REALITY CHECK: Oh, yeah? Try putting a traditional business on-line

Dan Caulfield is a former marine who more than trusts technology; he loves it for the power it can bring. A couple of years ago he experimented with running his Chicago-based recruiting business, Hire Quality Inc., as a truly paperless office. It almost worked. The paper eventually crept back, but Caulfield says that reducing it boosted the company's productivity by at least 300%.

Caulfield put up his first Web site in early 1995, when the gurus were still talking about the information superhighway and America Online was an upstart challenging CompuServe for its E-mail business. So during last year's Internet fever, he figured he'd better get a supersite going before Net-savvy competitors ate away too much of his business. "Every day, we'd lose customers to or HotJobs or some Internet recruiter," he says.

Hire Quality specialized in placing veterans, and one of its biggest assets was its gigantic database of military résumés. So the obvious solution to its competitive problem was to get that puppy onto the Internet. Let employers post job listings and search for candidates themselves, Caulfield figured. Make it possible for companies to screen job seekers automatically with a short on-line questionnaire.

Caulfield's business had always offered traditional individual package placements, which went for $3,000 to $5,000 each. Now he hoped to expand his line of products and services by taking advantage of the Web. Using the Internet model, he would be able to sell listings alone for a mere $25 each -- which was much more affordable for clients with less money to spend on recruiting. "Instead of turning down 80% of the people who call, because they don't want to pay the fee, we could get money from all of them," Caulfield says.

Strategically, Caulfield's move made a good deal of sense. He was confident of his company's ability to deal with the glitches that came with the adoption of a new technology-based business strategy. He had been down a similar road before, when he tried to go paperless. But putting Hire Quality's database on the Internet was a lot more complex than he had ever imagined. "We expected to put our system on the Internet and that people would be able to use it intuitively and quickly -- and get the same kind of productivity gains that we got over the past three years," he says. "That didn't happen. The legacy database was very cumbersome. We almost had to rewrite five years of code to make this work on the Web with multiple users. Taking a client/server system and porting it to an Internet model was very hard."

By last June the site seemed ready to go. Caulfield started running a commercial on cable TV -- which cost $8,000 a month -- and sat back to wait for traffic to build. But once again his strategy was hamstrung by the unexpected quirks of a new technology. His customers couldn't figure out how to use the site. "The system was just not intuitive," he says. "If I could have given our customers a day of training -- like I do my staff before they even touch the computer -- they could have done it."

That wasn't an option, so Hire Quality's customer-service phone reps spent most of last summer walking clients through the steps needed to post a job. Meanwhile, Caulfield's programmers raced to simplify the customer interface. "We thought this would be up and running in May. We didn't get it up and running until September," Caulfield says.

By the time his programmers got the kinks out of the system, programming costs had eaten up his marketing budget. So even though the site had been improved, traffic growth was, until recently, disappointing. Caulfield says that it is slowly increasing, but "we had no idea how slow the volume would be and how slow it is to build the $25-placement business. We are holding on by our teeth to our cash flow and bank reserves."

Though all the Internet hype had led Hire Quality into a quagmire of a project, it also provided one payback. Caulfield ended up creating a new company called Hire Quality Technologies to do for other companies what Hire Quality did for itself. The business creates private-label software for posting jobs and screening candidates on the employment section of Web sites. The new company is worth five times the value of the original Hire Quality.

Businesses making the jump to the Web should leave plenty of room for error, advises Caulfield. "Plan in time for technology that just doesn't go as smoothly as you'd like it to go," he says. "Give yourself an extra 30 days before you roll something out. Make sure the site is operational before you even tell anyone you're doing it."

Published on: Feb 1, 2000