IPOing today, looks good, page-26

I agree senderos.

Alan Kohler almost couldn't comprehend what he was hearing, and I sense we will see him as a shareholder for his fund at some time soon

The key take away for me was that Knosys are close to some sizeable Optus sales generated deals , some possibly introduced by the company rather than through the Optus network if you read the body language of the Mr campion on the point of commissions that might need to be paid to internal staff.

Current revenue for the quarter just gone was $304,000 , but of note in the qtly that KNO paid $400,000 on October 1.

Does this suggest next quarter we will see $700,000 for the quarter ? , or has the ANZ income gone up 33% and simply paid in arrears

Either way it seems this company is growing and fast and that ANZ underpins the cost base even if they did get a discount of size .

The founder stated revenue was around $100,000 per month per annum at present, and ANZ was their major client who were now up to 12,000 seats /licenses , so maybe they are paying $10 per seat, per month on that growing number .

The normal cost is $29 per month per seat and the cost of sale is about 25% of that number , the balance paid to the sales chanel , so on that basis for every 10,000 seats KNO receive about $200,0000 per month in revenue , and once they get over around 15,000 seats they move to cash flow positivity

The greatest excitement to me is basically every person in an organisation that takes on KNO needs a seat , ANZ should grow to about 25,000 on that basis , and companies like Telstra, government departments , other banks, the post office, gaming businesses have 100's of thousands of employees

This is a company i think will be taken out by a major software business once it becomes known what they can deliver large businesses and government

Copy of the interview can be seen on the website you can join for free for 14 days and watch

THIS IS AN UNEDITED TRANSCRIPT
AK: G’day, welcome again to Eureka Interactive and today, this afternoon, we have Gavin Campion who is the CEO of Knosys. No, you’re not the CEO, you’re…
GC: Founder and Executive Director.
AK: …Founder and Executive Director. We’ll get in to what that all means in a minute.
GC: Sure.
AK: But you one of three founders I think, is that correct?
GC: That’s right. Yeah.
AK: Now, before we get in to what exactly Knosys does which is quite interesting, I was just interested in some of the history of it because it’s not that old. I think it started in 2008 and according to the prospectus you started with a project for ANZ and they were what you called a development partner and then you decided to productise it, so whatever the hell that means.
GC: Well, we had a simple, bespoke deployment in to ANZ.
AK: And what were you doing at the time? Did ANZ engage you in some way to create this thing?
GC: Yeah, they had for tender a requirement in a small department and we produced a piece of technology at that time that answered those requirements.
AK: And the requirements were to?
GC: In knowledge management, in the consolidation of information, presenting information relevant to people’s roles from disparate technology platforms and that seemed to work pretty well. And at the time the CTO and Founder asked me as I arrived back in Australia to have a look at the technology and have a look at the solution – and he had a few ideas as to where to take it, but as the commercial partner – asked me to have a look at it and I thought it was a brilliant transformative idea there, albeit in a bespoke deployment. So we decided to productise it and take it to market, so expand it significantly, make it robust and scaleable.
AK: So you did do the job for ANZ, right?
GC: Did the job for ANZ, actually took it back to the ANZ as a productised solution and said, you know, we’ve moved on, would you be interested in taking this piece of technology? To which they immediately said yes and they’ve become our founding client which is probably the best language to use for them. And then they’ve since taken on in excess of 12,000 licences of the technology, so 12,000 seats.
AK: Right. That’s an interesting development there, the licences and seats. So perhaps we can go back to what exactly is the idea? What was the idea that was the kernel of the thing?
