After nearly going under in 2001— due to no fault of its own—Bloomington-based SoftBrands continues to build a worldwide market for its manufacturing- and hospitality-management software.
The SoftBrands comeback story began in 2001. Early that year, SoftBrands (then a publicly traded company called Fourth Shift) was acquired by AremisSoft, a high-flying software giant. Shortly afterwards, AremisSoft crashed amidst charges of financial impropriety. SoftBrands was able to extricate itself from the wreckage, unscathed legally, as an independent company a few months later.
In 2004, having worked its way through financial settlements and the tech downturn, the company signed a distribution agreement with SAP, the German enterprise-management software giant, for SoftBrands’ flagship manufacturing management product, Fourth Shift. Then last December, SoftBrands again became a publicly traded company (Amex: SBN).
It launched its new 8.2 version of Fourth Shift Edition for SAP Business One at the beginning of 2006. SoftBrands is targeting the product to the U.K, Ireland, and South Africa markets, and it continues to leverage its two-year-old partnership with SAP to more rapidly penetrate markets in Europe, Africa, and the Asia Pacific region. For SAP, the deal has provided software manufacturing for the small- and midsize-company sectors. It’s also given the German firm expanded market reach and penetration.
SoftBrands already had global business before its SAP deal. It currently works with 4,000-plus customers in more than 60 countries. Two-thirds of its 590 employees are located outside the U.S. According to Randy Tofteland, SoftBrands president and CEO, that global presence was one of the chief reasons that SAP selected SoftBrands as a partner.
SoftBrands has had a presence in China since 1989, and Tofteland says it’s the company’s fastest-growing market, with significant software development being performed there as well. SoftBrands’ office in Tianjin, China, serves as its operations headquarters for the Asia Pacific region, which includes offices in the Chinese cities of Shanghai, Beijing, and Guangzhou.
The company has another regional headquarters in Bangalore, India, where its worldwide customer support center is located. While the China regional office may be SoftBrands’ fastest growing in terms of business, the Bangalore site takes top honors for employee growth; Tofteland predicts that SoftBrands’ next facility there will employ 250 people.
The Bangalore office also is becoming increasingly important for the company’s strategy in hospitality software, with development for coding, maintenance, and related software functions taking place there. Softbrands’ hospitality applications help hotels, casinos, resorts, and related businesses manage tasks that include room and conference reservations, guest accounting and records, and coordination with travel agencies.
Softbrands’ third global office is located just outside of London, and it serves as the company’s headquarters for its business in the so-called EMEA region (Europe, Middle East, and Africa). The EMEA region has 130 employees serving diverse customers via offices in the U.K., Ireland, Belgium, and South Africa.
While the SAP deal is driving growth on the manufacturing side of Softbrands’ business, the strategy for growth on the hospitality side is different. There, SoftBrands will concentrate on acquisitions, and focus its sales efforts on small groups of hotels, as opposed to the larger brand-name chains.
Despite its aggressive global plans, SoftBrands still derives 55 percent of its revenues from the United States. Tofteland expects that the company’s highly skilled product-development and customer-support functions will remain in Minnesota, which is a hub for its manufacturing products. Wichita, Kansas, is the center of its hospitality development business.
For SoftBrands, which has annual revenues of $70 million, adding business globally is key to crossing the $100 million mark, a critical milestone that could earn the company analyst coverage. Tofteland says, “It’s very costly to be a public company today, so growth on the top line is incredibly important to us.”
