By Nikki Mandow
Friday 7th February 2003
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Not particularly impressed? Try this. Ring the Lucky Goldstar Home Shopping Channel in Korea and you'll get one of 2000 phone operators. It's a giant operation and again the software system that tells the telephonist that Mrs Kim lives in Pusan and her last purchase was an electric toothbrush comes not from an Asian or US corporate (though plenty make such systems) but from Agile.
Agile's call centre and other software products are on sale in a dozen Asian and European markets. Overseas sales made the company around $2 million last year, about 13% of total revenue. And that's just the start. With the software development phase largely done and discussions ongoing over entry into the US market, Agile general manager Tony Jayne reckons exports are due to really take off this year - and with it, the company's profitability. International software contracts (and the accompanying service) are very good earners.
How did the three-year-old, 43-employee company do it? Basically by persuading its main supplier, the vast ($US5 billion revenue in 2002, though, like so many other international telecommunications companies, loss-making at present) US-based telecommunications network supplier Avaya, to promote Agile products overseas. "We saw it as a cost-effective way to open up the Asian and other markets by going with a big channel. Avaya gets us the international exposure we could never afford otherwise," Jayne says.
Simple, huh? No, as a matter of fact. A company supplying its own telecommunications solutions to 90% of the Fortune 500 companies was about as keen to take on Agile's products as it would have been to adopt the proffered brainwaves of a kindergarten student. Like most large US companies, Avaya was (and still is) firmly of the opinion that no one outside Avaya could possibly make products as good as its own, Jayne says. New Zealand wasn't even on the radar screen for countries likely to produce good telecommunications software. Agile was an insignificant company on the other side of the world that sold a few Avaya boxes. End of relationship.
"We pushed, we used stealth, we allowed Avaya to shoot itself in the foot," says Matthew Bagley, director of software development and the guru behind most of Agile's software products. Bagley saw Avaya's main gap in the Asia-Pacific market was for foreign language programs. Avaya made great software, but if your Taiwanese call centre operator couldn't understand the English words onscreen, it wasn't much use. Bagley and his team created products and training manuals in local languages (they now have nine different languages plus English) and then pushed these products to their Avaya contacts. It worked - though slowly, much slower than the team had hoped. Avaya accepted the products were good and was swayed by the fact that if it sold the Agile systems under the Avaya brand, it didn't have to go through the laborious task of translating its own. Agile's is still the only product Avaya takes from a third party but sells as its own.
Having put Agile on Avaya's radar screen, Agile pushed some of its other products Avaya's way. Conscious that Avaya's products were high-end, expensive and intended for much larger operations than existed in New Zealand, Agile had developed its own cheaper software. Avaya's was good, sure, but the Agile team knew there must be companies in Asia and elsewhere that would be happy with a much simpler - and cheaper - product. Call centre systems are generally sold per "seat" - basically the number of separate operators that can be connected to the system - and Avaya's range costs about 10 times as much per seat as Agile's. "Of course, its systems do a lot more, but sometimes customers don't want to spend that much more for more functionality," Bagley says.
It was a cheeky move, asking your major supplier to sell your undercutting product alongside its own. But in the extremely competitive telecommunications software market, Avaya bought the idea. And in what could turn ou to be its biggest coup so far, Agile is in negotiations with Avaya over taking its products to the lucrative US market. If, as hoped, a US deal is signed this year, Jayne reckons major profits should start to flow into the company. Agile had revenue of $15 million last year and 20% growth, but most of that is still coming from the local bread-and-butter operations. It's the overseas market where the money is.
Never heard of Agile? You probably have in its original guise. It was formed in 1999 when David Charlesworth's Comworth Group (a telecommunications supplier and retailer), six Fisher & Paykel managers and three Comworth executives bought F&P's communications arm in a management buyout. The managers put in just under $100,000 each - a relatively significant sum for guys in their 30s with families and mortgages - and Comworth put in the rest, taking a 55% stake. Agile moved into Comworth premises and the company's 22 staff spent the first five months gloriously overworked with Y2K business. Then the market crashed, followed quickly by the worldwide telecommunications crash. For the next 12-18 months, times were extremely tight. The company restructured madly, cutting back on many services, splitting into three separate business units and looking at the overseas market. It worked. Agile, unlike many of its competitors, is still in existence and grew 30% in 2001 and 20% last year.
So what does Agile do differently from other Kiwi software companies? Take a look at its management structure. Although Charlesworth is managing director, it's the eight shareholder/managers that run the company and, partly because of their shareholding, they're a motivated bunch. "It is a high-tech business, so you rely on the talents and commitment of the staff involved," Charlesworth says. "They saw 5% ownership each as a way of providing an incentive and being totally committed to the business, so it seemed a logical structure." The theory worked. Despite some very bad months, only one of the original shareholders has left during the past three years and that was due to ill health.
Perhaps because there are so many bosses, it's an egalitarian regime. Stroll round Agile's Auckland headquarters and you'll find Jayne's desk is the fourth on the left in a totally open-plan office. Other directors sit within shouting distance at unprepossessing desks exactly like those of the staff surrounding them. Decisions are made in open conversations across the office.
Perhaps most important, the eight directors came to the company with complementary skills and have learnt from each other. The day Unlimited visited, Bagley was in the Agile laboratory (no test tubes, just serried ranks of computers) grinning ruefully at a coffee cup his team gave him recently that reads, "Do I look like a f***ing people person?" He says he would never have classified himself as a manager - he's a geek, happiest when writing software. Yet at Agile he heads a team of 20. "It's hard. But having a group of people around with a good mix of skills helps everyone learn." If you are a sole operator, he muses, "you don't know what you don't know".
At Agile, if you fall down in one area, your fellow managers will let you know. It is, after all, their money on the line.
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