GC: So within large corporates and government, information management is a pretty hot topic, finding the information we need to do our job, ensuring that the information is compliant and well-governed, ensuring that we have the most relevant information at all times to do the job of any individual in the organisation. And corporations have struggled with this because they have incredibly complex technology ecosystems whether they have ERP systems, CRM systems, asset management systems down to transacting platforms, point to sale platforms, HR platforms and a large corporate can end up with 50, 60, 70, 80 different technology platforms. And to be able to consolidate all that information and see all that information from a single screen is an incredibly difficult task. We’ve seen Telstra spend in excess of a billion to consolidate their consumer data and the idea is they’re ingesting it all in to a new platform. Knosys does it in a completely different way and takes big data capabilities of indexing and virtualisation and we don’t actually move any information. We provide a window in to the information in its existing platforms. So we provide a single source of information by sitting gently across that technology ecosystem. We don’t actually touch it. We don’t actually touch any of the processes around the existing platforms. We assume they’re all doing a pretty good job and that’s great. What we actually do is index and virtualise the content from within those platforms and make it available in Knosys. So if you take a large corporation and that can be a lot of information, presentable through Knosys, so then we only present information that’s relevant to the role of the person that’s looking at it. So there’s a decision making engine within the platform that then presents the knowledge from any of these platforms to… with high relevancy to the person who’s looking at it. So it’s a single source of information across disparate technology platforms, entirely relevant to the role of the person that’s looking at it.
AK: Right.
GC: So we don’t move any data. All the expensive bit…
AK: But you read it and sort of in a sense copy it or…
GC: Virtualise it.
AK: You virtualise it.
GC: Yeah. It’s like a ghost file, if you like.
AK: And that all goes in to the one cloud database?
GC: No, it doesn’t move.
AK: No, but the virtualised…
GC: The virtualised file you can see it, you can’t touch it and then it disappears. So we’re effectively… the simplest way to think about it is we’re peering in to the existing platforms and looking at the information.
AK: But then doesn’t Knosys then manipulate the data in certain ways that make it usable for the…?
GC: Absolutely, it can do. Usability is key to us, so we think we have a key advantage that we can access and make available that information without moving lots of information in to a new platform. But once you’ve got that information, you’ve got to be able to do something with it to extract the value from it, you’re exactly right, so we surround it with tools, business process tools, workflow tools, collaboration tools, analytics, whatever it may be to actually enable the person who’s looked for the information, found the information to actually transact and do their job. Now, if we can actually get them doing their job in the platform, we’re then able to optimise that system in line with the business’s goal, such that we ensure the best information is being presented, the best business processes are being utilised and we’re maximising our conversion and our use of that information at any one time.
AK: So that assumes that the person concerned… I mean presumably the person concerned has access to the information that’s relevant to them day-to-day that they’re involved in. If they’re in HR, they presumably have access to the HR system.
GC: Well, I’ll give you a real, simple example that we’re all frustrated with in life. You phone your bank and you say I’ve seen you’ve advertised a new home loan rate, I’d like to know a bit more about that. Okay, are you a current customer? Yeah, I’m a current customer. Okay, give us your bank account, give us your account details and give us your credit card number. Okay. Now, I’m going to transfer you to the relevant department. Okay, great. You’re transferred across. Someone else picks up. Oh, give us your information again. Okay. And you can bounce around a number of different times. If you put an enquiry in for a home loan and you go all the way through to application, you might have spoken to a number of different people. You’re speaking to a number of different people because there are different people trained on different platforms as you go around. Imagine if that first person that talked to can access all of those platforms. So through Knosys they can and the information is indexed and available to them immediately, so that you don’t get mid-call transferred in that case. You can simply have the person in front of you do your transaction: explain the product to you because they can get the product information, explain the application process because they can get that, take the application, do the 100 point check, whatever it may be, send that information off to the system that mails you a pack and confirms it all for you. So a single person can then transact across multiple different platforms.
AK: But that implies that they’re not just using Knosys to see the information, they’re actually engaged in, for example, using the 100 point check platform, whatever that might be.
GC: Well, we can feed the information back in to that platform and new information we can capture and feed it back in, absolutely, all through the permissions and the securities of that platform.
AK: Right.
GC: So it’s kind of an umbrella platform across all other platforms that allows you to do everything those platforms can do, see everything that they can do, but transact it in Knosys.
AK: And how long does it take if somebody said yeah, we want Knosys, how long would it take to fit it?
