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DATASERV COMPETES TO MANAGE
ELECTRONIC DOCUMENTS
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By Brian R. Hook
St. Louis-based DataServ LLC is fending off competitors and warding away buyers, while working to maintain its competitive edge and strong rate of growth.
DataServ, an electronic document management company, recorded growth of 920 percent from 1999 to 2004, reports Jeff Haller, managing partner at DataServ. He expects it to grow another 40 percent this year. Haller says he prefers not to release specific revenue numbers, noting that DataServ is privately held. But Hoover’s Inc., a provider of market intelligence, estimates that DataServ had revenues of $2.3 million in 2003.
 David Berndt, co-founder; Kathi Haller, partner
Jeff Haller, managing partner |
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It’s numbers like these that have potential buyers interested. Haller says DataServ has been approached six times already this year. “It is a sellers market right now and there are a lot of people out there with money,” he says. But selling is not on his agenda. “We’ve put a lot of energy and effort into this,” he says. “We don’t think that the best way to leverage this is to sell out. We’re committed to our employees and to our clients.”
DataServ is headquartered in Town and Country and currently has 54 employees. Three partners, including Haller, own and operate DataServ. Haller describes David Berndt, co-founder, as the technical expert. Haller says his wife and now business partner, Kathi Haller—who joined the company seven years ago—is the financial expert. As managing partner, Haller says that his business skill set is sales and marketing.
Up until now, he says everything has been internally funded at DataServ. While Haller says selling is not on the agenda, buying is an option. That’s why he says DataServ is looking for outside investment. Haller says the plan is to stay private. Therefore, he would prefer a small group of investors. He says part of the money might be used for acquisitions. “We are pursuing several possible acquisition strategies. We’re trying to pick the right one and we will probably pursue two of them simultaneously,” he says.
Competitors have taken notice. “We’ve had lots of competitors pop up, many of them in St. Louis, who have tried a similar model and they tend to not provide all of the services that we do,” Haller says. “It’s actually been a good thing for us frankly.” He says many of the competitors have spent a lot of money on marketing over the years. He says this has actually helped to educate the marketplace about services that DataServ provides.
So, what exactly does DataServ provide? The original concept for DataServ was based on businesses wanting access to the
latest technology for managing documents electronically. “There were a lot of people interested in it, but not a lot of people
who could provide that. There was a shortage of expertise,”
Haller says.
“We basically created DataServ to give people access to this capability and technology without having to buy the software, hire the people, bring in a big staff of consultants and spend a lot of money.” He says the model has not changed dramatically over the years. He says the service is broader, but the overall concept is the same.
Haller says DataServ sometimes competes with companies that develop electronic document management software. But he says DataServ does not develop the software. Instead, he says DataServ buys its software packages off the shelf, and has chosen instead to focus on implementation expertise.
Many companies, however, consider buying software before they sign up with DataServ, Haller says. “What we’ve always been able to do is take the best of breed packages and blend them together into a single service. It becomes one solution for the client,” he says. The client might end up with two different software products or three different services. “Either way, they are only working with one company,” Haller says.
“We began offering software that we use here that people would pay for as they went,” Haller says. Companies that provide this service are now commonly referred to as application service providers in the information technology world. “It sounds kind of normal now,” Haller says. “But at the time it sounded kind of weird.” Haller says that hosted software or ASP service is currently about 70 percent of the business at DataServ.
Of that amount, about 40 percent are using mailroom, scanning and indexing services provided by DataServ. Mail for a business client comes to a post office box in St. Louis. DataServ opens the mail for the client, scans it and puts it online to deliver it using workflow software. Therefore, on the mailroom side of the business, Haller says DataServ also finds itself competing with business process outsourcing providers.
Haller says ASP and BPO are starting
to converge. “That’s the trend that we’ve
been at the forefront of for the last couple
of years,” he says. “People feel like they can kind of get both at one time. They can get major improvements in productivity because of the software side, but they also get the ability to outsource” business processes like accounts payable, accounts receivable and some human resource functions.
Another 20 percent of DataServ’s business consist of selling clients software, Haller says. The final 10 percent is what Haller describes as a “hybrid solution.” For example, a company might buy the software, but DataServ manages it for them onsite.
One of DataServ’s customers is Don Janson, director of Emerson Business Services at St. Louis-based Emerson Electric Co. Janson says he chose DataServ a little over two years ago when Emerson was looking for a local company to support it on a small startup project. He says his division wanted to determine whether offshoring some back-office tasks would work. “The price was right for a startup,” Janson says.
Janson says the invoices for the Emerson division are first mailed to a business process outsourcer in Detroit. That outsourcer opens the mail and images the invoices. The electronic files are then passed to DataServ. It hosts the images and provides a file system for workers in Manila, Philippines, who get the electronic images and input the necessary information from the invoices into Emerson’s main computer system.
“They’ve helped us get away from paper and enabled the offshore
sourcing for some of our activities,” Janson says, referring to DataServ. He says his division has sent out a request for a quote on the entire process. He says that DataServ will probably bid on
the entire project, including both the mail sorting and the imaging. DataServ also now works with a number of other Emerson divisions. “It has worked out well,” Janson says.
Another customer is Jim Fox, senior vice president for Americas Business Services at Reuters’ offices in St. Louis. He says that the London-based firm has worked with DataServ for about four years. One of the new things, he says, is using a travel and expense document service from DataServ that allows Reuters to manage and automate the submission of expense receipts and the audit of reimbursements requests. “This has made our process three times more effective than it was previously,” Fox says.
“Reuters chose DataServ over other competitors because they had full-service offering including document management, workflow and outsourcing services combined with a very strong dedication to client service and partnering,” Fox says. He says that due to positive results, Reuters is planning to deploy DataServ on a global basis.
Going global has been one of the biggest challenges for DataServ, Haller says. “It’s kind of amazing, because we never really planned to be global. But we sort of made this jump from local straight to global,” he says, when DataServ went completely Web based with its service delivery in 1999. Now Haller says that 50 percent of the business is from St. Louis companies and the rest is from companies based around the globe.
But Haller says the plans are to keep the company headquartered in the St. Louis region. He says being located here is the key to success, mainly because of its central location. For starters, it helps with the mail service. “No matter where our clients are based, they can get it to St. Louis a little bit faster for the same price,” he says. Another reason is the central-time zone. Haller says it is easy to service clients on both coasts.
Haller says that DataServ may add regional sales teams in other cities within the next year. The next move might be a global-mail capture center. For international clients, Haller says, it does not make much sense for mail to come to St. Louis, due to international postage rates. But he says the global scanning center is dependent on clients.
“What we try to do and what we’ve always done here is base our growth on our client’s demands and our client’s needs, and we’ve just always been really good at listening to them and growing based on what they need,” Haller says. |
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