By Jessica Twentyman
London Bridge Software Holdings Plc, a UK-based credit management software house has found a new source of revenue growth with the acquisition of Hatton Blue Ltd, a Warwickshire, UK-based supplier of customer relationship management (CRM) software. When the deal was announced earlier this week, (CI No 3,352), many were puzzled as to why London Bridge agreed to pay up to 21m pounds for a little known outfit. But the company has come far in a short period of time. Hatton Blue’s co-founders, Paul Ratcliff and Craig Smith, first met at Warwick Business School in the early nineties, where they were both studying for an MBA. During the course of their studies, says Smith, they recognized that the British attitude towards customer service – which had long suffered a poor reputation – was changing radically. On completing the course, Ratcliff and Smith established Hatton Blue in 1992 and set about designing a software package which would enable companies to improve service, sales and business throughput. Having built a demo package of its CRM package, Vectus, they showed it to UK venture capital house, 3i, and were able to secure 250,000 pounds funding immediately, which was followed by a further 250,000 pounds a year later. The investment enabled Hatton Blue to take on a small team of professional software programmers to write the first commercial release of Vectus, aimed specifically at the legal market, and designed to improve the efficiency of case management. The company was soon to broaden its scope beyond the legal sector, however, although the opportunity to do so came through one of its legal customers, who mentioned the package to UK systems vendor ICL. ICL demonstrated Vectus at an IT conference in Edinburgh, and as a result, Hatton Blue was asked to develop a similar system for the Royal Bank of Scotland. Several other major accounts soon followed from Sainsburys Bank, the Department of Social Security, and telephone bank, First Direct. In addition to accruing an impressive list of customers, the company was also experiencing rapid growth at the time of its acquisition. For its 1998 fiscal year, which ended June 30, the company posted sales of $3.3m, and had forecast turnover to double to around $7m in 1999. Furthermore, while Hatton Blue and London Bridge share a similar customer base, encompassing the financial services, legal, government and utilities markets, their software is complementary; London Bridge’s RMS package handles debt recovery, and the addition of Vectus enables it to extend into the whole credit management process, including the cross-selling of products and services. Without London Bridge, however, Hatton Blue’s future was far from secure. The company badly needed to diversify rapidly into international markets if it was to compete against market leaders such as Siebel Systems, Onyx and Vantive in the fiercely competitive CRM space. London Bridge, by contrast, made aggressive inroads into the US market in 1998, winning a major contract with the US Department of Justice and snapping up Atlanta, Georgia-based mortgage software company, CheckFree Corp.