GC: It varies. I mean to deploy it, it varies on the complexity of the technology ecosystem that’s there, but it’s been designed to deploy very easily. It’s actually a very light platform because we don’t actually have any data within it, so it’s actually quite simple. We sit across, on top of these platforms and we can simply tag the content in there which an administrator can do – you need no technical ability to do that. You can connect with APIs or you can connect with web services, all very straightforward, cookie cutter type integration. So deployments can take anywhere from four weeks to six months. Rollout can take a little bit longer in line with the company’s objectives. But it’s actually very simple to deploy.
AK: So at least four weeks. It’s not like a few days. It takes a fair while to do it.
GC: It’s not a few days. I mean the key thing is that you need to configure the platform with the roles of the people that you want to use it. So if I’m a… I’ll use the same example. If I’m an agent in a contact centre taking home loan applications, okay, what’s my role? What information could I access? Where is that information? Okay, let’s configure it to ensure I have access to that information in the various platforms. That’s an administration role. You don’t need any technology capability to do that, but it still takes a little bit of time to do it.
AK: Yes. How much do you charge for it?
GC: It’s on a SaaS model, opex only.
AK: SaaS is Software as a Service.
GC: Software as a Service, yeah. No capex requirement whatsoever and our RRP is $29 per month, per seat.
AK: Per month, per seat?
GC: Yeah.
AK: And that’s per person who’s accessing it. It’s not the entire staff of the organisation?
GC: No, it’s an individual.
AK: An individual who accesses… And do they access Knosys, the actual… your product? They have some sort of log in to Knosys.
GC: They log on to our platform.
AK: Yes.
GC: That presents them a dashboard of information, processes, analytics that are relevant to their role.
AK: Right. And that’s been previously designed by you or the company for them?
GC: It’s in the configuration process. Yeah, absolutely.
AK: Right. And is there any setup fee or is it just straight out $29 per seat, per month?
GC: There can be setup fees. We use partners to manage all of our deployment and support. So SingTel Optus here, for example, is our primary reseller and deployment partner, so they would work with the client to deploy and support our technology for us on behalf of that client.
AK: Right. We have got a few questions here from this audience.
GC: Great.
AK: So I think you’ve answered this, but I’ll ask it anyway.
GC: Yeah.
AK: A comment from Ed, can your tech work across companies regardless of the systems they are already using? So have you come across any system that you can’t likely touch?
GC: No, we haven’t. No. We haven’t at all. In fact, that’s a great advantage of our platform because we can just tag the content or use API or simple web services. Platforms legacy and old platforms, we even integrated with some green screen flickering cursor type platforms from 35 years… I think they’re about 30 years old. Suddenly all that information is available on three screens, it’s available in the cloud, it’s available in a very contemporary UI [user interface], so it’s actually a really good advantage of us is how we can transform current platforms in to a contemporary, cloud based platform. So we haven’t found anything as yet and we don’t expect to find anything that we can’t integrate with.
AK: So but, say, you’ve got that flickering cursor green screen thing which obviously is not a great interface, can the employee then use your system to interface that instead of using the green screen thing?
GC: Exactly. Instead of doing the, you know, the tens of millions of dollars upgrade, high risk swap out of that, we can sit on top of it, tag the content from within the databases of that platform and present it in a contemporary UI.
AK: And can the employee add data to that system through Knosys?
GC: Yeah.
AK: Right. So it both reads and…
GC: Read, yeah, and can feed back.
AK: Can feed back. And you can put data in?
GC: Yeah. In the vast majority of cases, people use it to view information and utilise information in our platform, but there are many cases where we’re actually feeding it back in to the legacy platform.
AK: Right. So you don’t have to go out of Knosys, then in to the legacy platforms to type in the customers’ details? You can actually do it…
GC: No. You would do it within Knosys. You virtualise that within our platform.
AK: So the employee would basically do nothing but work in Knosys?
GC: Yeah, exactly.
AK: That would be it for them.
