterviews: What are you providing for your customers; are there particular flagship products? Mr. Brock: “The traditional Customer Relationship Management function can be looked at as a three-legged stool. The marketing leg is a key component. Marketing includes telemarketing and telesales and helps you generate and qualify leads. There is also the sales leg, where you notify the sales representatives about qualified leads that are in your territory. They are notified of what has been said or sent to these people, by whom, and what their interests are. You are turning over from an insider organization, such as your marketing, telemarketing or even your website, which has now assumed some quasi-human roles of qualifying people, to the field sales organization, which is going to work them through whatever process is appropriate to earn the business. The third leg is the customer support leg, which is what relationships are about. That is taking care of the customer after the sale so that they, in effect, become your sales organization by telling everybody and their friends that this is where they should buy business. There are many people, and good ones, that provide these base functions. I think that where we differentiate ourselves from everybody else is the quality of the underlying technology. It is not just the features; it has to fit. To make a product like this fit, it has to be a highly customizable solution. The solution has to be tailored to the unique needs of each company. It also has to be easy to use and intuitive. I think where we really shine is that we understand the communication features and functions that need to be in a product perhaps better than anyone else. We understand that the architecture that you deploy these features on is important.” CEOCFOinterviews: How do you sell your products? Mr. Brock: “We have several revenue streams. We sell our software as a licensed product, which means customers can take it out of the box and use it. What is unique about our product is that we will custom tailor our products prior to installation and therefore rarely need to remove any features. Other vendors have gotten into a feature ‘war’ and their customization process is to remove features that are not utilized. Sometimes customers will ask us if we can take their Legacy data and place it into the new system; so we solve that for them. Others will tell us that they have different terminology or have additional tables of information that they need incorporated; so we tailor the screens to fit their needs. What is unique about our company is the speed to which we can get the product fully deployed, in use with the right data with screens to match. It is reflected in the pricing. Our total cost of ownership, in terms of time to market and actual cost to market, is substantially less than our competitors.” CEOCFOinterviews: Are there particular industries that you focus on? Mr. Brock: “You try to market to certain industries. Your product has to be a good fit for them and they have to perceive it to be a good fit for them. While we do market to certain industries such as sport associations and venues, manufacturing companies, professional services organizations and software and technology companies, the reasons why we do it are different. We have a strong level of knowledge within these industries that provides us with the ability to understand our customers unique business needs and offer them effective solutions. The commonality between the different markets we market to is that we like to find complex business problems to solve." CEOCFOinterviews: Are most of the newer products web-based? Mr. Brock: “Yes. There is a requirement to make new products web-based because the needs of our customers require the flexibility it provides. An unfortunate trend has been for companies to simply put some lipstick on an earlier generation of a product – but that is only a cosmetic change. They may then grant limited web access to it but it is always limited. We have invested thirteen million dollars in our new architecture, and let me assure you, that there is no carry-over from client server architecture and Unix architecture except the domain expertise. The point that we make for our customers, and it is a very clear delineation, is that there is absolutely nothing that you need to install in your machine. It is a totally internet-based browser application. I think browse is the right word because it is deployed on a remote hosting and application server type of basis and we have had customers in the past that have done that for over a year to two years." CEOCFOinterviews: You have mentioned the consistent and dedicated work of your employees. Will you tell us about your people? Mr. Brock: “One of the things that I have been very proud of is the retention of our staff. We have had very little voluntary turnover and pride ourselves on hiring top-notch employees who grow with the company. I look at employee turnover as a barometer of a company’s health and I am so excited to say that our health is strong. I think there are several reasons for that retention and each employee group is a little different. The technical staff is the key to our software product. We push the envelope in technology and we are always using the first wave of the new technologies to serve our customers better. The technology workers in our organization love to be exposed to the latest and the greatest and that motivates them to produce great work. We then have our client services group and what motivates them is our customer intimate strategy, which is exactly as sincere as it sounds. We do whatever it takes to make our customers happy. By that, I mean if you are a professional service person, you are told to do whatever it takes to make that customer happy because over time, people will treat you right. That is customer intimacy. I believe we have the best technology in the market but customer intimacy is how you truly build a great business.” CEOCFOinterviews: How has your company fared in this difficult economy? Mr. Brock: “This ties in with your last question. We have done well in this tough economy but it is not sufficient to have great technology. The more difficult thing is to have a caring customer culture and customer intimacy and really do what it takes. Those companies that do will always have a place and be successful even in toughest of times. I think that these tough times have caused people to focus on these values more, not just on a personal basis, but on a business basis. If companies do not deliver on their promises, their customers will seek out new relationships. It takes longer to get business today than ever because the customers have to get to know you a little better and that results in a longer sales cycle but that increased intimacy prior to a closed sales creates a platform for a more solid business relationship." CEOCFOinterviews: You have won a number of awards; what is most meaningful for you? Mr. Brock: “We have won many awards over the years and the one that was important to me was one that occurred around 10 years ago and that was being on the front cover of Success Magazine. What is interesting about that award is that it was not for our company’s financial success because it was still a young growing company, but we were recognized as a company that was radically focused on customer satisfaction, and that means something. Of all the awards received, being recognized for the intrinsic value or the true spirit of the corporation is perhaps the most flattering.” CEOCFOinterviews: Where are you going forward with acquisitions, joint ventures and growth? Mr. Brock: “We announced an acquisition strategy that includes all three. We are focusing on companies that have an older technology platform but loyal customer bases. In this tight economy, we see a very attractive opportunity to acquire companies who are not able to finance an upgrade into the next technology. Their customer base has maintenance agreements and they are loyal. If we embrace them, they will be appreciative of the work ethic and the style that we have and they will continue to pay maintenance for an extended time. Because we have a favored vendor relationship, we can offer them great opportunities. We think that strategy will be very successful for us in the next year or so." CEOCFOinterviews: Will you tell us a little about the financial position of the company? Mr. Brock: “If we look at our 4th quarter performance in 2002 compared with the 4th quarter of 2001, for our software licenses, the profit margin has increased 180%, our services revenue increased 10%, total revenues increased 26% and net income increased 57%. If you compare these results with the 3rd quarter in 2002, software licenses revenues were up 184%, total revenue increased 15%, and net income increased 7%. Our cash balance during 2002 increased 103%. Our cash balance was 3.8 million, with no debt. It also speaks to the strength of our numbers. We have a rock solid set of financials and positive cash flow. We feel we are in great shape, great financial strength, great stamina and great organizational momentum. Springtime is going to find other people in very bad shape and as people start purchasing again, we are going to have an even greater advantage.” CEOCFOinterviews: What would you like to say to shareholders and future investors? Mr. Brock: “ We have had five consecutive quarterly profits and growth in cash and revenues as well as customer satisfaction. We have new technology and solid business practices and we are trading at a multiple of trailing earnings. I think there has been a concern about big customers being such a big part of our revenue source. I pointed out in the market last earnings call in February that we had a huge increase in software licenses, up 184% from the prior quarter and 180% from the comparable quarter in 2001. None of that came from the big customers that continue to give us business. The big customers that have been so kind to us and favored us continue to do so, and we have been selected for future business, which we expect to realize in the first and second quarters. It is not luck, but hard work with a great business plan. I think that I would encourage investors to look at our annual report, read the CEO letter, which is on our website and they will see that this company is a basic ‘rock solid’ company. I truly believe it will be a great long-term investment for them.”
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