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Return to: 1999 Feature Stories


Dec. 8, 1999: San Diego Union-Tribune


Doug Coull thinks the software industry is on the cusp of a sea change, where computer users no longer purchase software but instead tap into the programs they want and use them remotely via the Internet. And Coull is positioning his company, Advanced Personnel Systems, Inc. of Oceanside, in hopes of rising with this changing tide.

Late last year, APS launched SmartSearch Online - an Internet-based staffing management system where APS clients can use the company's human-resources software for a monthly fee, without having to buy it. The concept is similar to joining a health club. Members have access to the equipment, in this case software, but not the hefty price tag of purchasing and owning the software themselves.

"I think most companies aren't going to buy software in the future," said Coull. "I think the best business to be in is in the service provider business."

APS still sells its standard, traditional software packages to corporate human resource departments and personnel agencies that don't want to use the Web-based system. In fact, traditional software sales make up 60 percent of the company's estimated $2 million in revenue, Coull said.

"But the Internet product, SmartSearch Online, is growing fast. Coull said he expects monthly fees from SmartSearch Online to take over as the company's top revenue source within two years.

There's a convoluted name for these new Web-based software hosts: Application Service Providers. They've generated a buzz recently as the new business model for information technology. Proponents predict that computer users will throw away their expensive, memory-hogging software in favor of these Web sites, where the software runs remotely and is accessed with a Web browser. International Data Corp., a Framingham, Mass. technology research firm, forecasts that application service providers will generate $2 billion in revenue by 2002.

"In terms of the target market, the low-hanging fruit seems to be small to mid-sized businesses, but it's certainly not limited to these markets at the exclusion of large businesses," said Amy Mizoras, an IDC research analyst.

APS was "one of the first companies to come out with an Internet product," said Jim Wujkowski, global recruitment manager for Donnelly Corp., a Holland, Mich.-based firm that supplies components to major automakers. "It's particularly attractive to us because we can access our database from anywhere that has Internet access, which is anywhere in the world."

Donnelly operates in 14 countries. The $750 million firm uses SmartSearch Online when recruiting managers and technicians, Wujkowski said.

It has taken three years for Coull to remake APS from a pure software house to a company that also delivers software over the Net.

At APS' Oceanside office, one room houses racks of servers for the SmartSearch Online system. Coull guards against crashes with myriad backups - all part of the company's evolution toward the Internet.

He founded APS 14 years ago. At the time, he worked for a personnel agency in Orange County, screening dozens of resumes each day and placing up to 30 workers per week. "It was all paper-based and really hard to keep up with," he said.

So Coull and his brother-in-law, a software designer, developed a program to automate the hiring process. The partners founded the company with $50,000 in personal savings. As APS grew, Coull bought out his brother-in-law and moved the company to Oceanside for the slower-paced lifestyle. Sales peaked at $3 million. Then three years ago, the company stumbled. In an effort to keep up with competitors, APS added so many bells and whistles to its software that it became cumbersome to use, Coull said. Delivery deadlines were missed. Customers fumed. So Coull sent the company on a different path, drastically cutting its 45-person work force.

"It was very hard," he said. "We got to a low of seven people."

Rising from the rubble was a leaner APS - it now employs 13 workers - and the SmartSearch software.

"This system is easy to use," said Coull. "That's what got us into trouble before. We got caught up in the features, and it go so complicated that you couldn't use it."

Among those using SmartSearch Online is the San Diego Tech Force, a consortium of companies that joined together to recruit scarce technology workers. APS hosts about 9,000 Tech Force resumes in a database. Using Web browsers, recruiters from the 40 separate companies in the group dial up the database and search it for potential employees.

"They've been providing the Tech Force with resume management," said Jean Center, a spokeswoman for the group. "Our members use it as a tool."

While software can cost $20,000 or more, SmartSearch Online costs $875 a month, plus a one-time $1,5000 setup fee. APS is providing the system to the Tech Force free of charge.

Coull estimates that APS hosts more than 1 million resumes, which are either scanned into the system or, with e-mail submitted resumes, transferred electronically.

"It improves the efficiency of the staffing process, because, frankly, a lot of companies right now are so flooded with electronic resumes that it becomes overwhelming," Coull said.

APS recently signed deals with two leading European marketing companies - Intervention, Étude & Négociation (IEN) in France and Wuepper Unternehmer Beratung in Germany - to launch SmartSearch Online in Europe.

The potential in Europe is significant. "Based on our research and other studies we have read, and our own internal marketing analysis, we believe that APS sales in Germany will be $300,000 in 2000, $800,000 in 2001 and $1.8 million in 2002," said Karsten Westphalen, managing director of Wuepper Unternehmer Beratung, who responded to questions via e-mail.

APS hopes to raise $500,000 to $1 million to finance expected growth. Coull is convinced that Web-based applications will continue to spur the company's growth.

"We're just starting that process, and the market is going to be billions," he said. "That's a business I want to be in."

Return to: 1999 Feature Stories