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May 9, 1997updated 05 Sep 2016 12:54pm

RECOGNITION WANTS TO CONQUER US – BUT DOES IT HAVE THE CASH?

By CBR Staff Writer

If you have innovative software and you want to be a big player, you have to make it big in the States. This is the plan driving Birmingham, UK-based Recognition Systems Group Plc which sells software for analyzing and managing huge customer data bases using neural networking technology. The company has announced losses of 1.1m pounds for the six months to March 31 with revenues rising 33% to 326,000 pounds. But this is all part of Chairman David Bounds aggressive expansion plan following the company’s listing on the London Stock Exchange back in May last year (CI No 2,904). Money has been spent on assembling a US based sales team and on running lengthy pilot schemes at some big name US clients. Bounds is convinced of the wisdom of tackling the US head on. He wants to grab his share of the biggest market as early as possible. But also, the sales team has found a willingness by US companies to commit to this kind of leading edge technology. In the UK it seems, customers are more concerned with not wanting to be the first to install, a wait and see conservatism prevails. And Bounds’ plan looks like it’s just beginning to pay off. While revenues are still a long way behind earlier hopes, the company has just won two key deals in the States. Sears Roebuck, the massive US retail organization has agreed to pay $250,000 for the ideas Model Builder product and another deal valued at $350,000 has been signed with one of the biggest life insurance companies in America. Sears were initially very sceptical about the value of using ideas Model Builder on their 50 million plus customer data base. But the neural networking program turned up some results which really got them jumping, and the deal was done. The biggest problem facing Bounds and his team now is cutting down the huge lead times between initial interest in the product and finally closing the deal. Some of the early pilot schemes have run for over a year, a situation which is clearly not conducive to healthy cash flows. Many a sound product has gone under for lack of working capital. But newly appointed Group Sales Director and ex-Oracle man Bryan Black is working on schemes to close the license sales earlier. The company will also charge an up front 17% maintenance fee to existing license holders. However, at current rates of consumption, cash is going to get very tight very soon and the directors would not be drawn into how they intend to finance the tricky next twelve months.

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