How I made it; Interview; Des Speed
Sunday Times: Sunday November 25, 2007
One of the great ironies of Des Speed’s move from Belfast to Washington DC, as he readily points out himself, is that he gets to meet Northern Ireland politicians more frequently in the US capital than he did at home in Belfast.
Lagan Technologies, the software company he runs, is “the only show in town” when Stormont ministers want to showcase a high-growth, high-technology, indigenous Northern Ireland company.
When he arrived at Lagan in 1999, the company had just 10 employees and was in every danger of going under.
With more than 250 employees and a turnover of Pounds 14.3m (E20.5m) last year, Lagan is still hardly a heavy-hitter in global terms, but it has averaged a 65% growth rate since 2000. It has also notched up 45 US-based customers for its case management and customer relationship management (CRM) software, in addition to about 110 UK customers. Speed cut his teeth working at most of the big names in Northern Ireland industry -Shorts, Harland and Wolff, Northern Ireland Electricity -before he arrived at Lagan.
“I always had a hankering to start a business, but I hadn’t a clue how to go about it,” he said. “I did some research with a friend, but we hadn’t the funding, knowledge or confidence to go out on our own.”
The offer to take over at Lagan was as close to a start-up as he could get. “There were two world-class technical guys there, but what the business lacked was commercial skills -how to sell, how to operate finance, that sort of stuff,” he said.
Lagan Technologies was founded in 1994 as a software services company in the telecoms market. Speed’s first decision was to turn it into a product company. “We closed down the telecoms software business, which is where we were making money, but which was sucking in all our best people,” he said.
“At that stage, we didn’t have venture-capital funding, but we felt that if we had any belief in the future, we just had to do it.”
Five years’ experience of working with telcos meant it didn’t take the company long to come up with its first product, a customer management tool. A few months after Speed took over, it was developed and sold to a Jordanian mobile-phone company. In early 2000, the company got a welcome cash injection of Pounds 500,000 from the founders of Apion, the Belfast-based software company, which had recently been sold. By then, however, the telco sector, Lagan’s main market, was in the throes of a massive downturn following the dotcom bubble burst.
“We were casting about for alternative markets when several directives came out of Europe on modernising government through IT. The only government that took it seriously was the Blair government and in 2000 they ring-fenced about Pounds 2billion for these kinds of projects,” said Speed.
Lagan’s CRM product was quickly adapted for the local government market and through a mixture of hard work and good luck, the company found itself on the shortlist for a Pounds 1.5m project at Birmingham city council, the largest in the UK. “We thought we hadn’t a chance,”said Speed.
But Lagan won the contract, and a year and a half later Birmingham was winning awards for its e-government offerings. “We assumed, naively, that having won Birmingham we’d be holding back all-comers,” said Speed. “But nothing happened for over a year. It turned out that other government organisations thought Birmingham had made this quirky decision and they’d wait and see.”
After the awards, the contracts came rolling in. By 2003, Lagan Technologies was the largest provider of CRM to local authorities across Britain. “In terms of strategy, we began to feel we could do more,” he said.
The company looked at various markets, but decided Europe was too protectionist, Asia too difficult to understand and Australia too small and far away. In front-facing local government systems, the US was widely agreed to be in the early stage of development. “We were also very encouraged by Gartner Research that said software would work there,” said Speed.
Following a favourable response from potential customers during a visit to Virginia, Speed decided to tackle America. “It’s an expensive place to do business. It’s a potential graveyard because you just get seduced by the scale.” The company raised funding in 2004 and Speed and other colleagues “lived out of a suitcase” to test how much interest there was in the product. By early 2005, the company had opened its office in Washington and a year later Speed had moved to the US capital. “I couldn’t get comfortable growing something as significant as that 3,000 miles away,” he said. The UK business still accounts for about 70% of turnover and continues to grow. But because of its size, the US has the most potential growth. It is costly, however, and while the UK returns a “healthy profit”, the US business is still in investment mode.