It's a family affair…
Core business: Visualisation and analysis software for the oil & gas industry
Incorporated: 1995 (first product launched in 2000)
Turnover: £3 million
Major customers: Statoil, BP, Shell, Conoco, Chevron, Marathon – 120 customers in 80
It’s a family affair
In 1995, Dr Lindsay Wood wanted to move back to Glasgow, but because he couldn't get a job in science, he decided to start his own company, in partnership with his wife Angela and his brother William. And 16 years later, Sciencesoft has established itself as a leader in visualisation and analysis software for the oil and gas industry – and is still in family control, with Lindsay now in charge of research and development, Angela director of business and William looking after sales and marketing.
In the early days, the company sustained itself by providing consultancy services to leading oil and gas companies, leveraging contacts in the industry built up by both of the brothers, and behind the scenes developing its visualisation and analysis software, launched in 2000 as S3GRAF.
Today, the company's Reservoir Simulation Suite of products, “help engineers analyse the results from reservoir simulators by quickly producing 2D and 3D images of an oil or gas field.” This enables companies to decide whether or not to exploit the particular field.
Eleven years ago, bespoke products had been around for many years, but they ran on proprietary systems and supported a single vendor. The driving force behind the new product was widespread industry demand for a solution which would work on different platforms, including Windows PCs. Other companies tried to develop new software from scratch, but Sciencesoft also recognised the need for a backwards-compatible version which provided a familiar user interface – allowing engineers to use existing data as well as reducing the time required for training.
According to Wood, engineers told Sciencesoft at the time that they liked how the old software worked. They simply wanted a more open version with new improved features, and Sciencesoft could also recognise the market opportunity for a more cost-effective solution. “We believed that our role was to solve people’s problems,” says Wood, “not to build a mini empire or fight technological wars.”
Just before the product was unveiled in 2000, the company (still a small team of five people, with only two developers, including Lindsay Wood) knew it required an injection of funds – not to help the final stages of development but to beef up its sales and marketing efforts. “We had our proof of concept, but we needed market presence,” Wood explains. Until then, the company had funded development with the revenues from its consultancy work, and the product was close to completion. Wood and the rest of the family wanted to retain control of their creation, but several potential investors said they were wrong – and proposed investing much larger amounts. In the end, however, Sciencesoft brought in a company called Mdina Investment, who provided funds of £200,000 – much less than the £5 million some venture capitalists said was required. This amount was matched by Sciencesoft's bank, backed by the appropriate insurance. “We wanted to look at the finance on our terms,” says Wood. “Why spend £1 million on something we don't really need?”
The company strongly believed it should stick with its vision – an open, platform-independent solution, backed by world-class service and responsiveness to customer needs. The team was also happy to start off with one or two sales to a few companies, and gradually build up its business, and Statoil of Norway was one of its earliest reference sites, buying several licences. For these initial customers, says Wood, S3GRAF simply solved the problem by updating the old technology without interrupting the workflow. Customers wanted a new, improved product that was easy to use and displayed better visuals, but nobody wanted to change overnight and abandon the old ways of working. Users also did not want to throw away existing investments or learn a completely new product.
The other key to the success of S3GRAF was that the engineers now had a visualisation tool which they could show to non-technical people on Windows PCs – what Wood describes as “presentation quality.”
From a company standpoint, the technology was not the only critical factor. “What enabled us to succeed,” says Wood, “was the fact that we were small and quick to solve problems.” In addition, Wood believes it is important for developers to meet the customers whenever they can – e.g. at trade shows. “They speak the same language and also know exactly what customers want.”
Looking back, Wood also says the company spotted a gap in the market because it was happy to handle small sales – for example, contracts worth £50,000 rather than the big sums other companies wanted.
“Lots of companies like working with small companies,” Wood says, “because they know that we can react very quickly and deliver solutions.”
Since 2000, Sciencesoft has had a second round of investment, with Aberdeen's Nova Technology Fund putting in £350,000. The family has since regained the equity from Nova, allowing it to exit with a healthy return. Since 2002, Sciencesoft has had an annual growth rate of 25 per cent, and turnover this year will reach £3 million, with profits of £1 million, and the management team have set a target of £10m in turnover by 2014.
Growth has been steady but sure. Every year, the company has hired one or two extra people, reaching its current head count of 18, including six “high-end technical specialists” hired during the last two years. The next two years will see a slight surge in the workforce, however, with staff numbers doubling as the company also doubles its office space.
For Sciencesoft, the harder it gets to exploit oil and gas fields, the more its products will be in demand. And with new products coming onstream every year, the company is confident of steady growth in the future – as long as it retains its “small is beautiful” approach to the business.
Sciencesoft currently focuses on one suite of specialist products, but it aims to develop four more product lines over the next five years, including pre-processing software. It is also rewriting its software to run on 64-bit platforms – to “future-proof” its products. The Reservoir Simulation Suite includes S3GRAF, for automating workflow and displaying data, S3GRAF-3D and S3connect, a tool for linking simulators, plus S3GRAF-HPG, which allows reservoir engineers to load large simulation data files in a matter of seconds – a process which used to take over an hour. The company reinvests about 50 per cent of its profits in R&D.
Sciencesoft has worked with a number of universities over the years, engaging in a wide range of research, and the results from several projects are now contained in the company’s products. For example, working in conjunction with the University of Texas at Austin, Sciencesoft developed a set of file readers for the University’s UTCHEM chemical reservoir simulator, speeding up loading and output for rapid visualisation and analysis.
Over the last ten years, Sciencesoft has also worked closely with the University of Glasgow and the University of Strathclyde, taking on 2–3 student interns every summer and creating new employment opportunities for computer science and physical science graduates. The company has also donated software worth over £5 million to universities at home and overseas, and sponsors a PhD student in the University of Glasgow.