The 2008 Great Lakes IT Report Spring Tech Tour kicked off with a bang Wednesday in Kalamazoo, where the fine folks at the veteran IT shop BlueGranite made space available for me to visit with the best tech in southwest Michigan.
As a bonus, ConnecTech, the association for technology professionals managed by Automation Alley, brought a few extra folks in for a Microsoft Corp. presentation, "Security Between Friends: Protecting Proprietary Information At Work."
The day began with an interview with David Walker, who runs an software process quality consulting business out of his Paw Paw home. An Indiana native, he studied computer science at DeVry Institute and Northwestern University, then worked for AT&T Bell Labs, Motorola and Abbott Laboratories before coming to Kalamazoo to work in the IT group at the former Upjohn Corp.
When Pfizer Inc. took over Upjohn, Walker left, and he's been consulting since 2003.
Walker has been working with the Software Engineering Institute's Capability Maturity Model Integrated, a measure of the sophistication of a software development operation, since 1993, when he was with Motorola.
Today, he consults in CMMI and other software quality assurance issues with a variety of clients in Michigan and Canada, including the medical device and aerospace industries.
"I know the medical device industry really well, and I know what the FDA is trying to do in regulating medical device software, and companies are struggling with that," Walker said.
Walker is currently pursuing lead appraiser and instructor status in CMMI.
More at www.davidwalkerspcs.com.
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Next up was a visit from Marty A. Ulanski, executive vice president of sales at Portage software developers Manatron Inc.
Manatron is one of those old-line Michigan tech employers that's been around for decades, but is part of a unique business strategy now.
Manatron formerly marketed a suite of software that could manage a county's entire operations, from judiciary management to voter registration to finances to taxes. "The philosophy was to be everything you could be to the county, but it's just such a complex market," Ulanski said. "We had a financial application without having one CPA on our staff."
So, Manatron systematically sold off everything but its property tax software, and plowed the money into research into improving that software -- because even tax administration software is complex, stretching from property tax records in the Register of Deeds office to assessment in the County Equalization office to tax payment and distribution in the County Treasurer's office.
Manatron was also a publicly held company, conducting an IPO in 1986 when it had a mere $10 million in sales. But at $50 million in sales now, the compliance costs associated with being publicly traded were large and growing.
That's when Manatron got a buyout offer from Thoma Cressey Bravo, a San Francisco private equity firm. Ulanski said Manatron officials first heard "private equity" and shuddered, figuring TCB would simply buy the company and dismantle it. But Ulanski said TCB has a different strategy -- looking for businesses where the providers are small and fragmented, buying one of the biggest and best as a platform company, then buying out smaller competitors.
That's what TCB has done with Manatron, providing the capital to take the company private and make numerous acquisitons.
"We're looking at about 30 companies, actively talking to them about acquiring them," Ulanski said. "We want to take the company to $120 million in revenue in the next three years ... The goal is to do an acquisition a quarter, starting six months after we closed with TCB, which was April 1."
So it looks like Manatron will be growing beyond its current 340 employees, of whom about 100 are in Portage.
And being privately held is saving Manatron about $2 million a year in compliance costs.
By the way, Ulanski said Manatron is hiring, particularly people with experience in both technology and local government taxation. Developers in the C# and .Net areas are also in demand.
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Stephen Antisdel used to sell furniture. Now he sells Web visibility.
AVID Commerce of Berrien Springs has roots going back to 1996, as the skunk works of his original Web site, Furniture Find.
Antisdel's uncles owned a small furniture chain, with stores in Buchanan, New Buffalo and Niles in southwest Michigan. "We bought the business in 1996, and my great idea was, we'll put up a Web site -- and we inadvertantly stumbled into very high rankings on search engines, so we started getting calls from all over the country," Antisdel said. "We knew we should respond and built FurnitureFind.com as a result. But we also realized it was just dumb luck that we came up high on search engines, so we put together this skunk works to learn more about getting up high on search engines. And we wanted to know how you convert hits into sales, so we got into usability."
Antisdel sold FurnitureFind to the venture capitalists at Furniture.com in 2003, but retained the intellectual property that today is marketed as AVID Commerce.
Today, AVID consults with companies looking to set up or improve e-commerce operations. "We look for niche spaces where someone really has identified their customers well, and figured out how to serve their customers well, and has some kind of competitive advantage," Antisdel said. "We can improve it with better design and better visibility."
