Firm makes profit come falling from the cloud
Set up to take advantage of the ever expanding demand for cloud-based business solutions, the Hauste Group in Cork has, after its first year in business announced profits of €428,000 on a turnover of €1.22m.
In early 2011, the company started out by targeting the retail sector in the UK with a cloud-based solution which allows orders and invoices to be processed electronically. “Since then, we have processed 7m transactions with an invoice value of €800m,” says Hauste founder and chief executive Tony Duggan.
The company now employs a staff of 13, increasing to 20 in September, and its customers include large retail outfits in the UK such as the Ideal Home Shopping channel and household names such as Ronseal, Lindt, Casio, and Energiser.
Having achieved significant growth in its first year, Hauste is now aiming a great deal higher. “We are targeting a turnover of €5m this year and, halfway through the year, we are on track to achieve this. By 2013, we expect to grow turnover to €25m. This rate of growth is consistent with that projected by Bloom-berg for cloud-based enterprises,” says Mr Duggan.
The aim is to achieve this by growing the existing business and by expanding three new companies with separate products as part of the Hauste Group.
The first company deals with electronic document interchange on the internet. The second, due to be launched in October, will offer a cloud-based solution that will provide companies with short-term financing from non-banking sources. The third firm, which will be launched in December, will allow local authority tenants in the UK to swap properties online.
A native of Cork, Mr Duggan worked in the area of electronic supply chain with Wickes, the UK’s second largest DIY chain, and the Swift banking network before being offered funding by a group of investors to set up a company providing cloud services.
Although the primary target market for the company is initially Britain, Mr Duggan says Cork was chosen because of the quality of graduates available, the connections through Cork Airport, and low corporation tax.
Starting out at Web Works in the city centre, the company has now moved to Cork Airport Business Park. Hauste initially offered third party business solutions while working on developing its own products.
Offering third-party products allowed the company to develop sales and earn revenue quickly.
The company’s first in-house developed solution was launched in June.
“Our first significant customer was the Ideal Homes Shopping channel, which uses our system to send orders to suppliers and generate despatch notes for every consumer order they ship; all automatically linked to various courier services,” Mr Duggan says.
He says Hauste developed a cloud-based solution, which is a major technological breakthrough. “Existing companies in this field are using 30-year-old technology — our’s is massively scalable, sophisticated, more complex and cloud-based. A comparison would be using an old telephone exchange connecting wires for every call, compared with the breakthrough in automation we now take for granted through digital exchanges.”
The company started with a staff of three and began targeting large retail companies with high volumes of transactions. Now, Hauste has moved beyond the retail sector and is in discussions with a number of insurance companies and shared service centres. “We have also started to market Hauste in Ireland in the last four months with a fantastic response — we now expect business in Ireland to account for 10% to 15% of contracts signed this year,” Mr Duggan says.
While the company is targeting significant growth with document transmission solutions, the expectation is that the launch of the next division of Hauste in October will, over time, generate a larger share of turnover.
This division is another cloud-based company, which will allow suppliers to obtain short-term financing from non-bank sources. Mr Duggan sees enormous potential for this, given the current difficulties in obtaining this kind of finance from banks.
“This will allow companies to get funding on the strength of invoices due for payment, with credit rating information on the buyer and seller all allowing for more dynamic real-time financing,” Mr Duggan says.
“This is as significant as the introduction of “just in time” order processing in the physical supply chain.”
He also says it is similar to the Receivables Exchange in the US and is the first solution of this type in the UK.
“This leverages the current and growing €800m of invoice volumes from the Hauste transaction platform; so we already have potential demand to match alternative finance sources for our users.”
The third company is set to provide a solution for a very specific niche. “Only 5% of tenants in the 4.2m council houses in the UK move every year, although the rate in the private sector is 30%. The British government wants to increase this to 10% or 15%,” says Mr Duggan.
The Hauste solution is a website which facilitates a direct swap between tenants who want to move. Hauste will offer the website for free and earn revenue from the electronic transfer of lease documents.
While the short-term focus is on the UK, long-term, Hauste has its sights on Asia where many retail operations still carry out business transactions using paper.
Mr Duggan says: “Paper transactions are slow, inefficient, and costly and we see this as a prime opportunity to sell cloud-based electronic solutions,”
By 2013, he expects 15% of the business to come from Asia, at which stage he expects the staff size in Cork to have increased to approximately 70. The recent move to a substantial 7,000 sq ft office supports this planned growth.
* Company: Hauste Group;
* Location: Cork AirportBusiness Park;
* Chief executive: Tony Duggan;
* Staff: 13;
* Business: Cloud-based electronic document transmission;
* Website: www.hauste.com
