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Monday 18th December 2000

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Keylogix's Dot Johnstone goes global

It is the stuff of a business daydream. One phone call from small Kiwi software developer Keylogix led to a relationship with the world's largest software distributor, Microsoft.

Funny, how it came about. Earlier this year, Keylogix founder Dot Johnstone rang around her peers, seeking ideas

on how best to market her flagship software pro-duct, ActiveDocs. She contacted Trevor Eagle of Eagle Technology. "Ring up Bill Gates. Ask Microsoft to help you out," he said. After all, Microsoft will be a major beneficiary of the software.

Johnstone replied, "I can't do that". But she did, and though Bill Gates wasn't the right person, she found the one who was. Microsoft agreed to provide technical assistance and support to sell the product globally.

How important is the relationship? "We could have done it without them but it would have been a harder road to hoe. Having our name on officeupdate.microsoft.com opens the world to

us," Johnstone says.

Here's how automation works. A bank wants to set up a template for a mortgage document. Previously it would have needed a computer programmer. Using the recently launched ActiveDocs software, the bank can make the template in-house and then send the document to other branches. Gaps for individual variables, such as the branch name and amount borrowed, are provided by pre-installed prompts.

Without any formal IT qualifications, Johnstone (then 29) set up Keylogix in 1992, after spotting a gap in the market

for document automation. Her background included an IT project for merchant banker Morgan Grenfell in the United Kingdom, and a short stint as systems manager for the Auckland City Council on her return to New Zealand in 1991. It was at the council, grappling with automating hundreds of document templates mired in bureaucratic red tape, that she saw the opportunity to go out on her own, offering the service to other businesses.

It was a leap of faith. Her husband Mike was at law school, and they had no income. "Michael and I thought why not? We just didn't think twice about it."

Within four weeks, Television New Zealand was signed up as the first client and Air New Zealand followed soon after. She was on her way. Mind you, in the early days Johnstone worked Friday nights and Saturdays as a Villa Maria wine-tasting hostess, cleaned surrounding offices at night, and took in desktop publishing to help supplement the cashflow. "I wanted to work for myself so it was that old adage, 'you have to muck in'." Mike joined the company as chief executive in 1995, and Dot focused on business development.

After two years of development on ActiveDocs it is now make or break time for a transformed Keylogix. The husband and wife team flagged the core consultancy work some months ago, in order to concentrate on this one product. Staff numbers are about to double.

"Most people would look at it as a gamble. I look at it as a calculated and strategic opportunity. We have not gone into it blind. It has all been planned; we have done a complete analysis, understand the market and what opportunities are available internationally," Johnstone says.

Keylogix is already developing new ActiveDocs features for future Microsoft Office versions, and working on incorporating the same document automation into PowerPoint and Excel for slide presentations.

The Johnstones have sold 10% of their equity to a group of unnamed high-net-worth investors in New Zealand and Australia for $2 million. By February it will be spent, launching the product in Australia and the US. Chris Due (ex-Virtual Spectator) has taken one of six seats on the Keylogix board on behalf of the investor group. With a fully developed product and Microsoft as their partner, the Johnstones didn't see the need to give up a controlling stake. It is their story.

Merchant banker Tony Bishop, who put together the investor group, says the key is the people, then the product. "You can have the best product and not the right people and you're always going to struggle. Dot is an impressive lady with a good understanding of what the market wants."

As you would expect, Keylogix is geared for e-commerce, selling on its website www.keylogix.com, as well as through traditional sales and distribution channels. Johnstone has added some free advice to the website: "The next time someone says 'no', ask 'why not?'"

Fiona Rotherham

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