Accruent: Contract Worker
When Accruent CEO Mark Friedman was a commercial real-estate broker in the early 1990s, he regularly saw clients get cheated by landlords because someone in the accounts-payable department hadn't read the lease carefully enough.
For example, a company might have received a $5,000 invoice for snow removal from one of its landlords and simply paid up, not realizing the contract actually required the property owner to foot the bill. "It's death by a thousand paper cuts," Friedman says.
Plugging those nickel-and-dime leaks was Accruent's original mission. Its software tracks the terms of multiple contracts in a searchable database and automatically generates alerts for contract-renewal dates. The system can exchange data with a customer's external financial systems to automatically pay monthly rents and calculate other costs (such as rents per square foot), and red-flag any charges that aren't specified in a contract (say, snow removal).
While Accruent has attempted to broaden its software to manage all kinds of contracts, most of its customersincluding Dollar Generalare retailers that must monitor leases for hundreds of individual stores. Panda Restaurant Group, which runs 650 Chinese takeout restaurants nationwide, expects the Accruent lease-management system to help it save $500,000 this year identifying improperly levied maintenance charges from landlords, says Donna Wanser, senior counsel for real estate.
However, she adds, "You really need to have the information entered uniformly to use it efficiently." Panda first tried to input the data itself using temps, then enlisted Accruent to finish the project, Wanser says. Extracting data from paper contracts is, in fact, a key piece of Accruent's business: The company farms out such jobs to 250 workers in India, the Philippines and Vietnam.
Accruent now has 270 customers, 120 of which it added with the acquisition in May of Chicago-based National Facilities Group (NFG), its primary competitor in the commercial real-estate software market. That makes Accruent a sizable player in the rather puny segment for contract-management software, which AMR Research expects to be $246 million in 2004. "It's kind of the land of the munchkins right now in this market," says Pierre Mitchell, an AMR analyst. The opportunity today, he says, is too small to attract serious attention from big enterprise software vendors like Oracle, PeopleSoft or SAP.
Rick Stoneking, Rite Aid's senior director of real-estate accounting, says he was comfortable picking small, privately held Accruent because its venture-capital investors have pumped $38 million into it. He says Accruent has improved the quality of its software after being "a little weak" delivering customizations Rite Aid had requested two years ago. "The good thing is, once you make them aware of a problem, they're very willing to work with you."
1601 Cloverfield Blvd.,
Santa Monica, CA 90404
Ticker: Privately held
Before founding the company in 1995, he was a broker for commercial real-estate firms Cushman & Wakefield and Julien J. Studley. Holds a bachelor's degree in computer science from Tulane University.
VP, Professional Services
Previously was director of consulting and education services at Brio Software, a business-intelligence software company acquired by Hyperion last year.
The cmSuite applications provide a central repository for tracking contracts as well as analyzing cost trends and other metrics. The top seller is cmRealEstate, which monitors lease information and performs other functions such as scheduling monthly payments.
Senior Dir., Real Estate Accounting
Project: Drugstore chain uses Accruent's software to automate lease administration for 4,500 property contracts, including those for its 3,400 retail locations.
Dir., Real Estate and Marketing
Project: Los Angeles-based company, which operates 115 Hot Dog on a Stick food stores, spent around $100,000 to deploy an Accruent systems in 2002.
International Coffee & Tea
VP, Real Estate and Construction
Project: The 130-store coffee and tea retailer used the hosted service from MyContracts, which Accruent is phasing out. It plans to migrate to Accruent's new Java-based server this summer.
Project: General-merchandise retailer based in Green Bay, Wisc., tracks contract-renewal dates and calculates monthly occupancy costs with Accruent software for its 358 stores.
Panda Restaurant Group
Senior Counsel, Real Estate
Project: Chinese fast-food company picked Accruent's software in 2001 to track lease information for its 650 restaurants.
Project: Candle maker and retailer based in South Deerfield, Mass., manages leases for 318 U.S. stores with Accruent's software, which it plans to link to its accounts-payable and accounting systems from Lawson Software.
Executives listed here are all users of Accruent's software. Their willingness to talk has been confirmed by Baseline.
Revenue: $10M (est.), 2003 (AMR Research)
Funding to date: $38M
Investors: Granite Global Ventures, Sierra Ventures, Pequot Venture Partners, Innocal Venture Capital, Red Rock Ventures, Constellation Real Technologies, Peninsula Equity Partners
CMSI, Determine Software, DiCarta, iMany, Nextance, Tequila Software, Upside Software
Retail: Best Buy, Foot Locker, Guess?, Hertz, J. Crew, KB Toys, Linens 'N Things
Financial: Countrywide Financial, GMAC Mortgage, ING, Lehman Brothers, Morgan Stanley
Pharmaceutical: Bristol-Meyers Squibb, Pfizer, Schering-Plough, Sun Healthcare Group
Manufacturing: Anheuser-Busch, Campbell Soup, Raytheon, Siemens