Emerging to Applause

BOSTON (06/12/2000) - Many of the companies named to Computerworld's Top 100 Emerging Companies list have racked up one big win after another in the seven months since the list was published in November. Like other hot companies, the three profiled here can boast growing sales, successful initial public offerings (IPO), new product releases and other milestones.

These companies also exemplify character traits the best firms must have to continue to prosper - creative problem solving, employee-centric management and the desire to win.

Tweaking Technology

Jane Kirkland worried a lot about the shaky Internet infrastructure in Asia last March. But instead of merely fretting about it, she worked overtime tweaking what she could to ensure that the largest reverse auction involving Asian suppliers to date would go off without a hitch.

What troubled FreeMarkets Inc.'s CIO most was Carrier Corp. The subsidiary of United Technologies Corp. needed to buy more than $200 million worth of AC/DC motors for its HVAC systems over a period of three years.

Carrier wanted to use FreeMarkets' online marketplace to solicit bids from 50 companies in seven countries throughout Asia and the Pacific Rim. Problem was, not all of the suppliers had the same level of Internet access or technical capabilities.

That disparity posed a substantial technical challenge for the two-day bidding war, which was to be completely restricted to cyberspace.

To make certain that every supplier was on equal footing and that Carrier got the best deal on parts, Kirkland jetted to Singapore, Hong Kong and New Delhi and contacted each of the suppliers, going over their technical operations with a fine-tooth comb. She oversaw numerous mock bidding events to ensure that none of the suppliers would be left behind.

The auction was simulcast live on FreeMarkets' Web site to 16 Carrier locations, where buyers reviewed the bids from the various suppliers. According to Geraud Darnis, president of Carrier's Asia-Pacific operations, the event "reinvented the way business is done in Asia."

Kirkland says the Carrier deal underscored the value her company's Web business offers to mainstream manufacturing companies - companies that have already transacted $5.4 billion of business in Pittsburgh-based FreeMarkets' online marketplace.

Acquiring Success

A strategy of gobbling up new customers quickly has been one of the underpinnings of Kana Communications Inc.'s growth strategy during the past six months. One of the fastest ways to do that is through acquisitions, but that can often be disruptive and cause more problems than it solves.

Kana strives to integrate new companies quickly and smoothly. And it doesn't just pay lip service to the concept. In April, after Kana completed its $4.2 billion purchase of Silknet Software Inc., it flew all 300 of its newly acquired employees from Manchester, New Hampshire, to a company get-together at a Marriott hotel in Santa Clara, California.

In the throes of growing pains that ballooned the company's payroll from fewer than 70 people last June to more than 800 as of March, Kana executives recognized that knitting together different companies would require exquisite skill and care. So the Redwood City, Califo-based developer of online customer communications software shut down its operations for three days to woo new staff members from Silknet and last year's acquisitions, including Connectify Inc. and NetDialog Inc.

To help break the ice among so many strangers at the meeting, Kana CEO Michael McCloskey asked the attendees to look under their seats, where each person found an envelope containing a certificate for 100 shares of stock in the new public company.

Bringing the right mix of people together has been key to Kana's success, according to Bala Srinivasa, an analyst at Pacific Growth Equities Inc. in San Francisco.

Srinivasa likens Kana's industry to the customer relationship management market during its period of consolidation a few years ago. "If you agree that it's consolidating, Kana looks like it's assembling the best pieces of technology and new customers," Srinivasa says.

Finally, It's About Selling

Upon his arrival as CEO of CommercialWare Inc. in January, Amesh Mehta immediately bet his salespeople at the Natick, Massachusetts-based retail e-commerce software maker that he could outsell all of them and still do his job. At stake: a cool $2,000 to the one who nailed the first prospect.

"I challenged the sales force to call prospects," he says. "And I beat them," he adds, recalling how he brought in Casual Corner Group Inc. in Enfield, Connecticut, as the first new customer.

Analysts who know Mehta, such as Janet Suleski at AMR Research Inc. in Boston, say he's an "exceptional" leader. Suleski praises Mehta for sharp recruiting, fixing the company's marketing message and cutting key deals with IBM and San Mateo, California-based Blue Martini Inc. She says she believes CommercialWare should continue to thrive in the retail application software market, which she expects to grow 36% this year.

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Customer

Owens Corning

Product/service used: Used FreeMarkets Inc. products and services to buy and sell materials and services such as motor freight contracts and plastic packaging.

Benefit gained: The glass fiber and composite materials maker says it has surpassed savings goals of 5% by using the auctions but wouldn't disclose exact amounts.

Why customer chose FreeMarkets: Owens officials say they like the services FreeMarkets offers such as making sure the proper buyers and sellers are online.

Quote: "[Online auctions and procurement have] taken procurements from being perceived as just playing golf and sitting around eating doughnuts to being a strategic part of the business." - John Gellatly, procurement leader at Owens Corning.

Company

FreeMarkets Inc.

Product/service: BidWare auction-hosting software and an auction-hosting service.

Reason for success: Not only provides auction software but also helps to ensure that the right bidders participate in the auctions. A market operations team works with customers to ensure that the proper bidders are invited to auctions and that they are connected and in attendance when the auction begins.

Recent milestone: Officials said FreeMarkets moved $2.7 billion worth of goods through its service last year. The start-up also reported revenue of $21 million, a 167% increase from the previous year.

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Customer

Passport Health Communications Inc.

Product/service used: EdgeNet Inc.'s Bondware tool, which was billed as a tool for developing community portals.

Result: Passport said Bondware was too difficult and expensive to customize.

The company is now building a new community site with ColdFusion from Allaire Corp.

Quote: "From a small community perspective, in theory, Bondware is a good idea.

But as far as being a distinctive site development tool, its just not there." - Greg George, Web administrator at Passport Health.

Company

EdgeNet Inc.

Product/service: Founded in 1993 as an Internet service provider (ISP), EdgeNet sold the ISP portion of its business in April 1999 to focus on selling a Web development language and software to handle online sales of configurable products.

Reason for downturn: Since selling its ISP operation, EdgeNet has cut its staff from 42 to 20 people and has seen its revenue shrink from more than $4 million to less than $2 million.

Recent milestone: Released last September, Bondware is touted by EdgeNet as an inexpensive application for creating community-oriented Web sites.

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