I had the pleasure of reporting on the software category for this year's Inc. 500 list. Though the software companies on this year's list covered a broad range of industries and functions, after a while it became pretty clear to me that a certain sector of the B2B software category is absolutely booming. In fact, there were relatively few consumer software companies on this year's list. Why? Well, for one, the consumer software market is dominated by industry titans like Microsoft and Apple. And much of the software talent out there might well be flocking to the latest sexy internet startups. More specifically, this year's software entrepreneurs seem to be making a killing by bringing change to industries that have been slow to make technological leaps.
Take Turning Technologies, for example, which makes software used in schools that turns the dreaded PowerPoint presentation into an interactive learning tool. They're trying to rid the world of chalkboards once and for all (Check out the "How I Did it" featuring Turning's CEO Mike Broderick in this year's Inc. 500 issue for more information). Or eClinicalWorks, which makes software that helps doctor's offices move their medical records online. eClinical had more than $38 million in revenue last year. Then there's companies like Discovery Mining and Zantaz, which help large corporations produce internal communications, E-mails and IMs in response to lawsuits. As is common in the legal field, this used to involve stacks of paper so gigantic they would make even the most industrious law clerk cringe. Believe it or not, electronic discovery will soon be a multi-billion dollar industry. Zantaz, incidentally, was recently sold to UK-based company Autonomy for $375 million, or about 3.5 times their 2006 revenue.
What all these companies have in common is that they're serving other businesses. But more than that, they represent the latest wave in the drive to update the last few industries -- the medical and legal field especially -- that are clinging to paper-based operations. Think of the opportunity eClinicalWorks has next time you visit your local doctor's office and catch a glimpse of all those manila folders containing patient records.
There are also a few software companies that seem to be on the verge of changing the way we access and use information itself. Endeca Technologies has come up with a brilliant piece of software that acts as a sort of Google for company intranets and internal networks. The program can search and categorize everything from employee manuals to obscure company databases. ROME Corporation, based in Austin, hopes to prevent future Enron-sized financial disasters by selling software that analyzes the risk exposure of any partner a large company might do business with, as well as their business partner's partners. Think of ROME's software as a constantly updated credit check on your business partners, a service that companies exposed to the volatile commodities markets desperately need. QL2 Software, for its part, has developed a program that mines the internet for data in real time. Its clients use the software to monitor everything from mentions of their company in blogs to tracking competitor's prices online.
What do you think of the software companies on this year's list? Where do you think the future opportunities lie in this industry? Did you spot any long-term winners on this year's list?