The Dallas 100: Picasso Software Inc., Software biz grows even in market downturn

GRAPEVINE - After the recent unraveling of so many techrelated companies, when a young company like Picasso Software Inc. manages to succeed there are more than a few competitors meshing their mental gears to figure out why.

Begun in 1997, Dallas-based Picasso seems to have achieved the sometimes elusive mix of business sense and technical wizardry.

"We are unique in that we bridle our enthusiasm for incorporating new technology with an overwhelming desire to get the business issues solved first," said Stephen Casner, Picasso CEO.

What Picasso does is help turn business processes or transactions into online software products for consulting companies, software companies and corporate information-technology departments including PriceWaterhouseCoopers, GE, Sterling Commerce, Clear Stream and Quick Arrow,

Picasso has developed a corporate-disciplined approach for assisting companies with software, which has enabled the technology company to undergo modest growth in the current economic environment.

Its approach to software takes business strategy and melds it with software building to help mitigate the risks of bringing business applications online.

A point of the Picasso business model is to recognize failure early.

"One of the hardest parts of developing software systems is knowing when to invest and when to stop investing in software projects," Casner said. "The software industry has a high failure rate, and often software projects continue to get funded after its clear there is no longer a way to obtain a proper return on the investment.

"We get to failure faster. It is a strange mantra to have, but if you invest $5 million, and we find out after investing $1.5 million that it will not work, we've been incredibly successful

Before the company launches heavily and irreversibly into developing a software product, it takes gradual steps. A step in the Picasso model delivers a demonstrable product so a company and potential customers can see, touch and feel the product. This early step allows the company to get customer approval and essentially measure the product's market acceptance.

"In practical terms, this can occur within 3 to 6 weeks of initiating the project with less than 15% to 20% of the total project cost invested," Casner said.

Picasso's success stories include one product developed for PriceWaterhouseCoopers, Tax Web software, an online way to publish K-1 taxreporting information. The software cut the costs and time of mailing the information.

Picasso delivered a version of the product to PriceWaterhouseCoopers early on, which it was then able to show to customers to gauge market interest.

"In our model, we create a component that can be validated and presold to customers," Casner said 'From the first dollar to last dollar you are not going to invest until it is guaranteed its going to work."

The company distinguishes itself from contract software developers that may come in for a few days or months. Unlike contractors, Picasso brings an inhouse intellectual property library that can have both the internal development teams and external teams speaking the same language.

The intellectual property library contains proven, pre-existing generic functions used in developing new technologies. For example, a basic function utilized in software is the calendar function, which gives users the time and date. If a company works with Picasso, it can pull that existing function from its library.

The results are not only cost and time efficient but also create a higher quality in the functionality of the software, Casner said.

With all its success, Picasso's excitement is restrained about experiencing a 40% growth rate last year when contrasted with the growth rate it experienced in 1999 and 2000.

Picasso's revenue in 1999 was $1.9 million; it leapt to $8.3 million in 2000 and in 2001 is projected to reach $10 million.

"We are proud, and we should be proud, but we are also challenged. We know we have something and we are validated by doing well in the worst market," Casner said.

"But we could also be of incredible benefit to companies and could help them get through this, but we don't have the opportunity to prove ourselves, and it is very frustrating from a business perspective," he said.