HTE Makes Consulting Splash
Double-digit Growth, Government Deals Propel Orlando Firm Back in 1981, a cheeky 25-year-old named Dennis J. Harward promised the staff of his Orlando software company he would do something really big when company sales hit $1 million. When the day arrived, Harward, president and co-founder of HTE Inc., kept his promise: He climbed fully clothed into the atrium fountain of a prominent office building in the heart of downtown Orlando. When sales hit $5 million, Harward put on his favorite suit and headed across the street to Lake Eola. There, he rented a Swan Boat, then paddled to the middle of the lake. In front of God and everyone, Harward dived, head-first, into the water. A gaggle of tourists thought he was trying to commit suicide. The suit was ruined. The staff roared. When sales hit $10 million, Harward promised he would water ski the slalom course on another prominent downtown lake, in plain view of the staff and anyone who happened to be driving along Interstate 4 at the time. The staff, which now totals nearly 300, is still waiting for Harward's latest aquatic adventure. Given the company's growth, the 40-year-old Harward may simply have not had time to exercise. "I don't think I'd make six buoys right now," he says. "I just need a little more time to get in shape first." Indeed, sales growth has averaged 35 percent annually, fueled largely by a series of six acquisitions in the U.S. and Canada since 1993. In fact, by the time HTE's 15th fiscal year draws to a close on March 31, sales are expected to top $42 million. Projections show $57 million in sales in fiscal year 1998 and $100 million in 2000. The company is profitable, although Harward would not disclose any figures. Finding time to exercise could become harder than ever for Harward. In March, new products will be rolled out. In April, San Francisco's Volpe, Welty & Co. is expected to underwrite the company's initial public offering. In May, HTE will move to its new $16 million home suburban Orlando: An 87,066-square-foot building at the Heathrow International Business Center in Lake Mary. The site is a stone's throw away from AAA's world headquarters. (A second 87,000-square-foot building is already on the drawing board.) At least two $10 million acquisitions are in the works. Harward, who holds an associate degree in business from Orlando's Valencia Community College, also has applied to the Crummer Graduate School of Business at Rollins College in Winter Park. Once the new headquarters building opens, he will also be commuting more than 100 miles each day: Harward and his family live in Lake Gentry, about 10 miles south of St. Cloud, smack in the middle of horse country. HTE is growing so quickly because the company's integrated software has proven popular with smaller cities - those with populations from 25,000 to 80,000 residents. These cities typically operate several computer systems that run software applications on diverse but connected platforms. "I wouldn't know why you would want to have any other product," says Jackie Carkhuff, Ormond Beach's accounting manager. The city of 33,000 has been an HTE customer since 1988. "All the applications talk to one another, and you don't have to do double key entry. The staff has been extremely helpful, and the support is 24 hours, bar none." About 900 of the 18,000 cities and counties across the United States currently use HTE's integrated administrative and financial software systems for public safety, community development, parks and recreation, public works, human resources, courts, planning and zoning, transit and utility services. Florida customers include Casselberry, Davie and Winter Park. HTE has come a long way since Harward and his father, Jack, a former information systems director for Seminole County, started their small service bureau with a $3,000 investment and one local contract. Back then, most cities had no in-house computer staff and were seeking turnkey systems overseen by consultants. Now, municipalities increasingly are seeking integrated software solutions that run on open, scalable platforms. Average licensing fees for single users of HTE's software have risen from $70,000 in 1981 to more than $200,000 in 1996. Thanks to increased computing capacity, HTE and other smaller vendors can now go after contracts with larger cities that were once the exclusive domain of the big boys. HTE's primary competition is Pentamation of Bethlehem, Pa., whose systems run on Unix and the HP/9000 client-server platform. In stand-alone applications, "the biggest thorn in HTE's side right now" is SCT Utility Systems Inc. of Columbia, S.C., says Greg Galluzzi of TMG Consulting in Austin, which has done market studies for HTE. SCT Utility Systems is a division of publicly held Systems & Computer Technology Corp. of Malvern, Pa. SCT, whose clients are on utilities, rather than entire municipal systems, doesn't consider HTE competition. "In all candor, we don't pay that much attention to our competitors, but we don't run into them that often," says John Gregg, SCT's vice president of marketing. The company has completed more than 50 installations in the United States, Britain and Mexico. While smaller players have racked up impressive sales- HTE's clients include Fort Worth, Tucson, Anaheim, Portland, Maine, and Manchester, N.H., for example - they should really stick to their knitting, Galluzzi says. For HTE, that means cities with populations of 25,000 to 80,000. The operational side frequently "is not able to keep up adequately" with sales, he says. "They're moving so fast, they're doing so many jobs, so many enhancements in the base product that they end up overlaying things, loading software that hasn't been tested, changing fixes that were made to previous errors, things like that." HTE also is handicapped because the AS/400 is viewed as old, closed undesirable proprietary technology. "In organizations, typically there's that camp that says, if it's AS/400, we don't want to look at it," Galluzzi says. But, he adds, HTE has recognized the problem and is rewriting its code so it will operate on various open platforms. Harward acknowledges the problem and says, "We have solutions that work on Unix and Microsoft Windows NT - we wouldn't win without offering customers a choice. But when they get to where they're not so hung up on technology, they buy old reliable, the AS/400." HTE also is targeting investor-owned utilities, rather than just municipal systems, and is expanding into smaller markets through acquisitions. Last November, HTE acquired Canadian software developer Bellamy Software Ltd. of Edmonton, Alberta, for $1.5 million in cash and stock. Bellamy's niche is cities with populations under 25,000. Bellamy will be combined with Software Management Inc. of Mount Dora, a previous acquisition and renamed SMI Bellamy. The elder Harward is chief operating officer of the newly combined company. "I'm glad Dad's running it," says Harward. "We're both pumped about it."
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