Selling to the Vatican

ANN WALMSLEY October 14 1985

Selling to the Vatican

ANN WALMSLEY October 14 1985

Selling to the Vatican

After 10 months of negotiations the deal was completed over a pasta lunch in a Rome restaurant. And for the executives of Geac Computer-Corp. Ltd., located in Markham, Ont., just north of Toronto, the opportunity seemed heaven-sent. Last month Geac’s president, Charles (Chuck) Williams, announced that the company had signed a $600,000 contract to introduce computers into the famous Vatican Library. Now housed in a 16th-century Renaissance stone building, the library has used a manual card catalogue system since it was founded in 1475 by Pope Sixtus IV. But currently, said Williams, the library is “a little behind with its cataloguing—as much as 300 years.” The honor of cataloguing the 1.7 million priceless manuscripts, books, engravings and prints is an important one, but it is only the latest in a series of high-profile contracts that have thrust Geac into the international limelight. Still, said Williams, “For us, no contract has been as exciting as the Vatican.”

The 14-year-old company, founded by R. Angus German, a computer specialist, and Robert Isserstedt, a marketing expert, both from Toronto, has built its reputation by specializing in computer systems for libraries and financial institutions. It is a strategy that has made Geac one of only a handful of profitable Canadian computer companies. Geac’s customers have found the company’s computer packages ideal for organizing and verifying rapidly changing library catalogues and records of financial transactions. In early 1983 San Francisco-based BankAmerica Corp., the second-largest U.S. bank, bought six signature verification systems from Geac for $3 million. Then, in May, 1984, the French national library in Paris, one of the world’s largest, chose Geac over competitors including International Business Machines Corp. (IBM) to install a $2-million computerized catalogue

system that would help to streamline its operations. And several months later that year Geac signed a $1.4-million contract with the Washington-based Smithsonian Institution libraries for a similar catalogue system.

The innovative young company began by computerizing the records of school boards and small dairies in Ontario but now generates more than 50 per cent of its sales outside Canada. According to computer industry experts, at least seventeen per cent of the world’s computerized libraries use Geac systems, as do 300 financial institutions. Under the direction of Williams, who had personal experience in European computer markets and had been president of HewlettPackard (Canada) Ltd. before joining Geac in 1980, the company has opened subsidiaries in Ireland, Holland and Australia and has set up branches in Chicago, Dallas and Washington in the past two years. Said Nancy Miller, managing director of Toronto’s Evans Research Corp., a computer market research firm: “International sales are the secret of suc| cess for any Canadian high-tech company, ï That is because the “ marketplace here is so quickly saturated.” Still, added Williams: “Nobody seemed to know how much effort we have put into foreign sales until we signed the Vatican.”

Geac’s international success evolved from a decision in the late 1970s to specialize in computer hardware and software for library and financial transaction systems. The company had already begun to produce its own computer hardware in 1976 because existing computers could not handle Geac’s increasingly sophisticated software programs. At atime when computer systems sold by other companies could only process one type of financial transaction —such as a credit card payment or withdrawal—at once, Geac’s products could process many different types of

financial transactions at the same time.

The company’s strategy of producing specialized hardware and software soon proved profitable. By 1980 it had installed computer systems at such major financial companies as the Torontobased trust firm The Permanent. It had also automated six libraries, including two university libraries in Ontario, at the University of Guelph and the University of Waterloo. And in November, 1984, Household Finance Corp. of Canada chose a $2.8-million Geac system over 26 others because of its unique features. According to Household assistant vice-president of information services Malcolm Thornley, Geac’s system will replace the IBM system in the company’s consumer finance branches because of its capacity to compile a customer’s entire portfolio of transactions. Said Thornley: “If I spend one dollar at Geac I get far more value than if I buy a generalized computer system. Now we have a technological edge that other companies would be envious of.”

For other buyers the low cost of Geac’s products is a compelling factor. Said Serge Salomon, project leader for computer automation at the French national library: “For us, Geac appeared number 2 in terms of quality but number 1 because of price.” Added Household’s Thornley: “The price of Geac’s software alone was one-third the cost of comparable software to run in an IBM system.”

Although 1984 was the company’s best year for sales, an attempt to crack the medium-sized financial institutions in the United States proved less successful. Last year Geac spent $2 million opening U.S. branches and funding expensive marketing and research studies. But the company discovered that U.S. bankers were extremely wary about making large capital expenditures because of the uncertainty caused by a severe banking crisis, including the temporary closures last March of 71 Ohio savings and loans institutions. As a result, although revenue climbed 18 per cent, to $71.7 million, profits fell to $5 million from $6.1 million a year earlier. Admitted Williams: “It has been tougher getting into U.S. banking that we anticipated.”

But Geac’s troubles in the United States are balanced by another 1984 investment that analysts predict will pay off: the company’s new Concept 9000 computer. For the first time, Geac has hardware that is powerful enough to equip such large institutions as the country’s biggest banks, who traditionally have been IBM customers. Said David Dvorchik, a technology analyst at Royal Oak Securities Corp. in Toronto: “Geac will now be able to compete with anybody.”

— ANN WALMSLEY in Toronto