GC: It’s a great roadmap for those legacy platforms just to sit this on top of it and suddenly you’re cloud enabled. Suddenly I can access a green screen flickering platform off a mobile phone from New York, you know, things that aren’t possible in the old green screens at the moment.
AK: Right.
GC: So it’s a key advantage of our platform. Not only that, you can take that information that’s available in the old legacy platform and combine it with information from all of your more recent and contemporary platforms, actually utilise it to do your job.
AK: Wow.
GC: Yeah. Pretty clever.
AK: I’m suddenly impressed.
GC: So the big key difference there is we don’t have to move the data.
AK: No.
GC: Everybody else relies on ingesting the information afresh in to a new platform. You can imagine if you’re doing that across ERP systems, CMS systems, CRM systems. To keep that information alive is a near impossible task.
AK: So are you the first people to have done this or has someone else done it already?
GC: Indexing and virtualisation is a key thrust in technology at the moment. It’s a big data play, absolutely. We haven’t found anybody else applying it in to a knowledge management platform of this type. There would be information management providers who would cross over the circles a little bit, maybe a bit of enterprise search who say well, we can search different platforms, can’t present it relevant, you can’t wrap the tools around it to use it and optimise it. So we believe we’re the first doing that, but I’m sure somebody is doing it somewhere.
AK: And when you say that, you know, ANZ is your first… What did you call them? Your…
GC: First client.
AK: Your first client.
GC: Yeah
AK: How far in to it are they? Have they fully adopted it?
GC: Yeah. I mean they’re continuing a rollout. I mean it’s very commercially sensitive, so I want to be aware of that as I speak, but yeah, they’re taking on more licences and it’s growing.
AK: Can you tell me how many seats they’ve bought?
GC: Just over 12,000.
AK: Right.
GC: And I believe it’s growing.
AK: And their intention is to keep rolling it out?
GC: I hope so.
AK: And have you got any other clients apart from them?
GC: We’ve got a number of smaller clients and we’ve got some councils and a bit of government and the like, but we floated only on September the ninth.
AK: That’s right.
GC: Our strategy is not to sell direct at all. We want to sell through resellers, channel partners, deployment partners. SingTel Optus was a huge coup for us. They’re a very progressive group in the application solutions group. They manage a lot of big clients. They have great relationships selling and supporting technologies as well as the carrier services, but they’re very strong on the technology side and they have those relationships. They have the managed service agreement. We’re just slotting in to that relationship. And SingTel Optus’s feedback to us has been that this technology is something they’re leading with. They’re touring it around the country at the moment to their clients. So that’s really our focus. That leaves us with a really highly leveraged operating model where we are just product development and licencing. We don’t have to take the risk on sales teams and we don’t have to take the risk on deployment and we don’t have to take the risk on support. You know, our next client, if you like, is pure profit to the business.
AK: Yeah. But how much do you have to pay SingTel Optus?
GC: They are very excited about our technology because whilst they get a small discount on the licence – they buy licences from us at a small discount to that $29, they are then able to take a very hot piece of technology to market. It positions them well. And they get all the services around it, so the deployment, the support and the like around it. So we don’t pay them anything.
AK: No, okay. So I thought it might have been a commission.
GC: They get a small discount on the licences.
AK: Yeah, right.
GC: So typically for a reseller like that, you might think that they buy licences at 75 per cent of our RRP.
AK: Yeah.
GC: No other costs to us.
AK: And have they made any sales yet?
GC: They’ve just been well on board it at the moment, so the CEO, Ashley Gall, who’s ex NTT, ex HP, ex Business Objects, 25 years, probably raising an eyebrow at that somewhere right now, of selling through channel for those types of companies. He’s done a terrific job on boarding them and the pipeline is pretty buoyant.
AK: And have they got an exclusive…?
GC: No exclusive team.
AK: So you can and will presumably use other distributors.
GC: We’ve taken on other relationships, absolutely, and we’ve got a key relationship in to Southeast Asia covering Vietnam, Malaysia, Singapore, Indonesia, The Philippines. We’ve carved out the Greater China region at the moment. We think we may have a better partner in that area. And a big part of my role is going and speaking to those partners and seeing who’s got the capability to take us to market. And I spent six weeks in Europe over the northern summer doing exactly that.
