180 West Election Road
Draper, Utah 84020
Telephone: (801) 495-1010
Toll Free: 800-836-3653
Fax: (801) 495-0353
Incorporated: 1993 as KeyTex Corporation
Sales: $92.4 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: TENF
NAIC: 51121 Software Publishers
TenFold Corporation's mission is to become the world's premier supplier of vertical software applications.
TenFold Corporation is a major provider of vertical software applications for corporations in the insurance, health care, energy, communications, banking, investment management, and other industries. About 60 percent of its revenues comes from insurance companies. Using its patented Universal Application technology as a foundation, TenFold develops flexible client applications that later are licensed to others. Tenfold made history in 1998 when it became the first company of its kind to offer a money-back guarantee ensuring that its clients would get their Internet-based programs for a fixed fee and on time. TenFold promises its clients a 'ten fold' advantage compared to other so-called integrators. One reason for its rapid growth is its ability to complete a project in a few months, while competitors' products can be years in development. TenFold had no clients until 1996, and stock analysts and technology consultants praise this young company for its innovative technology, rapid revenue growth, profitability, and sound management team of mostly former Oracle Corporation executives.
A graduate mathematician from Brown University, Jeffrey L. Walker founded Walker Interactive Products to develop financial and accounting software before joining Oracle Corporation. Walker started Oracle's application division back in the mid-1980s, developed Oracle Financial and other applications, and played a key role as the firm's chief financial officer when Oracle became a public corporation.
After Walker retired from Oracle, he was prompted to return to the business world to satisfy his desire to automate the development of software applications. He knew companies often spent too much money and time in creating essential applications. So Walker and some other former Oracle personnel started a new firm, originally called KeyTex Corporation, incorporated in Delaware on February 3, 1993.
Walker and his early employees set up a small San Francisco office. 'They had to rescue some furniture from a dumpster to start the first office,' recalled Liz Tanner, the company's public relations director in a phone interview in May 2000.
For about four years Walker and his small group of about 25 KeyTex employees worked on a new technology they called the 'Universal Application.' Company literature later described the Universal Application as 'our collection of technologies for building large-scale, complex applications quickly and reliably. It supports rapid development and quick maintenance to make enhancing and evolving TenFold applications easy and inexpensive.'
In those early days, the company operated in what Liz Tanner referred to as 'stealth mode'; its new technology was still in development and secrecy was imperative. Some employees even had to ask to print business cards, so that they could prove to their families that they had real jobs. Walker's personal investments and a few pilot and consulting projects provided the company's initial funding.
In 1996 Walker and his team were ready for business. They tapped as company president Gary Kennedy, another Oracle executive who had hired about 3,000 Oracle workers and had become the president of Oracle USA in 1990. Kennedy was raised in Utah, and he had hoped to return there after several years' absence. With Walker's approval, the company moved its headquarters to Salt Lake City. Soon they relocated the headquarters to Draper, a suburb south of Salt Lake City. Walker remained in San Francisco.
Utah offered TenFold several advantages. The University of Utah, Utah State University, and Brigham Young University trained many software engineers and other high-tech personnel and helped several of the state's approximately 800 software firms get started, including Evans & Sutherland, Novell, and WordPerfect. Moreover, the cost of living was far less than in Utah than it was in the Silicon Valley.
Soon after becoming TenFold's president, Kennedy presented his goals to Walker and other executives. According to Tanner, many were 'astounded' by Kennedy's bold vision, and it would eventually be realized. In addition to Walker and Kennedy, other individuals who left Oracle and became TenFold executives included William Conroy, Robert Hughes, Sameer Shalaby, Adam Slovik, Larry Stevens, and Richard VanderDrift. Thus most TenFold's executives were former Oracle leaders, a great example of the risks businesses take when they train leaders who then leave for other opportunities.
Building the Business: 1990s and Beyond
In 1997 one of TenFold's first major customers was Barclays Global Investors, among the world's largest institutional investors. Working with Barclays personnel, TenFold in just six months built the TenFold Revenue Manager program that was then used by Barclays to automate billing invoices and revenue accounting. Barclays used the TenFold application to replace Microsoft Excel, which required considerable manual work to invoice customers.
