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CEOCFO CEOCFO Monthly Analyst |
"To print this page go to file and left click on print" A very strong company financially Technology Prophet 21, Inc. 19 West College Avenue Charles L. Boyle III Interview conducted by: CEOCFOInterviews.com Bio of CEO,
Under his stewardship Prophet 21 has
become a leading provider of industry-focused technology solutions to the distribution
industry, growing to more than 300 employees and 2,000 customers who value the
company’s goal of enabling them to increase sales and improve customer service while
reducing operating costs. Major achievements of the company
under the leadership of Chuck Boyle include the development of an industry leading
enterprise software offering … Before his appointment as president
and CEO, ‘Boyle made significant contributions to the company by holding various
senior management positions, including Chief Financial Officer, Chief Operating Officer,
and Executive Vice President. A finalist for the 2002 Greater
Philadelphia Ernst & Young Entrepreneur of the Year Award and a 1999 finalist for CEO
of the Year from the Eastern Technology Council. Prior to joining Prophet 21 Boyle held
both financial and operational management positions with Colt Industries. Ceocfointerviews: What is Prophet 21 all about? Mr. Boyle:
Prophet 21 is a leader in providing business technology solutions to the durable goods
distribution market in North America. We
provide three things to this market: enterprise software, a digital Internet trading
network called Trading Partner Connect, and professional services that allows our
customers to get the greatest value out of the first two offerings. We have approximately 2,000 businesses that use
our product currently and conservatively $35 billion in business transactions are
facilitated by Prophet 21 technology annually. Prophet
21 is a very strong company financially, with excellent customer satisfaction. We’ve
been in business since 1967, went public in 1994, and are very excited about our offerings
going forward. Ceocfointerviews: You have quite a number of professional services
that you offer. Mr. Boyle:
That is true; in fact, half of our human resources are dedicated to professional services. You would be surprised as to how many businesses
invest large sums of money in technology yet only use 20 percent of their capabilities.
What we do through Professional Services is allow our customers to exploit the technology
they have invested in so that they can gain 45, 50, 55, 80, 85, even 100 percent of the
potential value. We do this through a number of means: first through our support offering,
we are the only provider in our market that offers Web based support that goes well beyond
e-mail communications. We have a knowledge
base that our customers can come and tap into seven days a week, 24 hours a day to get
answers automatically without any human intervention.
In addition, our customers can see the progress and history on any case that
they submit to Prophet 21 and even add information. We also have a strong consulting group
who are engaged during the implementation process of our enterprise software and Trading
Partner Connect and beyond. In many cases our customers have us out on an annual basis to
perform system audits where we will meet with top management, review their business goals
for the year, and align the technology so we can Ceocfointerviews: Please tell us about Prophet 21 University. Mr. Boyle: Prophet 21 University is a blended educational program
for Prophet 21 solution users. Computer-Based Training is a CD ROM-based offering that
allows our customers to learn about the products that they have purchased and see how they
can implement them into their business processes. We believe in accountability;
there are tests, and there is also the ability for our customers to actually build their
own processes into the training. We also offer Web-Based Training where we give a
classroom-style educational experience to our customers over the Internet at a very
effective price point. We have traditional classroom education also. In fact, we
sponsor local user groups for our customers and host an annual summit conference, which
brings all of our customers together. Ceocfointerviews: Is this actual brick and mortar building or is
this in the companies that you are actually dealing with? Mr. Boyle: We offer both. The Web-Based Training and Web-Based
Consulting are done via the Internet. It brings our customers classroom-style training
without them ever having to leave their office. They can interact with the teacher
and other students, ask questions, see presentations, and more. We also have traditional
bricks and mortar Classroom-Based Training for more intensive study. Training topics cover
all of Prophet 21’s technology offerings. Ceocfointerview: I noticed your third quarter has very nice
results. What do you account this to? Mr. Boyle: Actually all three quarters of this fiscal year
has been outstanding with regard to Prophet 21’s financial performance.