AK: So you’ll propose to… you’re going to sign up a partner in Europe, is that correct?
GC: Yeah.
AK: Right.
GC: And hopefully in Latin America.
AK: And North America?
GC: North America, we’re just holding back on a little bit. We’ve got a couple of options that are perhaps more medium term. In my experience it takes a little bit more money to enter the North American market place and we’ve got low hanging fruit elsewhere, so we would like to capitalise on that low hanging fruit. I don’t really mind where we sell the 15,000 licence deal, as long as we sell the 15,000 licence deal, so I’ll do it where I’m pretty sure I’m going to go and get them.
AK: So how many licences in total have you sold? There are 12,000 to ANZ. Can you tell me roughly how many in total?
GC: They are by far the majority of the licences. They’re our anchor client.
AK: Yes.
GC: And we’ve been focussing on building the channel, so that we can scale the business through the channel.
AK: Yeah. Leo says, which sector do you anticipate being the biggest market for your technology?
GC: That’s a good question. Any kind of large corporate. Financial services are obviously buoyant, but we have a reasonable case study there obviously. Telecommunications. Really, like government, local government, federal government. We have Alan Stockdale as our Chairman who’s active in the business. I spent yesterday afternoon with him. I asked him to come in to run a public company board and for compliance and governance and he said, yeah, I can do all that, but let’s drive the business too. So that was great to hear, great to hear from Alan. So really it’s more the profile of company or organisation. Complex technology ecosystems, multiple platforms tend to be at the medium and larger end. But it’s not specific to any particular sector.
AK: Steven asks, what kind of information organisation systems do big corporations currently use and do you have any competitors either here or overseas?
GC: Well, there’s information management is a hot area and there are lots of great platforms and it crosses over in to asset management and it crosses over in to content management and there’s quite a bit of complexity there between… overlap between those sectors. We’ve actually just engaged Gartner to do that segmentation for us and to better demonstrate our proposition in each sector and that’s a process that’s ongoing. In fact, the CEO may have been sat here today instead of me if he wasn’t doing that. So we’re excited about that. There’s lots of competition. This is a hot space. Information management is key access to information and improved decision making, improved productivity and efficiency by having access to the information is very hot. Technology ecosystems are getting more and more complex. Now, we’re transforming to the cloud, so we’ve got legacy, we’ve got hardware and we’ve got native cloud applications. It’s quite… They’re becoming increasingly complex. Plenty of competitors out there, but they all rely on taking the information from the various platforms and putting it in a new central repository, a task too hard for large corporations to do that and to keep that information compliant and new. So we are taking on that competitive market place with what we believe is a much better way of doing it.
AK: And I presume that part of the problem is that those other systems disturb the information in some way. They kind of interrupt…
GC: They move it.
AK: They move it?
GC: Yeah. They move it and then how do you keep it live and accurate and up-to-date and then how do you consolidate it in a new platform with information coming from different sources in different forms? It’s incredibly complex.
AK: So Knosys presumably is constantly up-to-date.
GC: Constantly up-to-date.
AK: Because whatever data is coming in to the legacy system is seen by Knosys.
GC: Exactly. And the compliance and governance is off the charts because if this is our approved piece of content or this is our approved customer detail, no matter where you are in the world and you want to access that information, you’re going back to the source of the information. There’s no replication, no duplication, no moving of the information, so you can walk around Singapore and look through our platform, a product sheet that’s based on a server in Port Melbourne, knowing that it’s accurate.
AK: Hm.
GC: Hm.
AK: It’s pretty good. Ryan wants to know, what are your finances like now? Is there revenue coming in since listing?
GC: Yeah. I mean I think we’re publishing financials tomorrow I think. We’ve got good revenue. We’ve got a small burn at the moment, but we’ve got…
AK: How small?
