Somewhere on the scale between sophisticated MS Project software on one hand and the easy-to-use Outlook on the other lies the ActionBase's software. The purpose of this program is to distribute and manage tasks at an enterprise in a way that simplifies use on one hand, while being comprehensive and omnipotent for the enterprise on the other, to the point where even Microsoft (Nasdaq:MSFT) cannot ignore it.
Israel's largest enterprises and organizations - the Israel Defense Forces (IDF), Clalit Health Services, Strauss-Elite Ltd. (TASE:STEL), and Amdocs Ltd. (NYSE:DOX) - all use ActionBase. "We sell to 40% of TASE 100 companies, says ActionBase CEO Dan Gross, one of the company's owners.
Unlike most Israeli software companies founded in the past ten years, ActionBase developed much more rapidly in Israel than abroad, although it has extensive overseas business as well. Apparently, it pays to develop software that managers love, even if ordinary employees sometimes curse it.
Gross started out at ActionBase as a salesman, eventually rising to VP sales and marketing. Founded in 1999, the company was owned by BRM Capital. This was the bubble era, and ActionBase burned a lot of cash, but had few sales. Gross says, "BRM invested $28 million in the company, of which $15 million was burned while the company was barely able to stand on its feet. We invested too much in R&D before launch. The company had representatives overseas, but they were unable to market the product, whereas the team in Israel was actually able to do so."
In February 2003, ActionBase was sold to Kamoon for an estimated $3-5 million. Kamoon reached the end of the road itself in July 2004. Gross says, "I was told that the company would be closed. BRM wasn’t interested in a company of this size, which had failed to break into the global market."
Gross, then 30, planned to use his severance pay to start a new life in Australia. But when he heard the price, he suddenly realized that he could buy ActionBase - he paid only $100,000 in cash, and promised to pay BRM $1.2 million if ActionBase became profitable. "I couldn’t understand how a company with 150 customers wasn’t profitable," he said. Gross rectified the situation fast, firing seven employees who were previously his peers. "I had no choice," he says apologetically. Less than a year later, Gross sold 73% of ActionBase to Advantech Technologies (IT) Ltd. (TASE:ADVT) for $150,000, making a profit on his investment.
Advantech supplied the business and R&D backing that ActionBase needed. "Advantech's Magen group gives development services through outsourcing. Magen is one of eight Microsoft Technology Centers in the world," says Gross. The next version of the program will be Microsoft-compatible, as will be described below.
It all begins with a yellow pad
ActionBase does not actually have a brilliant innovative technology. We've already seen more complex technologies in Israel. Companies like it rise and fall on understanding user psychology.
This understanding begins with yellow pads. At the end of a work meeting, an organized employee lists their tasks. When they return to their desks, they add them to a yellow pad. The color of the pad, or if it's corporeal or virtual, are unimportant; ActionBase believe that the main thing is that this method has disadvantages.
One disadvantage is that these notes are not prioritized. Did you write a note yesterday? Today, you'll have to write another one, listing tasks sorted by urgency, one the basis of what you thought this morning. New tasks will of course come later in the day, and tomorrow you'll have to write the note all over again.
The second problem is that only one person sees these notes. If that person doesn’t see his tasks, they'll disappear. The third problem is related to the second - no one knows who has completed a task or when. Consequently, an employee waiting for another employee to complete a task has to nudge him to find out if the job was done. A lot of time is wasted asking about what has already been done, what is stuck, and why. Sometimes, this involves the time of quite expensive people.
ActionBase's conceptual change was to create an organization-wide task table that is not classified by person, but by task. The program therefore resembles Microsoft Project-style task management program, but is much simpler to operate and understand. What do tasks look like with ActionBase? It usually begins with a discussion, after which all the participants get a report detailing decisions and tasks. The summary of the discussion and its related tasks are copied into the system, with the name of an employee attached to each task. When the discussion is over, e-mails are automatically sent to the employees entrusted with carrying the tasks out.
When the task is completed, the employee has to record a summary with ActionBase. "There are managers who explain to employees that as far as they are concerned, if a task isn’t registered with ActionBase, it hasn’t been done," says Gross. The system automatically sends an e-mail to the person responsible for the task. If a task is defined as interdependent, an e-mail is sent to the employee responsible for carrying out the dependent task.
Every task also has a deadline. If the deadline has passed, the task is redlined, and an e-mail is sent to the employee responsible, and maybe to his or her boss as well. "A manager I worked with told me that he regularly sends e-mails stating that anyone whose tasks have been redlined will be summoned to a meeting to explain why the matter is delayed. It isn’t always necessary to hold an actual meeting. Wondrously, sometimes a task is completed immediately following the e-mail. No can say that they weren’t told. No can say, "I thought it was stuck somewhere else."
If someone divides a task and allocates parts to his or her subordinates, they have to register the division on the task chart. In this way, a senior manager can know where a task is jammed. The system can produce reports according to subject, department, or even employee, in order to show how many tasks he or she is working on and what their status is. These charts explain why this program is so liked by managers and disliked by their subordinates.
"I never opened it"
Clalit Health Services is one of ActionBase's most prestigious customers. This is a huge organization in which information is critical. D., a former employee at Clalit, claims that the system, adored by "computerized CEO" Dr. Yitzhak Peterburg, was not really appreciated by ordinary employees. "After a few days of adjustment, it was neglected and I never opened it again. Our managers have their own ways of giving us tasks. But that's OK. We now use Excel spreadsheets. I've never updated anything on them."
The situation in the IDF is rather different. "This is software that senior officers love," said a soldier at a computer unit. "Tasks come down from on high through the system. It's rather unpleasant receiving orders from a computer. I tackle these tasks without enthusiasm, but I have a problem: the tasks don’t disappear. After all, every organization has tasks that both sides tacitly agree can be ignored…"
Given that uploading is vital to ActionBase, what does the company do to see that this is done?
"Managers are responsible for ensuring that their employees update everything with ActionBase. Since they buy our program, and it isn’t cheap, they will presumably do it," says Gross. The program, by the way, costs $200 and up per user, with costs declining with each license that a company buys. "Employees also find that it helps them manage time and that managers bother them less - what's happening with this and with that. Besides, someone is monitoring them and sees that they're working, and that they have tasks. This is especially relevant for employees directly overseen by more than one manager.
"Managers tell me that e-mails are ordinary updates and that ActionBase is like an operational frequency. When a task is really important to a manager, when he really wants to monitor it personally - this is the solution."
The new version of ActionBase's program directly interfaces with Outlook, and requires a server on which its database is installed. These points greatly interest Microsoft, which gave ActionBase a $100,000 development grant. "We're a killer application for Microsoft," says Gross. In other words, because the software sits on top of a single operating system, an enterprise will consider upgrading or replacing its operating system in order to use the application.
ActionBase's software was originally based on Sun Microsystems' (Nasdaq:SUNW) Java program. The next platform will be Microsoft, with ActionBase directly linked to Outlook and feeling like a part of it. "It's in Microsoft's interest that all programs in the world look like it," says Gross.
Like any entrepreneur, Gross will not admit that acquisition by Microsoft is his goal, but he admits that he can't conquer the world by himself. "We're looking for a strategic partner," he says, but for now says only that this means distributors to market the system overseas; someone who is already sells solutions to which ActionBase's program can be added. ActionBase will first sell in the UK, since the program is already has an English version, and the geographic proximity makes providing support services easier. As for Microsoft, it is expected to help the marketing effort.
Published by Globes [online], Israel business news - www.globes.co.il - on July 4, 2005