"I want to ride the iPad wave"

ClickSoftware CEO Moshe Benbassat sees the consumer devices becoming big news in the enterprise market.

You're sitting at home and waiting. The technician who is due to come between 9 am and 1 pm to fix the washing machine has still not arrived, and it's already 11 am. Another hour passes, and just as you are about to pick up the phone to call the company's service center to find out what happened to the technician, he arrives. After he fixes the machine, you sign the forms he presents you and he sets you free.

This scene is part of our daily lives, but most of us are unaware that behind this individual technician is a service center, which handles the operations of hundreds or even thousands of field technicians like him. These service centers do everything they can to meet the customers' demands, and the company that helps them in Israel and around the world is ClickSoftware Technologies Ltd. (Nasdaq: CKSW), one of Israel's oldest high-tech companies.

ClickSoftware went public on Nasdaq 11 years ago. It published its financial report for the first quarter of 2011 last Thursday and announced the distribution of its first-ever dividend. The company's results continue to reflect its ability to generate double-digit annual growth.

2010 was a rollercoaster for ClickSoftware's share, but it has since stabilized at a price giving a market cap of $299 million. The five investment houses that cover the share are quite optimistic about it, and their average target price is $11.33, a 16% premium on Friday's close of $9.75.

ClickSoftware was founded by chairman and CEO Moshe BenBassat 14 years ago with the goal of optimizing the work of service companies' field technicians, which means knowing which technician to send where and when. BenBassat says that ClickSoftware's customers can quantify the software's contribution, in the form of large cost savings (such as by increasing the number of technicians supervised by one manager), increased revenue (if the number of calls handled by each technician rises), improved visibility and control, and better customer satisfaction.

ClickSoftware targets its solutions at utilities, such as electricity and gas companies, telecommunications companies, cable and satellite broadcasters (Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and its satellite broadcasting subsidiary DBS Satellite Services (1998) Ltd. (YES) are among its customers), retail chains such as Best Buy Ltd., and office equipment manufacturers, such as Hewlett Packard Co. (NYSE: HPQ) and Xerox Corporation (NYSE: XRX).

"There is little difference between an HP and a Xerox printer, so these companies compete on service, which is where we come in," BenBassat told "Globes".

BenBassat (63) has no plans to resign as either chairman or CEO of ClickSoftware, let alone from both positions, which he has held since founding the company. "Until four years ago, I managed all the company's customers personally, and there were eight managers who reported directly to me. For the past four years, CFO Shmuel Arvatz and COO Hannan Carmeli have been the only executives who report directly to me, so I have more time to take care of the long term," he says.

"Globes": What about separating the chairman and CEO positions in accordance with corporate governance best practice?

BenBassat: "I see no problem here."

ClickSoftware's main software product was designed for the service company itself, and is installed in its computers. Three years ago, the company realized that it could not rely on just one product and began developing solutions for mobile devices and for shift management. These segments will drive the company's growth in the coming years. The massive spread of tablet computers, like the iPad, is related.

"When a particular company has a mass of technicians, and they have to be synchronized with each other - let's assume that one has become available and another is delayed - and everyone has a mobile device that includes ClickSoftware's software, it's easier for that company to move them from one place to another," says BenBassat.

"Smartphones and tablets have created a real revolution. We're currently talking about devices mainly intended for personal consumption, but the iPad wave is slowly reaching the business world, and I want to ride it."

ClickSoftware's software can be downloaded onto almost any mobile device, including the iPhone, Blackberry, Android, and the iPad. "One objective is to make the manager mobile, too, not just the technician."

As though BenBassat's belief in the huge potential of mobile devices were not enough, ClickSoftware has targeted another growth engine: a software solution for managing shifts, such as by jailers. "These two growth engines are already starting to greatly contribute to increasing revenue," says BenBassat.

It is to ClickSoftware's credit that it survived the changes in the industry. While many competitors have been swallowed by larger companies, or changed direction, ClickSoftware has insisted on staying the course and has become a leader in its field. BenBassat and Carmeli are proud of a Gartner report, which says that the company is the leading pure-play player in its field, surpassing giants like SAP AG (NYSE; XETRA: SAP) and Oracle Corporation (Nasdaq: ORCL). ClickSoftware has just over one-third of the market, while the others have only a few percent each.

But ClickSoftware would have made far slower progress were it not for assistance from giants like SAP. In addition to direct sales, ClickSoftware markets its solutions via strategic partners, including SAP, integrators like IBM Corporation (NYSE: IBM) and Accenture plc (NYSE: ACN), and Microsoft Corporation (Nasdaq: MSFT).

"There are markets and operating segments which are hard for us to enter alone, and these partners help us," says BenBassat, emphasizing that the partners state that the software solution they are marketing is ClickSoftware's, not their own.

Which has higher profit margins - direct sales or sales via partners?

Arvatz: "Direct sales, because we sell a license per technician. However, we have greater sales via our partners, so in total, there is a balance in the profit margins between the two sales channels."

BenBassat says that ClickSoftware's revenue is divided almost evenly between direct sales and sales via partners. "It's important for us to keep a balance, so as not to lose the direct link with the customer."

ClickSoftware's breakdown of revenue by sales method is not the only factor behind the company's condition. The company's revenue comes from the sale of licenses and the provision of support services. "Our objective is for revenue from the sale of licenses to grow at a higher pace than revenue from services. This shows us that our growth engines are working," says Arvatz.

In 2010, revenue from the sales of licenses rose 34%, while revenue from the provision of support services grew by 8%. ClickSoftware hopes to at least maintain these levels.

ClickSoftware is not building its future only on organic activity, and it is seeking other companies with similar businesses, which can be acquired. In 2009, it acquired three companies for small amounts, but since closing the purse strings, the company has been in no hurry to reopen them.

"I am looking for something suitable for the company's growth engines, which means a customer base in a business sector where we do not operate, or operations in a country where we are not active," says BenBassat. He cites the acquisition of India's Manchitra Services Pvt. Ltd., which increased ClickSoftware's presence in the subcontinent.

Published by Globes [online], Israel business news - www.globes-online.com - on May 2, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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