One of TenFold's key moments came in mid-1998 when it began offering its unique TenFold Guarantee to promise its customers they would receive their applications on time and at the fixed price or else they would be fully refunded their money. As TenFold ads indicated, the firm was committed to 'do or die.' TenFold ads also stressed that '92% of all large-scale software development projects fail,' referring to the results of a 1998 CHAOS study by the Standish Group that found 92 percent of such projects either far exceeded their budget or time projections or were just terminated. Thus in one of its 1999 ads, TenFold invoked the famous William Tell story: 'Imagine an archer who hits the bull's eye only eight percent of the time. ... we don't miss. You might say we have straighter arrows in our quiver.' In another 1999 ad, TenFold emphasized that it was a 'well-kept secret' that 92 percent of software applications projects failed as companies wasted millions in the process. The final tagline read: 'The secret's out. Pass it on.'
Thus TenFold made bold promises that it could do something most competitors failed to do. 'TenFold has built a reputation in the software industry as both an innovator and something of a maverick,' said the Aberdeen Group, a Boston consulting group that tracked the computer and communications fields.
In 1998 Mercy Health Services and its Michigan Cardiovascular Network (MHS MCN) faced a major problem after Summit Medical Systems ended its data services contract for the Society of Thoracic Surgery (STS) National Database. MHS chose TenFold as its partner to develop software to track outcomes of cardiovascular operations, partly because of TenFold's promise to build a set of applications quicker than its competitors. In December 1998, just six weeks after this project began, TenFold demonstrated the initial version of TenFold CardioTrac for MHS MCN. After CardioTrac was formally launched in early 1999, MHS MCN intended to tailor it to keep track of other clinical outcomes besides those of cardiovascular surgery. The MHS MCN contract was TenFold's first project in the healthcare industry. Later HealthSouth would become another major healthcare client.
In May 1999, TenFold and Perot Systems Corporation formed a strategic alliance. TenFold President Gary Kennedy told CNN Financial Network, 'it became obvious that there was a wonderful match between our aims and theirs, between our cultures and Perot's cultures.' Ross Perot, in turn, noted that TenFold was 'one of the most unique companies I have ever encountered.' Although the two companies were not directly competing at the time, the agreement created a TenFold partner instead of a potential competitor.
On May 21, 1999 TenFold became a public corporation, with an initial public offering of 5.2 million shares of its stock at $17 per share raising $88 million. In a May 21, 1999 interview on CNN Financial Network, TenFold President/CEO Kennedy said, 'we probably could have gone public a year or so ago, but it was important to me to make sure that the company was in very stable hands. ... I didn't want to come here and tell the market what we were going to do; I wanted to describe what we had done. I didn't want to say we were going to be profitable; I wanted to be profitable. I didn't want to say we were going to build a strong management team; I wanted to have one built already. So we've waited.'
In 1999 TenFold signed a contract to construct a group of software applications to facilitate energy trading, billing, logistics, and risk control for Southern Company Energy Marketing. Don Jefferis left his position as Southern Company Energy Marketing's vice-president to head up the TenFold Energy Group. TenFold used its EnergyNow! suite of applications to provide integrated and comprehensive software for such energy companies.
Most of TenFold's business came from providing software applications for insurance companies. For example, in 1999 it worked on a fixed-time contract to create and install new programs for Utica National Insurance Group, a $600 million company based in Utica, New York. TenFold contracted to develop applications for Utica's 11 business divisions that eventually would provide all Utica agents with access via the Internet to all company business and customer information. Utica chose TenFold because of its timely services, fixed price instead of the hourly rates charged by competitors, and the fact that TenFold guaranteed its work and prices.
1993:KeyTex is founded by former Oracle Corporation executives.
1996:Firm relocates to Draper, Utah, a suburb of Salt Lake City.
1997:Name of firm is changed to TenFold Corporation.
1998:The company begins offering its unique TenFold Guarantee.
1999:The firm's IPO is completed.
2000:Company receives a U.S. patent for its trademarked Universal Application technology.
TenFold's other insurance clients in 1999 included Provident Companies, Crawford & Company, TIG Insurance, Trinity (a Unitrin subsidiary), United Casualty (another Unitrin subsidiary), and Westfield Companies. Moreover, TenFold served the following investment management companies: Barclays Global Investors, Dresdner RCM Global Investors, Franklin Templeton, and Loomis, Sayles & Company. Its other clients during this time were Enron, Mercy Health Services, Ameritech, NAI Block, and Nielsen Media Research.
On October 7, 1999 TenFold completed its purchase of LongView Group, Inc. from that company's parent Barclays California Corporation. TenFold reportedly paid $22 million for LongView, while Barclays simultaneously paid $4 million for a TenFold software license and related technical support.
