Interview with Dan Dube, Managing Director of SaaS


Software as a Service (SaaS) is a hot target in all software sectors today. The success of Salesforce.com has proven the concept
and many are emulating that model.
SaaS has been slow to grow in the general ECM space. One big proponent of SaaS in our sector is DocZone. We sat with Dan Dube, Managing Director, to get his insight into this offering

Q. Can we begin with a brief history and introduction of DocZone, and tell us about your business vision and strategy??
A. DocZone.com® came to market in 2005 as a spin off from Scriptware, a Netherlands-based provider of localization services. From our collective experience, working with global companies, we saw the benefits of multilingual content management and publishing technologies to help significantly reduce the cost of producing information for global delivery (by 50-70% or more) and dramatically improve process efficiency and time to market (from months to hours or days). However, the price tag associated with purchasing and implementing this technology was cost-prohibitive to the vast majority of companies that appreciated the benefits.

Our vision was to provide the proven benefits of these technologies in a bundled subscription service that could be implemented very quickly and offered at an extremely affordable price. With the “on demand” Software-as-a-Service (SaaS) business model, the return on investment for this technology is now almost immediate (less than a month!). Our customers are seeing their historical production schedules reduced by weeks and the cost of their translation is being cut in half.

Q. Which markets are your key markets and account for the majority of your sales?
A. We currently have a rather horizontal market approach. The primary users of our solution are responsible for producing technical documentation, training materials, online help, product data sheets, catalogs and other information that needs to be produced in print and/or web delivery formats. As a result, our customers come from a number of different industries, including healthcare/medical devices, high tech manufacturing, energy, automotive and financial.

Q. In which regions do you have the greatest presence? What is your business percentage per region?
A. Approximately 80% of our current business is in North America, with the remainder in Europe. Over the next 24 months, we expect this breakdown to shift to 70% North America, 20% Europe, and 10% Asia/South Pacific.

Q. Can you discuss some of the opportunities available to you? Where do you see the biggest growth opportunities?
A. Without getting into specifics, we see some tremendous growth opportunities in the publishing/media sector, healthcare and financial.

Q. Is your sector or area sector showing good growth dynamics?
A. The Software-as-a-Service business model is certainly generating a lot of industry buzz, as exemplified by the enormous success of companies like Salesforce.com. DocZone.com was the first to market with a SaaS solution for XML content management and we are seeing greater demand and shorter sales cycles with each passing quarter.

Q. In a wider sense, can you talk about the drivers that are at play, and then bring it back to your company and give us a sense of how you’ve been able to tap into these drivers?
A. The biggest factors at play are the following: the increasingly global economy (especially with the expansion of the European Union), the constant pressure to simultaneously ship products globally (with supporting documentation in the local language of each country), and the prohibitive cost and time required to localize content to all required languages.

The DocZone solution addresses these drivers by using automation to improve efficiencies in creating, translating and publishing multilingual content deliverables. This leads to faster turnaround times and dramatically reduced costs for translation and production. The ROI is almost immediate in most cases, usually just through the reduction in translation costs.

Q. How would you characterize the current business and economic environment?
A. The severe “drought” in technology investment that followed September 11, 2001 is mercifully behind us. However, today's technology buyers are much better informed and much more cost-conscious. I believe this is one reason for the increased interest in the SaaS business model. Lower cost of acquisition, faster deployment time and less internal IT overhead make the business case more compelling for a SaaS solution.

Q. How would you like to see your business develop over the coming 12 or 18 months? Are there any key initiatives or targets that you are gearing up for?
A. Over the next 12-18 months, we expect a significant increase in quarter-to-quarter sales across a variety of industries. This year, we intend to focus even more on certain vertical markets where we have identified a need for a service such as ours. These markets include financial printing, journal publishing and healthcare.

Q. Are those objectives likely to be achieved through organic growth or do you have an ear to the ground for acquisition opportunities as well?
A. Our primary business plan is currently focused on organic growth. However, we are always open to creative opportunities to either acquire other companies or to sell a stake in DocZone.com...if there is a compelling business argument.

Q. Are you able to quantify your market opportunities, your target market size and the slice of that market that is available for your solutions?
A. In the most current version of our business plan, we are using statistics from research firm InfoTrends to define the slice of market that directly applies to DocZone in its current implementation. According to InfoTrends research, the market for XML content management systems by 2009 will be approximately USD$145MM. We intend to control 10% of the market by that time. However, we feel these numbers are too conservative, because they do not take the growing overlap between XML content management and ECM into account, so we feel that this market is actually much larger. In addition, the SaaS business model is also not included in their research, which we feel will have a positive impact on the market size.

