DEMOCRATIZATION OF SOFTWARE

Chris Perram never imagined himself as a software entrepreneur. He started out in 2000 as a management information consultant, helping companies manage the mounds of digital information piling up on hundreds of hard drives. Now he’s chief executive of his own software company, FileFacets, and recently raised $4 million in funding, is managing a network of global resellers and admits he’s learning it all as he goes along.

FileFacets is a software as a service, or SaaS, company that offers a product that helps customers manage their information. However, the company doesn’t install it. Instead, it pays Microsoft to run its software using its Azure cloud computing service, and then charges clients a monthly fee to access it via their browsers.

Monthly recurring revenue, or MRR, is a model that has spawned several Canadian success stories, including Toronto-based Freshbooks and Vancouver’s Hootsuite.

Perram is a graduate of L-SPARK, an Ottawa-based accelerator for SaaS companies. Created by investment management firm Wesley Clover and Invest Ottawa, it provides mentorship for SaaS firms, explains Leo Lax, its executive managing director.

“This business model is so attractive because of the democratization of software,” he said. It brings complex software to customers that previously couldn’t afford to license and operate it.

Perram, however, targeted large businesses and government, rather than the small to mid-sized businesses or consumers who tend to buy SaaS. Instead of the $10 a month an SMB might pay for an online bookkeeping system, FileFacets’ customers typically pay between $2,000 and $5,000 a month. They’ll use the service for 32 months on average to help with long-term information management projects, and FileFacets’ margins are upward of 95 per cent.

As firms grow, employees inevitably store documents on the computers at their desk, and will arrange it in their own ways. One person might use a different folder for each year. Another might structure files by project. This creates a fragmented and confusing array of information that is difficult for senior executives to collate and use.

As a consultant, Perram helped managers collect files from across the organization and create companywide standards for storing it, called taxonomies. He developed his own software tool to do this faster. His consulting firm reached 34 staff with $4 million in services revenue, but it was stagnating.

“We were having a lot of success but it was hard,” he said. Employees were scattered across North America and each project involved travelling to customer sites. “It was getting to be something that could no longer scale, but we’d built this really cool product.”

In 2013, Perram pivoted the business, cutting the consulting work and concentrating on building a product other consulting firms could use to do the same work.

He participated in L-SPARK’s nine-month Accelerator program from October 2015 until this June. Rather than funding, the company provides mentorship and helps entrepreneurs contact potential investors. He grew his recurring revenue to $107,000 a month from $4,000 during his time at the accelerator.

Jane Wang, CEO of Optimity, is another L-SPARK graduate who pivoted to SaaS. In 2013, she launched MyHealthSphere, a mobile health coaching app for consumers. Selling B2C health coaching as an app was difficult because it takes a large investment to tackle the consumer market, she said. “Optimity was a rebrand of MyHealthSphere as it became a corporate wellness provider,” she said.

Optimity sells its service to human resources departments that want to educate employees on good health practices to help lower group health insurance costs. The SaaS service delivers a library of content via a mobile Chris Perram, CEO of FileFacets, pivoted from being a consultancy to a software as a service provider.