Stock analysts and industry consults gave TenFold high marks in several areas. For example, giving TenFold stock a 'buy' rating in September 1999, Deutsche Banc Alex. Brown described the company as 'The Best of Buy and Build in Vertical Market Application Software,' also noting that 'TenFold has put together a top-notch management team ... and we believe that management has the ability to take the company to $1 billion and beyond over the next three to five years.'
Goldman Sachs analysts agreed and on February 4, 2000 placed TenFold on its 'U.S. Recommended List,' emphasizing that, 'We believe that TenFold has an attractive market opportunity, innovative technology and methodology, and solid momentum to support its valuation longer term.' The Goldman Sachs analysts were impressed by TenFold's fourth quarter 1999 performance, especially the company's license revenues of $23.7 million, an increase of 265 percent over fourth quarter 1998, which was more than double Goldman Sachs' estimate.
TenFold in 1999 reported annual sales of $92.4 million, up from $40.2 million in 1998 and $14.1 million in 1997. The company's 1999 sales were generated almost evenly between license revenues of $47 million and services revenues of $45.3 million. The largest source of those revenues was insurance services and licenses, although the firm was diversifying into other industries as part of its long-term strategy.
In its 1999 10-K Report, TenFold wrote: 'An element of our business strategy involves organizing our business along industry lines, and evolving these business units into separate operating companies.' To facilitate that process, its subsidiaries were based in different cities. For example, TenFold Insurance, Inc., was headquartered in Dallas.
Major companies added to the TenFold client base in 1999 and 2000 included SkyTel and Southern Company, as well as investment management customers Chase Manhattan Bank and Oppenheimer Capital, among others. In 2000 TenFold operated a total of 15 offices in the United States and London, including a new office facility in San Francisco where the firm planned to occupy six floors. Thus managing its expanding business operations was one of TenFold's major challenges as the new millennium began.
Principal Subsidiaries: TenFold Healthcare, Inc.; TenFold Energy, Inc.; TenFold Communications, Inc.; TenFold Insurance, Inc.; TenFold Investment Management, Inc.; TenFold Financial Services, Inc.
Principal Competitors: Cambridge Technology Partners; Sapient Corporation; Andersen Consulting; Computer Sciences Corporation; Interim Technology Inc.; Policy Management Systems Corporation; SAP A.G.; PeopleSoft Inc.; Baan Company; Electronic Data Systems Corporation.
Berquist, Thomas P., et. al., TenFold: Strong Fourth-Quarter Results, Goldman Sachs Report, February 4, 2000.
Carricaburu, Lisa, 'Utah Firm: Y2K Bug Just a Symptom,' Salt Lake Tribune, November 1, 1998.
'Consultant Killers,' Red Herring Magazine, August 1, 1998.
Dennis, Kathryn, 'Concentra, TenFold Challenge Larger Competitors,' Technology Marketing Intelligence, September 15, 1998.
'Fixed-Term Contracts: Ready or Not, Here They Come,' Solutions Integrator, April 1, 1998.
Frye, Colleen, 'Shared Risk, Shared Reward,' Software Magazine, February 1998.
Hoffman, Thomas, 'Automated Billing Saves Bank Time,' Computerworld, September 28, 1998.
Keri, Jonah, 'Software Firm Winning Clients With Money-Back Guarantee,' Investor's Business Daily, July 20, 1999.
King, Julia, 'Integrators Get Creative on Project Pricing,' Computerworld, April 26, 1999.
McGee, Marianne K., 'Customized Apps--Tenfold Targets Specific Industries for Custom Software,' Informationweek, April 13, 1998.
------, 'TenFold Development of Critical Apps,' Computer Reseller News, April 6, 1998.
'Mercy Health Services Chooses Fast Track Partner to Expand CV System,' Cardiovascular Disease Management, January 1999.
Mortenson, W. Christopher, and Patrick O'Hara, TenFold Corporation, Deutsche Banc Alex. Brown Equity Research Report, September 10, 1999.
'A New Wrinkle to an Old Debate: TenFold Pushes Buy and Build,' Insurance & Technology, January 1999.
'Powerful Minds,' Power Trading Technology, September 20, 1999.
Shein, Esther, 'Prix Fixe Deals,' PC Week Online, July 27, 1998.
'Trading Places [Interview with Gary Kennedy],' CNN Financial Network, May 21, 1999.
'Upside's 1998 Hot 100 Private Companies,' Upside Today, April 21, 2000.
Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.