Q. What are the components of your revenue? How much of your revenue comes from maintenance and services?
A. Well, this is difficult to classify by traditional measurement criteria. In essence, our entire “product” offering is a service, since there is no actual software purchase involved. Our standard pricing is broken into two components: a one-time “setup” fee to help new clients quickly get up and running into production with the DocZone environment, and then we charge for ongoing monthly license fees, based on concurrent DocZone users.

Q. Who are you running up against in terms of competition? Who do you consider to be your primary competitors? Do you see ethical behavior all the time?
A. We are primarily running into the “traditional” CMS vendors who cater to the technical publications/training community. On the “low end” of the price scale, we typically see AuthorIT and SiberLogic. On the higher end, we usually see Astoria and/or Vasont and/or XyEnterprise. (Of these, only Astoria has recently started to actively promote an “on demand” version of their product.) For the most part, the behavior of all of these companies is professional and ethical. For our part, I will happily compete against any and all of these vendors, as I feel that we have the most compelling price/performance ratio and the fastest deployment to full production use.

Q. So will there be consolidation on the horizon? What are your thoughts about consolidation? Is it a threat? - An opportunity?
A. I'm not convinced that the market in this niche space is big enough to support consolidation...but I do think that some of the usual crowd will fade away. There are just too many vendors competing for the same limited amount of market share. That's why we are focusing downstream on the small to midsize businesses that can't afford the “traditional” products: we can provide an affordable alternative to a fast-growing and untapped piece of the market.

Q. What enables you to play successfully in this space?
A. We offer the most functionality for the lowest total cost of ownership. We get our customers into production with our system much faster than any of our competitors can. We are staffed with veterans of the industry who are highly experienced and professional. And, most importantly, we value customer satisfaction above everything else. Our best selling tool is our ability to point to satisfied customers who continue to purchase more licenses and renew their contracts.

Q. Has it been a challenge for management to maintain the focus as you’ve grown and do you have the team in place now to make sure you can execute on your objectives going forward?
A. Of course, as an early stage company in our first two years of growth, we have had numerous challenges and worn many hats. We do have a seasoned team running the company with deep breadth of experience and knowledge and we have a strong plan for continuing to grow the business by adding the right team to introduce new product offerings, penetrate new markets and build our revenues.

Q. What are going to be the main challenges for you to overcome?
A. As might be expected with a subscription-based model, cash flow in the early stages of the company is more challenging to manage. Unlike traditional product vendors, we do not get paid “up front”...our customers pay on a monthly cycle. The good side of this model is that cash flow is predictable over an extended time duration. The downside is that you need to have several customers paying you simultaneously to have strong cash reserves. This problem will lessen over time as we continue to build our base of satisfied, paying customers.

Q. The entire field of Document Management, Content Management, and Business Process Management has been set for explosive growth over the last several years. However, growth has not actually matched those predictions. What’s wrong? Are vendors not performing?
A. That is certainly one problem. A former boss of mine used to quote that approximately 90% of content management implementation projects ultimately fail to get into full production. That's a staggering number and a fact that is not often publicized. These products are very difficult to implement properly; they are often a mix of several different products (e.g., authoring tools, workflow, database, publishing tools, etc.) that need a lot of custom integration in order to fulfill customer requirements. As a result, sales cycles are long (often 12-18 months) and the implementation cycles are equally long. These are not factors that support “explosive growth”.

We believe that we have solved much of that problem by offering an end-to-end solution that is already packaged and ready to deploy. The customer only needs to pay a monthly fee and have internet access to start using our platform. By removing most of the barriers to entry, it is possible (we think inevitable) that the explosive growth will come.

Q. Where do you want to take the company in the long term? What will your company look like in 3 – 5 years?
A. In the next 3-5 years, we anticipate that DocZone.com will be recognized as an industry leader for hosted content management. We plan to offer a suite of product solutions and services that will be available via subscription. What we offer today is only the tip of the iceberg of what we plan to make available in the next 36 months. We are leaving the door open so that we may be at least partially owned by a larger software or service provider.

Q. What is the mission and the vision that drives your company?
A. Our mission is to make the benefits of standards-based technology available at the most affordable price, with the fastest ROI, for all companies that have the need to produce information...from the largest enterprise to the smallest business.

Our vision is to be the industry leader in hosted solutions for creating, managing, localizing and producing information products.

Q. What are the three or four best reasons for investors / customers (as appropriate) to look towards your company?

• Solid business model that can produce strong revenues with a high profit margin and positive cash flow as the number of customers scale.
• Seasoned management team and staff with a long-term vision and strategy to grow significant market share.
• Proven technology already successfully deployed to customers worldwide. Our customers are satisfied and happy to give references.
• Track record of being able to significantly reduce production expenses for our customers...often by 50% or more.