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[July 11, 2006]
Saved from bad acquisition, Gyrus is back
(Richmond Times-Dispatch (VA) (KRT) Via Thomson Dialog NewsEdge) Jul. 9--The future looked bleak for Gyrus Systems in 2001.
" 'Implosion' is the word I like to use," said Steve Harrison, director of technology and one of the three out of 40 employees left after a disastrous acquisition six years ago.
But executives at Chesterfield County-based Gyrus say the business is solid now.
The company has designed new software for human-resources training. Gyrus is focused on growing its revenue base and is signing on new customers.
Gyrus products help companies manage employee training. A bank, for instance, could use Gyrus software to make sure workers receive proper education on banking requirements and federal policies.
So it seemed a good fit in 2000, when Experient Technologies, which offered products tied to helping businesses with corporate training, acquired the small software company.
But like many other technology companies at the time, Experient ran aground financially. In April 2001, the company filed for bankruptcy protection.
Gyrus was caught in the mix, losing customers and shedding employees in the months that followed.
"You know, the kind of ironic thing about it is Gyrus was the only piece of Experient that had any value," said Ivor Massey Jr., one of two secured creditors in Experient's bankruptcy who later became part owner of Gyrus.
"They had an actual product and product sales, and the management at Experient didn't realize what they had."
Only Harrison, general manager Bob Dust and Tim Kisner, director of professional services, remained at Gyrus.
Harrison remembers manning the phones daily after the bankruptcy filing when customers called with questions or needed assistance -- basically just keeping the lights on in the office.
"You get a first-hand baptism with how important those customers are," Kisner said. "As far as we were concerned and as far as our customers were concerned, it was business as usual."
A few months later, Gyrus found its savior -- investors bought the company in a bankruptcy court sale. Massey's firm, Triad LC, along with Tampa, Fla.-based Bay4 Capital LLC became the company's backers. Experient has since been liquidated.
The next two years were spent stabilizing Gyrus' business and regaining customers the firm had lost, Dust said.
The clients Gyrus did have were still using its Training Wizard software product. Though it was five years old in 2001, it "was still a darn good product for a lot of people," Dust said.
But there was no ongoing software development because they didn't have any employees to do so. Gyrus was years behind its competitors.
"And in the software-development space, anytime you're not developing, improving what you have or building a new product, you're falling behind the competition," Harrison said.
"In the back of our heads, we knew we really needed to come out with something new," he said.
That product is GyrusAim, a Web-based service that is being tested by a few customers. An October release is planned.
Training Wizard focuses on managing employees' professional-development requirements. GyrusAim takes it a step further by tailoring and monitoring a training schedule for individual employees.
"The long and short of it is that it tracks your employees' skills [and] allows them to see what skills they have, what skills they need" and how to get those skills, said Harrison, who led the software development on GyrusAim.
GyrusAim also lets bosses make sure employees are learning something from corporate training programs.
"The fun buzzword is 'return on investment' on your training," Harrison said.
The market for this corporate software, known as learning-management systems, is estimated at $480 million, according to market research firm Bersin & Associates.
The largest learning-management-software vendors are Saba Software Inc., SumTotal Systems Inc. and Arlington County-based Plateau Systems Ltd. Those three companies control 29 percent of the industry's revenue, according to Bersin.
Gyrus generated $1.1 million in revenue last year, up from $200,000 in 2001. The privately-held company declined to provide specifics, but Dust said Gyrus has been profitable for all five years since the firm's rebirth.
By comparison, publicly traded Saba reported a loss of $6.9 million for the fiscal year that ended May 31 on revenue of $71.2 million. It posted a loss in the prior fiscal year.
Gyrus is increasing its customers, but clients such as Durham, N.C.-based Bowe Bell + Howell helped keep the firm afloat during its rocky years.
Training Wizard is used daily at the mail- and document-processing firm, teaching 1,500 technicians last year how to maintain Bowe equipment.
The logistics of scheduling the teaching of a large number of employees would be impossible without the Gyrus product, said Cary Disney, the company's manager of training and documentation.
Bowe is testing GyrusAim software, and Disney says he can't wait until the full product arrives. By tailoring training programs to individual employees, GyrusAim minimizes the amount of time technicians are in the classes, he said.
And the new product will serve as a springboard to expand Gyrus' revenue and customer base, said Kisner, Gyrus' professional services director.
"They seem to be a phoenix rising from the ashes," said Triad's Massey. "I think one day it will be a neat success story. It's a good little company and it's going to be a good bigger company."
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