1Mby1M Deal Radar 2011: iOffice Corp, Houston, Texas

There will be a need for companies that provide facility management services as long as people need to go to work. Companies like the Houston, Texas–based iOffice Corp are valuable not only because organizations have to provide comfortable, functional workplaces for their employees, but because iOffice in particular makes it easy and affordable for them to do so.

Founded in 2000, iOffice is a software and consulting services company that provides solutions for commercial tenants, property managers, and facility professionals. With the help of facility management experts, the company developed solutions that are tailored to meet each customer’s specific needs and budget.

The services iOffice offers are its integrated workplace management application, which is a modular, configurable SaaS solution that allows companies to manage internal corporate services such as temperature and lighting; relocation management streamlines moving, whether the customer is moving to, from, or within a large office location, campus, or medical facility; LEED (Leadership in Energy and Environmental Design) certification, the latest addition to iOffice’s collection of services, helps clients, in both new and existing buildings, to meet their sustainability needs.

In 2000, there was little or no emphasis on technology for the printing and mail industry, which was iOffice’s original service focus. There were only companies that manufactured copier or mailing hardware, which focused on output, such as a printed page or postage meter. At the time, there was no technology that focused on process and service delivery, providing the ability to manage and track activity, cost, and performance. In the office and facilities management industry, all technology was insular, meaning it focused on one function and did not interface with other tools, which made managing these services challenging. Each system needed the same information like occupant data, asset data and space information, but there was no reliable data source. The iOffice portal allowed all occupant and asset data to be shared across all the service applications. This quickly expanded to include asset tracking, space management, move management, facility service requests, inventory management, file management, and visitor tracking.

Experience with providing on-site managed services and operating large-scale print production and complex mail operations for Fortune 1000 companies helped iOffice CEO Don Traweek recognize that the tracking of all activity and transactions could be more efficient by automating the process and managing multiple operations in real time. With executive vice-president Elizabeth Dukes, Traweek pitched iOffice at the Houston Technology Center’s Mentor Breakfast. Attendee Dan Sudduth, who is now iOffice’s CFO, recognized the opportunity in the marketplace and joined the team. Sudduth’s business experience made it possible for iOffice to move one step closer to becoming a full-fledged company.

The founders penetrated the market by embedding iOffice with, as a channel partner, the Japanese-based IKON/Ricoh. The company’s beachhead was establishing a product – branded as TRAC – as IKON/Ricoh’s platform for providing on-site management of copy and mail operations. This gave the company’s solution credibility and significantly minimized its customer acquisition costs. Today, iOffice continues to establish other channels in different industries such as move management and service management. The company has more than 1,000 customers in the United States, United Kingdom, Canada, and other countries.

At the time of its inception, iOffice’s competitors offered network-based solutions focused on a single service environment that were difficult to learn and use. The iOffice team eliminated such obstacles by offering the company’s solution in SaaS format. This meant no IT install and support. Organizations could manage the full scope of office and facility services within a single application that was configurable to each environment.

Today, the company sells its facility-based solutions such as space and move management, facility maintenance, and asset tracking applications.  It aims to set itself apart by providing customers with products that allow them to get the information they need and have access to real-time reporting in a seamlessly implemented, cost competitive, easy-to-use application. Competitors like Manhattan Software, FM Systems and Archibus, conversely, offer complex, inflexible, expensive solutions. In addition, none of iOffice’s competitors in the marketplace bundle this suite of services in one portal.

Because the corporate facility management market is vast, the iOffice focuses on companies 1000 employees or more and 300,000 square feet or greater of office space. Current clients are Fortune 1000 companies, some with office space as large as 2.8 million square feet. The founders believe there are at least one million companies that qualify and that only 3% to 5% of the market is served by software applications other than spreadsheets.

iOffice has been profitable since its second year of operation. Revenues for 2010 were $5.4 million, an increase 20% from 2009’s $4.5 million total.  Gross profit is in the 75% to 80% range with net profit being in the 20% to 25% range.  The founders expect iOffice to repeat its 2010 to 2011 growth rate of 25% to 30% from 2011 to 2012.

The iOffice pricing model is per module and per location. Customers are charged a one-time process review fee for consulting and design that ranges from $5,000–$7,500 and a one-time set up fee per module to set up the URL, load data, and configure the application.  Set-up fees depend on the module. The fee for the Space and Move module is based on the total square footage and can range from $.02 to $.05 per square foot depending on the size of the facility. For other modules, the set-up fees range from $1,500–$3,000. There is also a monthly site license fee, which covers maintenance and support, upgrades, data backups, and unlimited users. The monthly fees for Space and Move are based on square footage and range from $.002–$.005 per square foot. The monthly fees for other modules range from $500–$750 per month per center.

iOffice was funded by the founders and earnings from consulting fees outside iOffice’s core business, such as SOX (Sarbanes-Oxley) compliance and process engineering. The founders re-invested a “good bit of money” into the company in IT infrastructure and marketing, in 2011 to support expected growth over the next three years.

The company’s growth strategy involves continuing to add channel partners and new clients through networking and its active social media campaign, which the founders say produces three to five leads per month, and attending industry-related trade shows.

“We do not have an exit strategy,” the founders say. “Our intention is to build a profitable company on a long-term basis. The industry we are in is its infancy.  Therefore, the opportunity for growth is substantial. In ten years, we have never lost a customer.”

Recommended Reading:
Major SaaS Companies Become Consolidators 
Deal Radar 2010: Allegiance, Inc.

This segment is a part in the series : 1Mby1M Deal Radar 2011