Commanding New E-commerce Options
John Marrah has taken command of Ecometrys
future. The CEO of the application company which once led the market
in new HP 3000 sales, Marrah pooled his personal stake in Ecometry
late last year to buy the firm from its founders. Marrah had to
attract a financial partner to make the deal a reality, finding a
well-heeled one in Golden Gate Capital. Golden Gate already owned
more than $1 billion worth of software companies. Now its financial
strength looks to enable Marrahs strategy for his e-commerce
firm: growth through acquisitions along with an increase in revenues
from established products.
Those products run for customers who include some of
the best-known HP 3000 users in the world, the brand names that stand
out in retail malls and on the covers of the most-mailed catalogs:
Nordstrom, Lego, Time-Life, Brookstone, Hickory Farms, Levenger, Nine
West, Coach, and Urban Outfitters. Explosive growth through the
Internet shopping boom fueled Ecometrys go-go years leading to
the turn of the millennium. Marrah had joined Ecometry when the
company was called Smith-Gardner, named after its founders and
drawing nearly all of its business from the catalog channel. The
dot-com boom led to an IPO for the company, which went private again
Now the 43-year-old Marrah is taking Ecometry back into
growth territory, the scenario he joined the company to explore after
he led three turnarounds. As we took this issue to press Ecometry had
just announced it made a $54 million
offer to buy Blue Martini, an e-commerce solution supplier that
might have once been considered an Ecometry competitor.
Mergers are becoming more popular in the HP 3000
community, with the Activant's proposed purchase of Speedware
preceding Ecometrys Blue Martini deal by a little more than one
month. But what makes the Ecometry story even more interesting in
light of its growth plan is the companys re-embrace of the HP
3000 platform. Marrah wants his 200 or so MPE customers to know they
dont have to migrate away from the server by 2006, extending
the companys support of the 3000 by at least two more
Those HP 3000 customers still make up the largest share
of Ecometrys business. The company is straddling the past and
the future of the platform by offering migration solutions through
partners like Transoft while extending application support on the
3000. From his service in the US Marine Corps to a directors
post at Oracle age 26, Marrah looks like hes always been eager
to lead the way to higher ground. We asked him what drove his deal to
acquire Ecometry and how the companys expanded future looks for
the sites that still rely on the 3000. We spoke in a pair of
telephone calls in January and then in March, just after Ecometry
announced its offer for Blue Martini.
So you started with the 25 percent of Ecometry you own
in your effort to buy the company from its founders?
Exactly. I rolled over my investment in the company, and
found outside financing to go and allow Will and Al to move on into
retirement. I also found a financial partner to execute our strategy
of growth and really be in a very good situation where we
could find some strategic positions that will add more value to our
customer base and put ourselves in a much better financial situation
Do you think the acquisitions that youre keenest
on right now would bring you customer base, or bring you
I think both, actually. We have a pretty pragmatic view of
what were looking for. Were surely not looking to go fund
losses. We have a very strong mantra of profitability at Ecometry
today. Weve all gone through the last couple of years and want
to maintain our financial stability. The worst thing we could
possibly do, and a disservice to our customers, is to make some kind
of financial investment that would harm Ecometry put us in a
situation where we could no longer develop and support our
Were looking at continually having net-positive
additions. From a financial standpoint, such companies that can add
financial resources and capabilities is a top-line requirement.
Having companies that can add technologies that can assist our
existing customers and extend our customer base are the three main
areas were looking at. Were focusing on multi-channel
retailing. All the positions youll see from us are focused
around providing technological solutions for multi-channel
It looks like Golden Gate, your financial partner, has
also invested in Herbalife, an HP 3000 shop. Any connection there
that might have spurred Golden Gates interest?
I thought that Herbalife was a 3000 customer also. But it
never came up in the process. Yes, Golden Gate is an investor in
Herbalife, and by now may even be the whole owner. Herbalife just
Speaking of going public, a published report has
suggested that Ecometry might be going public again. Is that in the
future for the company?
You never know.
Well, it would an interesting move to go from private
[Chuckles] Then back to private, and then back to
There was a stretch in the companys history where
it was working to regain profitability. Where did you turn the corner
on that effort?
We turned that corner just at the end of 2003. For the
fiscal year 2003, we were almost at break-even. For the whole 2004
period we were very strong financially.
What do think this change of ownership means for the HP
3000 customers you still support?
One of the things that this means is that we are going to
extend support for the Ecometry product beyond the end of 2006.
What led you to make a change in your strategy?
The support network is really becoming a reality.
Were going to ask our customers to do a couple of things in
exchange for extending this support. If we can get them up on those
versions, which are easier to support than some of the older versions
and are of higher quality, then we will extend that support.
Well be asking everybody to get up on a current version by the
busy season of this year.
Any other conditions for post-2006 support?
Were going to tell the HP 3000 customers were
not going to stop supporting their product at the end of 2006.
Were not doing new modifications and enhancements to
that platform. But well be doing new UPS shipping stuff, credit
card updates, that kind of enhancement. If theres something
thats necessary to keep that 3000 platform alive and running,
then absolutely were doing it.
How long will you extend the support for this
application on the 3000?
Were saying 2008 for now, because thats as far
as we can see. The biggest issue is third-party support at that
How does the MPE version of the application compare to
the open systems version of Ecometry?
The functionality of the open systems product is quite a
bit ahead of the MPE product. But if a specific customer doesnt
need need any of that specific functionality, then theres no
crying need for them to go off the 3000.
How long has it been since the MPE/iX versions of
Ecometry got enhancements?
We stopped doing enhancements in April of 2004. But for
people who that version is doing everything they need, theres
no need to change. No need to migrate if theyre happy on that
platform. If theyre able to get third-party support,
thats great. I dont want to force them off.
Any other enhancement news about the 3000?
Were building a separate team of people to create
enhancements on a one-off basis, through our professional services
Did you hire for that team, or just re-assign
Were taking folks and dedicating them to that work,
our most experienced people for the MPE team. We have a very big
product, so it was a huge challenge. We have people on the team that
know multiple aspects of our product and had the highest quality
metrics in their coding.
So youre going to focus on that and point your
3000 customers at potential sources of that support?
Yes, there are all of those great, qualified third-party
Is the requirement to come up to a more current version
of Ecometry going to provide your company with some revenue?
No, its free to them. They dont have to pay
anything to do that. Theres no revenue motivation at all. If we
can get them on the most current version, its easier for us to
provide better support.
Is there a cost savings youll realize then, by
having the 3000 customers move up?
During these tough financial times, weve struggled
with support and development. If we kept those older versions of the
MPE product, that would be multiple versions that wed have to
support and code for, and the cost would have made us staying on MPE
We basically went and cut the company during the last four
years almost in half, from a resource standpoint. On a hugely
significant decrease in revenue we increased customers, increased
support requirements, built a whole new open systems product that
weve got 90 customers on today. And we never increased our
support costs. We migrated customers almost for free. [Ed. Note:
Ecometry has since announced its first increase in support costs in
six years, 10 percent or less depending on a customers
We really bent over backwards to make it positive and easy
for customers to do what they needed. In 20-20 hindsight, some of
those things werent the best things to do from a financial
standpoint. Thats an awful lot to do at once, and Im
really proud of the people in our company for accomplishing that.
Were the biggest company in our marketplace just on the open
systems customers alone.
Whats really important to us today is that during
that time, our customers did suffer some. Our support levels dropped.
Now were really focused on product quality and product support,
things that we havent been able to focus on for a year.
So were telling customers Get on these new
versions. Theyre better versions, and theyre easier for
us to support you on.