WisBiz People: RoleFlow Swimming Against Cautious Midwestern Current
This is the first edition of WisBiz People, a new column from WisBusiness Editor Brian Clark. If you know someone with a good business story to tell, write to email@example.com with your idea.
MADISON - Mark Blumenfeld never wanted his software company - RoleFlow - to be a poster child for a struggling information technology start-up.
The former CIO at Fiskars would much rather be discussing - albeit modestly - his firm's successes and growing sales figures.
But it hasn't turned out that way. And while he acknowledges that 2004 WAS A difficult year for many enterprise software firms - he believes part of the problem is a cultural mindset in the Midwest that works against adopting new technology.
It's of way of thinking that is adverse to using something new, even if it has the potential to cut costs and improve efficiency.
Roleflow makes software that keeps track of the roles each participant in a project performs. It allows managers to define employees' roles and improve workflow. But the business has yet to take off.
In fact, Roleflow's difficulties have been enough to make the Madison native consider relocating his fledgling firm - and family - to either Seattle or Boston, a move he'd rather not make.
"In order for our area to have a vibrant venture/start-up/patent-to- market system, established companies have to be more willing to take some risks with buying newly developed products," he says.
Unfortunately, the entrepreneur says he doesn't think his story is unusual among tech start-ups in Wisconsin.
On the East and West coasts, he says, established companies are more open to taking risks and becoming so-called "first adopters" of new technology.
There is an almost "incestuous" buying and selling environment on the coasts among people who go to school together, know one another, and constantly do business with each other he says.
"It makes commerce hum," he says. "There is cross-pollination between big and little vendors."
Here in Wisconsin, without local "first adopters," Blumenfeld says, getting customers to buy and use his product has been the toughest part if getting his business off the ground, making the often difficult steps of taking an idea and finding financing almost seem easy.
And if he branches out to try to sell to companies on the coasts, Roleflow ends up at a competitive disadvantage compared to companies based on the coasts.
Tom Still, president of the Wisconsin Technology Council, says he understands Blumenfeld's plight. He also has praise for Roleflow, which was a finalist in Gov. Jim Doyle's business plan competition last year. The WTC ran the program, and is gearing up for a new competition in 2005.
"Sometimes I fear Wisconsin is not a good early adopter state for (information technology)," he acknowledges.
"We tend to be a fast follower in which companies are quick to follow once something is shown to work," he says.
"I think we are culturally cautious," he says. "If business leaders aren't particularly tech savvy and they can't understand something, they will be hard pressed to invest in it."
Unfortunately, Still says, IT at many companies is a delegated function, not thought of as part of the core business.
"It's something like the shipping department," he says. "Companies with the best technologies are most likely to succeed. They are also often early adopters."
Still says hospitals that were first to make the switch to electronic medical records are ahead of the curve in terms of quality care, monitoring and cutting down error rates.
The trend has snowballed, he says, and Madison-based Epic Systems' business has grown so rapidly that it is building a huge new campus near Verona, southwest of Madison.
"Companies have to clearly understand how the technology fits in with their business before they adopt it," Still says.
Perhaps even more important, technology creators have to convince companies that they need the stuff.
"They need to clearly articulate that this technology will solve a particular problem," he says. "Creating an IT solution in search of a problem can be a very tough sell."
Blumenfeld started Roleflow in 2001, after a couple of years with Fiskars. He also was vice president for IT at Promega earlier in his career. The idea for Roleflow came from co-founder Eve Rosenthal, a former New York colleague who now teaches at a Canadian university.
At his previous jobs, Blumenfeld says he was somewhat open to new technologies, though he often had trouble convincing his bosses they were good investments. Blumenfeld says business people often puzzle over why IT projects fail.
"It's partly because there is a 'Mars vs. Venus' conflict between business and IT people. They see the world differently. This software helps solve that."
Blumenfled formed a partnership with Beacon Technology, a Madison company that serves meduim- and large-sized firms. Roleflow works with Beacon's dozen-plus engineers and project managers.
In 2003, Roleflow sold a system to the state Department of Health and Family Service to manage the security of its child welfare data base.
"We thought we'd parlay that into sales with industry," he says.
This year, he has pitched Roleflow's products to a lot of companies, and several deals are pending.
"We are working with several consumer product companies who want to make sure products are manufactured the first time," he says.
But he now has sales to report, and commercial transactions are "where the rubber meets the road," he says.
Blumenfeld has praise for Accelerate Madison, an IT networking and business support group. Its aim is to encourage and improve the use of information technology in creating new ventures.
But he thinks more could be done, including the creation of tax credits by the Legislature for Wisconsin companies to work with local technology start-ups.
"I'm optimistic that 2005 will be better for us," he says. "The economy is improving and a rising tide floats all boats.''
Blumenfeld also has to hope that the rising tide lifts the innovative spirit in the Midwest, where caution sometimes gets in the way of a good idea.