Providing HR Management Tools Proving To Be Profitable for Empliant

Editor's note: Each Thursday, Local Tech Wire profiles an emerging company or executive in the Triangle. This week, LTW interviews David Russo who is guiding Empliant toward profitability.

RALEIGH - In 19 years at SAS, where he was a leading force in a human resources team that helped make the company one of the world's most admired to work, David Russo learned a few things about the challenges and costs of working with employees.

So when he was approached to run Empliant, a software and application service provider focuses on HR services, and saw what the company could do last summer, he signed on.

"This opportunity surfaced, and I was excited about the technology and the business plan," Russo says. "It looked like it made sense, and they were reaching out to a marketplace that was underserved, And also the fact that it was Web-native, I felt comfortable that it would be attractive to small-to-midsize companies and could be used without stripping them of their budget dollars."

Recent announcements of new customers is only one sign that Russo, Empliant's chief executive officer and president, thinks he made a good choice.

Novo Nordisk signs on
Twenty-two customers, the most recent of which is Novo Nordisk Pharmaceutical Industries, have signed on since last July, when Empliant launched its business plan. The company utilizes an ASP platform to deliver communication tools and information via the Web to reduce administration costs, increase employee satisfaction and enhance operational efficiency in client companies' HR departments. Other major customers include Inspire Pharmaceutical, Targacept and SpectraSite, with more in the works.

Russo tells Local Tech Wire that the company will reach 50 customers by mid-summer, 100 by the end of the year.

"From our perspective, that is easily doable," Russo says, referring to Empliant's customer growth. "We have a template for ourselves that will create opportunities for customers to come on board on a modular basis. All modules are independent, so customers can come on and license one module without carrying the whole package. They take what they can get."

The modular approach, says Russo, helps HR business pains, such as the inability to communicate effectively or problems with benefit enrollment. It does so through tools for automated online content management, interactive transactions and Web-accessible administration. The modular approach also gives Empliant the opportunity to grow rapidly by accepting more customers.

$1 million in sales in 2002?
Along with customer growth, comes an increase in sales. Russo predicts Empliant can wrap up sales of $1 million this year, with that amount multiplying to $25 million by the end of 2005, when the current business model ends.

In other words, Russo has many reasons to smile.

"Sales are robust," Russo says. "Our adoption rate has been averaging four clients per month because our revenue model is an annuity, where the upfront cost is low. It's a licensed agreement with a per-employee, per-month fee."

Surprisingly, it doesn't take many employees to run a business specializing in that very subject area. By the end of the year, he expects to employ 10 people, with eight more by the end of 2003. When the business plan starts to "flush out" in 2004, Russo says, Empliant could have 30 employees. But after that, growth will slow down.

"Long range, since we have a constant ASP-platform," he says, "I don't think we'll ever need-regardless of our client base-more than 100 employees."

A focused market and product line
Empliant concentrates its products and services on the small to mid-size marketplace, meaning companies with as little as several hundred employees to as many as a few thousand. Russo says his company hopes to maintain its foothold on this market segment and eventually become the leader in employee services for the small to mid-size market.

He thinks Empliant can rise above the rest because of the company's unique offering, which can be broken down into three components.

First, Empliant does active content management, as opposed to static PDF files or downloads that are simply scanned.

"We do content management in a Web-ified form that allows for cross examination and searching of data through tools that allow for relative topics and issues to be accessed," Russo says. "It's a timing issue. Rather than waiting, it's all on a database, so the reaction time is much quicker and the quantitative and qualitative aspects of the delivery system are better."

Secondly, he says, all of Empliant's products are Web-native, so they are not just the front end for browsers, but everything is on the Web, making them easier to use.

And third and finally, everything is designed from the end-user's perspective.

"We did not lean on technology or human resources expertise, but rather on delivering our content in the most user friendly way possible," Russo says. "Our interface is not intuitive, it's obvious. There is no question where to go to navigate."

These qualities make Empliant's offerings more than just a tool for human resources. It's a technology that has real business value and impacts the bottom line. In fact, the IT departments of client companies like Novo aren't even involved in Empliant's solutions.

"Empliant has enabled us to further process automation and efficiency within our organization by merging human resources information and technology," Patricia Thomas, Novo's human resources manager, said in a statement. "Through Empliant, we are able to use technology without straining our IT resources."

The initial round of financing was funded by a number of local angel investors, including Timothy Buckley and Howard Jacobson of Red Hat; Michael Brader-Araje, founder of OpenSite Technologies, and Barrett Joyner, a former SAS executive and current CEO of FullSeven Technologies.

While that money has allowed Empliant to undergo its recent growth, Russo says the company is looking to obtain another round of at least $2 million in the near future. With that amount, he says, Empliant should be able to reach profitability by the end of 2002, as well as accomplish some other goals.

"We will use the money for increasing our customer service capability, increasing our ability to sell and market our products and increasing our visibility by building infrastructure," Russo says. "At the same time, we will be flushing out some products in the incubator."

An experienced leader
As vice president of human resources for SAS, Russo gained much of his knowledge and experience in the field. He has also been a longtime member of the Society for Human Resource Management (SHRM), for which he's served as vice president and secretary-treasurer. In 1999, the SHRM, which has more than 165,000 members, gave Russo the Award for Professional Excellence in recognition of individual excellence in human resource management.

Russo's high profile in the human resources world caught the eye of Marc Lemmerman, Empliant's founder and chief operating officer. After contacting Russo, Lemmerman made the decision to hire him.

"David's selection demonstrates our commitment to providing technology that liberates HR professionals from baseline administrative activities to re-focus on more strategic work within their organizations," Lemmerman said in a statement last year. "His vast industry and technology experience will help ensure that Empliant continues to deliver solutions that meet the needs of small and medium-sized companies traditionally unnoticed by larger technology, consulting, and service organizations."

Before joining Empliant, and after his tenure at SAS, Russo worked briefly as senior vice president of human resources at BuildNet, a company that went bankrupt soon after.

"I was at BuildNet for a little over a year, and that didn't work out all that well," Russo says. "It was a dot com that over-extended its supply line, and as a result, came to a sad end. But it was an interesting experience that gave me guidance as to what to do in running a company."

For more information, visit www.empliant.com