GC: Ten per cent of revenues, so we’ve got revenues just in excess of $1 million, so pretty small. We’re focussing on building out the channel. We’ve got a small burn. We think one or two more clients cleans that up easily and takes us in to free cash. We’re very focussed on that as an organisation.
AK: So your costs are $900,000 per what?
GC: Per annum?
AK: Yeah.
GC: Well no, the other way round. Our costs are probably 1.1.
AK: Oh, I see. Yes.
GC: No, sorry.
AK: Sorry. Yeah.
GC: We’ve got $1 million in revenue and our costs are probably about two [per cent21:55???] at the moment and we’re burning probably $100,000 a month somewhere of that order.
AK: $100,000 a month, yeah, right.
GC: Yeah, somewhere of that order.
AK: Yeah.
GC: We’re keen to close that gap very quickly.
AK: Yeah. Tell us what the ownership structure is like.
GC: It’s a public company and the founders own in excess of 50 per cent of it. We’ve got some good small…
AK: The founders being you…
GC: Myself, Alistair Wardlaw, the CTO and Richard Levy who’s the original kind of chief administrator officer.
AK: Yes.
GC: We’ve invested there a bit ahead of the curve and put a quality public company CFO in in a fellow called Stephen Kerr and then obviously I swapped myself out, having done the turnaround on float and brought in Ashley Gall as CEO to sell through channel. Yeah, so that all looks pretty good.
AK: Why did you float?
GC: We’re ambitious. We’re kind of cautiously ambitious, but we do believe that another significant client has us to profitability, or perhaps two, you know, so we’re not too far away from that. We’ve got channel partners who are obviously invested in delivering those clients pretty quickly, so we feel pretty good about that. But we do want to internationalise. We’ve gone out in to Southeast Asia already. The market here is not big enough for a technology of this nature. There’s opportunity elsewhere and that takes a little bit of investment and a little bit of, you know, funding to on board the channel.
AK: So you’ll be raising more capital?
GC: No, don’t need to. No intention to do that.
AK: How much did you raise in the float?
GC: $4 million.
AK: Right.
GC: We did a pre IPO at 750[23:30???], pay a few fees and allow me to invest in the new executive team.
AK: Yeah.
GC: And then $4 million in the raise.
AK: Right. And so, as you say, you’ll stop burning cash fairly soon, so that will be available for expansion.
GC: Yeah. And that’s what we’re trying to do. I mean we are talking to international resellers right now, but we would really like to get a couple of runs on the board with our existing channel and get ourselves in to that free cash position.
AK: An anonymous guest says he wants you to sell it to Centrelink.
GC: That would be a good idea.
AK: That would be a good idea. And the whole of government in fact.
GC: It’s really… You know, the whole of government would be great. I mean everybody that sees it and grasps it… And I know sometimes it takes a second explanation to grasp it because it’s a new technique and we’re a pioneer, so pioneers have to educate the market, but we don’t have the scale to educate our market. So that’s why we’re using the channel partners, again. They’re good at educating markets. They’re good at educating and we get quicker scale. But very rare we come across anybody in a large organisation that says oh, when the penny drops – you know, it’s our responsibility to ensure that it does – well, we can combine our customer information with our product information with our financial information and we can distribute that or make it available on a global basis to every branch, to every office, whatever it may be all through a system hosted in the cloud. People get pretty excited about that. And then when we say well, it’s designed for ease of deployment; it’s sold through tier one resellers; it’s floated; it’s got the credibility it needs; it’s got a good anchor client; and we can deploy it very quickly, they go great. So we feel pretty good about it. I think we’ve got a good model.
AK: So I mean are you selling it to governments? I mean how are you… You’re talking about local governments. What about the bigger type of government?
GC: We have a number of opportunities at the moment in state governments that the team are chasing down, some of whom are current clients of our reseller network and, in fact, a couple of them are actually direct introductions. We will ultimately put that business through a reseller which is, again, it’s great for reseller relationships if you bring them new business. But yeah, we’re currently chatting at state government level in I think it’s three states.
AK: Right. So okay, just to get a head around… You’ve got a partner for parts of Asia, Southeast Asia?
