Article

Going With The Workflow - Tenrox Software Tracks Time And Saves Money
Canadian Business magazine, April 1, 2002

Not many six-year-old software companies can boast Tenrox Inc.’s success: a 20,000-square-foot headquarters that it owns outright, no debt and no outside investors beyond family and friends. The founders aren’t even chartered accountants—and, no, they haven’t won a lottery, either. 

The Laval, Que. outfit, founded by four McGill University specialist grads, is fast making a name for itself with popular products and a disciplined, innovative, low-cost approach to doing business. "We call ourselves conservative risk takers," says Rudolf Melik, Tenrox’s 35-year-old president and CEO. It doesn’t hurt that the company is breaking ground in a hot new software market: Web-based applications that specifically help project-driven businesses like IT consulting and accounting firms or pharmaceutical companies manage projects, track time and expenses—and save buckets of money in the process. The emerging IT sector is known by two unwieldy handles, professional services automation (PSA) and service process optimization (SPO). 

Tenrox is just one of about 30 companies that have grabbed a foothold in this field (including Toronto’s Changepoint Corp.). All are working furiously to survive an impending market shakeout. Today’s PSA/SPO market may be small—about US$270 million annually worldwide—but according to Ted Kempf, an analyst with Connecticut-based research firm Gartner Dataquest, most major enterprise software makers now have the business clearly in their sights. "We think, by 2005, SPO software could be a US$1.6-billion market in terms of new license revenue," he predicts. 

It seems PSA/SPO software is a good fit for penny-pinching times. "When you’re looking at internal IT departments and divisions like the research and development arm of a pharmaceutical company," explains Kempf, "all of them are focused on cutting costs. They are looking for tools to help them become more efficient in their internal processes. That’s what SPO does." 

Tenrox’s solid financials are one clear strength. But a good set of products is critical, too. The company’s main product line—a suite of tools called Tenrox PSA—has sold well. To date, Tenrox has installations at approximately 700 companies in more than 50 countries, including such big-name clients as AT&T, Hewlett-Packard, IBM, EDS and BCE Emergis. 

Tenrox’s ultimate trump card, however, may be the same prudent, opportunistic thinking that has got it this far. In 1995, Melik—an Armenian from Iran who immigrated to Canada in 1983—teamed up with three former McGill colleagues (two Armenian-Iranians and a Palestinian from the Gaza Strip) to form their own IT consulting company. The founders needed some good time-tracking and project- management software, but from previous experience, they knew none existed and decided to create their own. By late 1997, the partners realized their home-grown software might have commercial value. They recruited Melik’s brother Ludwig—then a Future Shop sales manager and now Tenrox’s vice-president of sales and marketing—to put together an inexpensive Web-focused sales plan. "The first version was very crude, but we got lots of fantastic feedback,"  says Melik. "It spiraled from there." 

Today, Tenrox still relies heavily on the Web for marketing, product seminars, demos, customer relations—everything right up to closing a sale and delivering its software. "We rarely travel for free to see interested potential customers," says Melik. "Once a product is purchased, customers pay for Tenrox to work with them on installation and training." That has let Tenrox maintain a high proportion of staff working on product development, but that will change as the company now begins to place greater emphasis on sales. 

Innovative thinking is again the rule. Come April, watch your favorite online book retailer for a book written by Melik and several colleagues, entitled Professional Services Automation: Optimizing Project & Service Oriented Organizations. Analyst Kempf, who wrote the foreword, doesn’t agree with everything Melik has written, but he does say that the book reflects Tenrox’s most important strength: "What they understand as well as anybody are the workflows that organizations experience." 

Will that be enough to keep Tenrox in the PSA/SPO game? Melik’s only concern is Tenrox’s relatively small revenue. Even if sales keep doubling annually, it’s possible that Melik is contemplating faster growth by acquisition. While that would mean taking on outside funding, he refuses to rule it out. "We think we are a tiny company," he says. "We feel that we can do a lot more."