Software: Clientele’s
Initial Resistance Wanes
Michael Petruccelli has set a lofty goal for the company he now heads, but it’s one he thinks is attainable, given the firm’s product and his employees.
“We want to become the Microsoft of law enforcement. We want to become the national standard,” said the CEO of Impact Solutions, a San Diego software company with a product aimed at police agencies.
Born in 1993, Impact Solutions produces software used by police officers in writing incident reports, or replacing pen and paper forms with computers and digital data.
Since writing reports is so time-consum ing, and streamlining that process puts more cops out on the streets to catch bad guys, it would figure Impact Solutions’ sales would be skyrocketing.
Think again, says Petruccelli, who joined the firm in 1995 in a marketing position, left about two years later, and then returned last year to be named the new president and CEO.
“We had a strong story and good product, but cops weren’t ready to embrace computer technology, even though it makes all the sense in the world to venture capitalists,” he said.
As a profession that is one of the most conservative and least open to change of any kind, law enforcement agencies were slow to adapt to writing reports electronically, especially if they didn’t see others using the newfangled technology.
Early Customers
The company was able to sign up a few large agencies , notably the San Diego County Sheriff’s Department , but for the most part, it was a slow, but steady stream of sales to smaller police departments that kept the company afloat.
Adding to Impact Solutions’ less-than-stellar sales (it was averaging about $250,000 annually) was a lack of cash by the public agencies to buy the systems, even if police chiefs liked what they saw. In the mid-1990s, they had more important priorities, Petruccelli said.
“In those days, vests and bullets were more important,” he said.
By 1998, things were looking bleak. The company was more than $2 million in debt, hadn’t paid some employees for weeks and was being sued by angry creditors.
At the company’s shareholders meeting in December, they turned to Petruccelli, a former employee whose ideas were once rejected.
Although he was reluctant to take the helm of what appeared to be a sinking ship, Petruccelli said he felt a sense of loyalty to both fellow employees and the company’s customers.
Restructuring
After restructuring the company’s more than $2 million in debt, he met with the firm’s 14 employees, laying out his plan for survival. As a way of getting them to buy into the plan, he awarded each of them 50,000 shares of company stock, gave them all a raise, but then asked them to defer half their salary four months later.
Within months, the turnaround was under way, and by early last year, Impact Solutions signed a contract with Snohomish County in Washington state for about $500,000 that involved providing its software to 27 separate police departments.
Soon after the turnaround was evident, Norm Waitt, co-founder of Gateway Inc. and brother of Gateway chairman Ted Waitt, invested $1.5 million in the company, bringing his stake to 12 percent. Collectively, directors and officers of Impact Solutions own 52 percent of the stock, Petruccelli said.
Petruccelli said looking back on the darkest days of 1998, the company has come a long way.
“The papers for bankruptcy were all drawn up and we laid all the groundwork for the company to be dissolved,” he said. “It actually would have been much easier, we were told.”
Not only wasn’t that his style, Petruccelli said the stigma of bankruptcy would have hurt the company’s image with its ultra-conservative customers.
Rosier Times Now
Things are looking much rosier these days, said Bill Taper, Impact Solution’s founder and chairman.
“We’ve went from zero backlog to a $1.7 million backlog (in orders), and conservatively, we’ll probably do about $3 million in sales this year, compared to the $1 million we did last year,” Taper said.
Recently the company announced its biggest contract ever with Prince George County in Maryland, one that could mean more than $1 million over the course of five years.
With the sales and market share growing steadily, Impact Solutions 20 current employees should grow to about 35 by the end of 2001, Petruccelli said.
It might be about then the company could do an initial public offering, and be at a level that the forward-thinking Petruccelli sees as its real goal.
“At that point it’ll be pretty obvious who will be the Microsoft of law enforcement, and I think it will be us.”