GC: Yeah, it’s a company called GO Cloud IT and they master distribute your agreement and they have a number of resellers that they’ve worked with previously with different products and over time and they are working with those resellers to sell and distribute Knosys.
AK: And with China you’re talking to some potential partners?
GC: Yeah. China, we’re looking at well, potentially with GO Cloud IT, but we have a couple of other options as well.
AK: Do you have an idea of the competitive landscape in China, whether this sort of thing exists there now?
GC: Well, we haven’t found that it exists. As I say, there are bits of functionality that other sectors overlap, as is the case in software. We’re trying to keep it pretty simple. We’re not interested in that positive confusion strategy. This is what we do. This is what we’re capable of. Do you want it?
AK: I presume Knosys speaks Chinese, does it?
GC: It can be double byte character very quickly, so we’re pretty comfortable with that. And I think we will enter that market pretty quickly, for sure.
AK: And what about Europe?
GC: Europe we think we’ll enter pretty quickly too. As I say, we just want to get a couple of runs on the board and make sure we’re supporting our existing partners effectively and getting them well on boarded and they’ve made commitments to us; we need to be committed to them. That’s appropriate and in the best interest of success for all. But yeah, then we’ll replicate that in to other resellers around the world. And yeah, we’re keen to get up through Asia. Deals can happen a fair bit quicker. They can be of a bigger scale. The margins can actually be higher, given the nature of certain markets up there. And to get in to Europe, we have the tyranny of distance in Australia, so we’ve already identified a Head of Emea who I’ve worked with previously – he’s well-known to us – who could run the reseller networks over there. Still, you know, it takes a little bit of time for Ashley and I to get on the plane and go and on board the resellers, so we’re careful not to stretch the elastic band too far at the moment, especially as we have a buoyant pipeline in Australia. We would like to get some runs on the board and do this on our own cash.
AK: And what is the margin? I mean are there variable costs?
GC: Not really.
AK: Right.
GC: It’s pretty highly leveraged. I mean if we did a deal… if a reseller did a deal now and bought licences off us, they might get a 25 per cent discount on those licences, so we have a net revenue of 25 per cent… 75 per cent of $29.
AK: Yeah.
GC: Our costs associated with that, we don’t really have any.
AK: Right.
GC: I mean we have normal course product development that’s occurring and improving the technology all the time.
AK: But they’re all fixed costs.
GC: Yeah, you could view that as fixed costs. The variable cost, the cost of sale, if you like, the cost of good, there might be a commission, so there might be five per cent commission or something like that if someone’s done a good job to get that deal over. Hopefully we’re paying…
AK: That’s got to come out of the resellers’ margin, surely.
GC: Maybe. In most cases that would absolutely happen, but we may have introduced the deal to the reseller and we feel that we would like to reward our staff for doing that. I would certainly like to be paying a lot of commissions.
AK: Yeah, fair enough. One more question and this time from Sam, do you have a sense of the dollar figure the companies would save using your system versus their own system upgrades?
GC: Yeah. Productivity and efficiency scores have always been double digit in everything that we’ve seen, so 10 per cent, 15 per cent, 20 per cent productivity increases. You can delete a number of technology platforms because Knosys can assume responsibility and enables us to reduce duplication and replication of technology effort in organisations very quickly. You don’t have to train people on a hundred different platforms. You just have to train them on one, so it reduces the training time. We’ve actually seen really good staff satisfaction and customer satisfaction. The staff satisfaction one is great – I’ve finally got the information to do my job and it’s presented in a nice UI that I’m able to do it. And we get really good staff satisfaction scores out of it as well.
AK: And it’s on the phone as well as the iPad and the computer?
GC: Yeah, we’re a progressive site. It’s on everything.
AK: Yeah.
GC: Yeah.
AK: Okay. Well, we’re out of time.
GC: Great.
AK: It’s been fantastic. Thank you very much, Gavin.
GC: Thank you. Thank you.
AK: I’ve been talking to Gavin Campion who is one of the founders of Knosys.
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