A case in point is the Working Persons Store, a retailer of work clothes from manufacturers like Carhartt and Dickies -- in tiny Lakeville, Ind., population 490. The store was already drawing clientele from a 100-mile radius and had a decent Web site, and in 2005 AVID signed them on as a customer, in part paid by equity in the store.
By 2007, AVID had helped boost their sales 800 percent.
"We found an underserved niche, one big enough to scale a sizable business," Antisdel said.
Most recently, AVID has signed a Michigan company called Conceivex, which is marketing an online "Conception Kit" that is the only FDA-reviewed medical device to boost the chances of pregnancy for couples struggling with infertility. It's $299 -- far less expensive than the average of more than $3,000 that hundreds of thousands of infertile couples spend every year at clinics.
Antisdel said the Conception Kit Web site will be rebuilt on the AVID Platform, technology that contributes to search engine visibility.
Other clients include JL Powell, a Three Oaks retailer whose JLPowellellUSA.com. Web site sells high-end men's clothing, and Art Passions, an Ithaca supplier of framed art to furniture stores that's now trying to break into the business-to-consumer market.
AVID, by the way, is an acronym, for Advanced Vertically Integrated Dialectic. That last word, Antisdel said, refers to the constant feedback loop required for a successful Web strategy.
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Next it was a visit with one of those guys who makes your realize just how much smarter scientists are than those of us with squishy liberal arts degrees: Robert C. Gadwood, a co-founder of Kalexsyn, a pharma startup in Western Michigan University's Business Technology and Research Park.
Kalexsyn opened in the Southwest Michigan Innovation Center in 2004. Both founders, Gadwood and David Zimmerman, were researchers with Upjohn Co., the Kalamazoo-born pharmaceutical company that first merged with Sweden's Pharmacia, then was bought out by Pfizer, which slashed research employment in the Kalamazoo area.
Kalexsyn is a chemistry company that makes compounds for pharmaceutical and other life sciences companies. The compounds are used in drug discovery and as reference standards.
Kalexsyn is one of the SMIC's success stories, as it "graduated" from the incubator and moved into its own 20,000-square-foot building at the BTR park lsat November.
The company has 25 employees and is hiring, although only people with advanced degrees in chemistry.
Kalexsyn serves a variety of biotech and pharma companies, mostly small and mid-sized ones. Says Gadwood: "Large pharma has decided cost is more important than quality so they have gone almost exclusively offshore, to India and China," despite ongoing problems with "quality and rework issues." The smaller companies still want their chemicals produced domestically, Gadwood said.
Kalexsyn is branching out internationally, with customers in Japan and Europe. "Compared to Japan we're a low cost provider," Gadwood said.
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I ended the day with a tour of the Southwest Michigan Innovation Center, the 58,000-square-foot building that opened in 2003, shortly after Pfizer announced it would close down all human drug discovery in the Kalamazoo area.
That cost the region 2,000 jobs.
But Fred J. Einspahr -- an Upjohn retiree who took over the center as CEO in 2006 -- says he believes the SMIC will replace those jobs within a few years.
The SMIC is about to break ground on an 11,000 square foot expansion that will increase the building's capacity from about 120 employees to 160. Based on the 30 percent annual growth rate in firms at the center, and its track record of graduating operations like Kalexsyn out -- seven so far -- it won't be that long before job growth in Kalamazoo that can be attributed to SMIC hits 2,000, Einspahr said.
Indeed, Kalamazoo County is now touting Southwest Michigan as a "front door to the U.S. biotech industry" with a "virtual pharmaceutical company," a group of small biotech and pharma firm that can handle any pharma task, from all types of early drug discovery through all levels of testing.
The SMIC's bills are paid about 75 percent by rent -- new tenants get the cheapest rates, with rates gradually rising over six years in order to encourage companies to "graduate" from the incubator and move out -- with the other 25 percent covered by the local economic development agency, Southwest Michigan First, local property taxes and the Michigan Economic Development Corp.
The region also houses some biotech startups at Kalamazoo Valley Community College's Michigan Technical Education Center, which also contains a drug candidate screening operation that is unrivalled among community college in its speed and sophistication.
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After a lunch with ConnecTech officials, it was off to Grand Rapids, Thursday's stop on the Tech Tour. Because it's a short ride I took the old highway -- Douglas Avenue in Kalamazoo County, A45 in Allegan County and Division Street in Kent County, the various names for old US-131. It's scenic, hilly and forested in many places, with a lot of Up North feel. And the Chevy Tahoe Hybrid gets absolutely amazing mileage at 59 mph -- upwards of 25 mpg.
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