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When Doug Colbeth took over as CEO of Kinaxis in 2003, he scaled back the company and setting about to fix the business.Dave Chan/The Globe and Mail

Kinaxis Inc. has been the company of the future for three decades.

Since its founding in 1984, the Ottawa software firm has won praise for its sophisticated business planning technology that helps complex multinational companies get a better handle on their operations and save money. The New York Times in 1992 called the company's customer reviews "almost too good to be true," and it scored one of Canada's largest venture financings in 2000.

But sustained success has been elusive. Kinaxis has had a litany of false starts, changed its name four times and undergone two restructurings. While other startups grew into giants, Kinaxis remained stuck at the starting gate.

Now, Kinaxis finally seems to be hitting its stride. The company has increased revenues by more than 20 per cent annually over the past three years and added key multinational customers, including Ford Motor Co. Last year, market research firm Gartner named Kinaxis one of the world's best providers of supply chain management software. "We're becoming less of a secret," said CEO Doug Colbeth.

In June, 2014, Kinaxis launched the biggest Canadian tech initial public offering in years, selling more than $100-million of stock on the TSX. The share price has since gained 65 per cent, and a U.S. cross-listing is in the plans. "NASDAQ is a very viable option" in the next year, CFO Richard Monkman said.

The latent emergence of Kinaxis as one of Canada's hottest tech companies is a reminder that having the smartest engineers, the best product or even the richest clients isn't enough to succeed without the right market conditions, business model or timing.

Now the question isn't whether Kinaxis will succeed, but how big its breakout will be. Analysts, customers and the company's leaders compare Kinaxis to Salesforce.com, which upended business process software giants to take a place at the forefront of the never-ending drive to help companies improve efficiency. "We believe [Kinaxis] is one of the most compelling new enterprise technology companies to surface in years," Cormark Securities analyst Richard Tse said recently.

A tech star takes over

When Doug Colbeth joined the board of Kinaxis forerunner Webplan Inc. 14 years ago, he was not preoccupied with building a business, but giving back.

Two decades earlier, the Long Island native had experienced a debilitating depression as a young man. After getting back on his feet, he was determined to help mentally troubled kids once he had the means. That came in 2000, when Mr. Colbeth sold his company, internet pioneer Spyglass Inc., for $1-billion. Much of his windfall went toward financing a Chicago clinic that has treated more than 100,000 children.

In addition to philanthropy, Mr. Colbeth was keen to advise a few upstart technology companies. Webplan, run by his Chicago-area neighbour Michael Ker, was one of them.

Mr. Ker had big plans for Webplan, which started 17 years earlier when three Mitel engineers set out to solve a challenge facing large companies: how to cut the time needed to make important business decisions.

Companies relied on mainframe computers to process their storehouses of data. If a company wanted to do a "what-if" analysis – such as what if a key supplier shuts down – it had to wait until evenings or weekends to run the numbers. Those calculations could take 36 hours.

The trio created a powerful computer the size of two refrigerators that could reduce that 36-hour run time to 14 minutes without interrupting the mainframe. The technology functioned "like a supply chain-aware brain," said chief products officer John Sicard, allowing company planners to rapidly jump back and forth between different data sets to run multiple "what-if" scenarios. Other tools couldn't do that kind of analysis, and still can't.

Their company, initially called Cadence Computer Corp., never lacked for happy customers; Defence giant Sikorsky Aircraft Corp. used the technology to cut inventory levels in half. Trane determined it could ship 114 large air conditioning systems to South Florida after Hurricane Andrew without affecting its other commitments.

What the Ottawa company needed was a solid business model and marketing savvy. Making customized, expensive hardware limited its growth potential, and its revenue remained below $10-million a year. Many large companies were hesitant to buy from a tiny tech supplier.

In the mid-1990s the company restructured, taking on a new name (Webplan), CEO (Mr. Ker) and strategy: it would no longer make hardware, just the advanced planning software inside, with a friendlier user interface. And it would give the product away, in hopes that users would buy extra features.

Mr. Ker raised $33-million (U.S.) from venture investors in 2000, then set about to double the staff of 100 and open offices in the U.S.

Mr. Colbeth liked what he saw when he became a director in 2001, sensing that the rise of e-commerce would pressure companies to respond more rapidly to changes in the market – at a time when many were increasingly outsourcing manufacturing.

"I said, 'this is going to wreak havoc on supply chain' – while creating demand for the company's user-friendly software."

But sales stagnated and Kinaxis was stuck with too much staff. Mr. Ker left and Mr. Colbeth took over in 2003, scaling back the company and setting about to fix the business – again.

New name, new challenges

In 2005, newly christened Kinaxis announced it would now provide its software on a monthly subscription basis over the Internet – like Salesforce.com. – rather than collect a one-time fee upfront. "People thought we were crazy – they said, 'you can't make anything that complex, work using the Salesforce.com model,'" Mr. Colbeth said.

He initially forecast revenue would rise to $100-million in three years from $15-million in 2003. Kinaxis remains short of those original ambitions, on track to bring in $70-million in revenue this year.

The main challenge: its RapidResponse product is hard to sell. "The customer has to first realize they have a problem [with their existing planning tools] and they have to come to that realization on their own," BMO Nesbitt Burns analyst Thanos Moschopoulos said. The company has fewer than 100 customers, and takes up to 18 months to land a new one (the company employs just nine direct sales people).

The product is also expensive: Users typically pay between $30,000 and $300,000 a month. Implementing the system can take six months, as it requires streaming in data from the company's various internal systems and suppliers.

The company also still struggles with market awareness. Once during a demonstration to a prospective aerospace customer, Mr. Sicard demonstrated he could provide an answer to a complex question – how soon could you deliver an unexpected order for 45 aircraft – in 40 seconds. He was met with disbelief. "We were actually accused of being a random number generator," he said.

But once customers sign up, they rarely leave. Communications infrastructure supplier Avaya Inc. started using RapidResponse in 2007 and now favours it over all other supply-chain management tools. Benjamin Green, Avaya's director of global operations, says his company has cut inventory and freight costs by more than $20-million a year while paying Kinaxis $800,000.

"I've never seen any type of [cost] recovery to that magnitude on such a large scale," he said.

Kinaxis has expanded beyond its traditional base of electronics manufacturing companies into aerospace, automotive, pharmaceuticals and packaged goods. But with a small sales force and long lead times, it needs help. So the company is turning to systems integrators such as Accenture and contract manufacturer Celestica to expand offerings to their own customers based around RapidResponse. "We are clearly at the beginning of a wave of supply-chain outsourcing that will become more mature in the next three to five years," said Erwin Hermans, vice-president of supply chain-managed services with Celestica.

Indeed, Gartner has forecast the market for cloud-based supply chain software will grow by 21 per cent a year from $1.5-billion in 2012 to nearly $4-billion in 2017, twice as rapidly as the business software market. Kinaxis seems poised for bigger things.

Then again, the market has heard that before, as Mr. Colbeth is all too aware.

"I wouldn't call it a tidal wave yet," he said, "but boy, we're seeing increased momentum."