Distributors are operating in a tough economy, but even with the slowness in the market,
Prophet 21 has been able to increase our revenues and dramatically increase our
profitability. On the balance sheet side, we have continued to accumulate cash, with our
current cash standing in excess of $22 million dollars. Among the reasons for our success
are earlier investments Prophet 21 made into research and development of our technology
offerings. The end result of these investments has been a product called Ceocfointerviews: Isn’t true that when the economy is a little
bit on the down side it actually is beneficial to companies because it helps them minimize
their expenses? Mr. Boyle: You are right. When things get tight distributors start
looking at their operations to see how they can improve. Prophet 21 can bring a lot of
value when businesses do this, which is another reason why our customers and prospects
look to Prophet 21 for technology investments. It’s very easy for us to show the
return that it can bring to the bottom line. Ceocfointerviews: There is always something bigger, better, faster
out there. How are you keeping up with that and implementing it with your customers? Mr. Boyle: Prophet 21 has a big advantage in that we made
investments in our technology. Prophet 21 invests approximately $8 million dollars a
year in research and development. We focus on predicting the needs of the market going
forward, six months from now a year from now, five years from now. Six years ago we
started working on CommerceCenter, and just a year and half ago we started working on
Trading Partner Connect. Those two investments have given us a unique advantage over
all of our competition. We have the greatest and newest offering available. We’ve
been in business since 1967, and have developed three offerings prior to introducing
Prophet 21 CommerceCenter; we are very innovative organization. Ceocfointerviews: You mentioned the two major products you are now
offering; do you see any additional ones going forward? Mr. Boyle: What we see going forward is a further expansion of
Trading Partner Connect. We have 2,000 customers that we’ve been able to
connect to each other, their suppliers, and to their end-customer so that they can trade
among themselves. For example 3M is a member of Trading Partner Connect. They can now
receive all of their orders electronically, directly from their distributors’ Prophet
21 systems, with no human intervention. All of the corresponding business transactions
flow back and forth -- acknowledging the order, invoicing the order for payment, etc. --
all of that can be handled electronically by Trading Partner Connect. Every party
saves a tremendous amount of money in operating expenses. Best of all, we are just
scratching the surface with regard to the potential of Trading Partner Connect. As I said,
we have generated an additional $2 million dollars to a new revenue stream in the last
three quarters and we are doing that at a gross profit. Moving forward, we expect this to
give us the opportunity to go after a much broader market. There are approximately 70,000
distributors and 5,000 manufacturers supplying distribution in North America that are
potential candidates for Trading Partner Connect. If we play our cards right, we have the
potential opportunity to serve many of these – bringing to Prophet 21 in return
tremendous revenue opportunities. Ceocfointerviews: How about on the international arena? Mr. Boyle: We are not really focused on expanding beyond North
America. This is more of a business decision than a technology limitation. In fact many of
our larger customers in North America are truly international organizations and our
technology offerings provide the functionality they need. Moving internationally
would mean diluting of our development efforts. Besides, there is a lot of market
potential in North America for Prophet 21. As I said, there are 70,000 market prospects in
North America. I once took a trip to England to look at the prospects there. I found
there were more distributors in the state of Georgia than in all of Great Britain. Ceocfointerviews: What markets here in the US are you in now and
exactly where do you want to put most of your concentration in the next year? Mr. Boyle: We have customers in Canada, the United States, and
Mexico. Our focus is on durable goods distribution -- typically this includes
industrial, electrical, plumbing/HVAC, fastener distributors, and similar vertical
markets. The focus of Prophet 21 is going to expand within these verticals. Much of our
competition focuses strictly on tight verticals. Prophet 21 has developed an offering that
meets the needs of many different markets in the durable goods distribution. Ceocfointerviews: From what I’ve been reading on your Web
site, Prophet 21 seems strictly internally driven. Do you see any acquisitions? Mr. Boyle: Currently, we are growing organically and I expect that
to be the case through our next fiscal year. We have the potential to grow through
acquisition and it is something that we have seriously considered. We have the potential
because we have the currency with regards to our public stock, and the $22 million in cash
assets that we really don’t need to run the business today. Historically, we’ve
been cash positive and I expect that to continue. In the future I think acquisitions
Ceocfointerviews: From a potential investor’s standpoint
looking at your company, they are continuing to ask the question, why, why this company,
what would you tell them? Mr. Boyle: I think that Prophet 21 is a very interesting company
for a number of reasons. Despite today’s economic climate, Prophet 21 offers a lot of
stability. When you take a look at our balance sheet you see that for a company that
generates revenue in the mid $40 million-range, the amount of cash and marketable
securities we have -- $22 million -- is very nice stable base. On top of that, our
days outstanding on accounts receivable are below market averages. From a liability
standpoint, Prophet 21 has never borrowed a dime in its history and has no need to going
forward. We have a strong customer following and steady revenue from our technology
offerings. Our professional services area generates recurring revenue of approximately $20
million dollars a year through our consulting and support services. Looking well into the
future, we have invested wisely into product research and development and it’s
beginning to pay off. Prophet 21 has a nice mix of stability from current verified revenue
and the potential for dramatic revenue generation. Ceocfointerviews: As the company grows the demands become more
demanding. Is Prophet 21 adequately staffed and does the company have everything in place
should the demand rise even further? Mr. Boyle: Most definately. We practice what we preach. Prophet 21
uses CommerceCenter internally and we have armed ourselves with a number of experts within
our professional staff of 300. We have a very seasoned management team and some
great professionals in Prophet 21 with a lot of tenure. Knowledge with regards to
the industry is as important as anything else, because we are really selling business
expertise through technology. We are very well suited to handle the needs of the future. Ceocfointerviews: And how often do you send your own employees back
to school? Mr. Boyle: We only hire experienced people, but we do encourage
them to continue their education focusing primarily on industry programs so that they are
true experts in distribution. Ceocfointerviews: Being everything involved has to do with technology, if something were to go a blip would they still be able to recovery everything manually? Mr. Boyle: All businesses must have a disaster recovery or business
continuity program in case of a problem. We provide our customers a means to have minimal
business disruption in the event of a technology failure. If they follow the proper steps
with regards to safeguarding data and information we can rebuild systems almost
instantaneously. We offer hosting services so we can bring customers up on remote servers
that could serve their needs. It is important to protect yourself and to protect your
business because technology is an important part of any organization today. Ceocfointerviews: Do you have any closing statements or anything
you would like to add to my readers? Mr. Boyle: Only that I would encourage them to research Prophet 21.
There is a lot of information on the Web. Take a hard look at us and if you believe
in our technology, then this is a company that you should follow. disclaimers |
