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WellPoint Systems Inc.: Full of IDEAS

By Fareen Qureishi

Toronto (TSX)_ It's simple. Even with the growth of alternative forms of energy, our dependency on oil and gas will never completely disappear. Companies in the energy sector need fool-proof systems to manage their complex data, and that's where WellPoint Systems (TSX-V: WPS) steps in.

WellPoint is a software company that develops and delivers enterprise application solutions primarily for oil and gas companies, although they're equipped to deal with all energy companies in general. These applications help WellPoint's clients manage their data and gain better insight into how their business is being run.

"Our goal and mission is to help these companies manage their business," says Richard Slack, WellPoint's President and Chief Executive Officer, and a 30 year veteran in the software business.

Founded in 1997, the Calgary-based company began with a mere 10 employees and two application systems. In 2002 they went public on the TSX Venture Exchange, and today WellPoint employs nearly 200 people who help manage their 450 clients in over 60 countries worldwide.

Slack describes their customer base as diverse, ranging from small start-up companies to some of the largest oil and gas producers in the world. WellPoint's large contingent of American clients allows them to provide accounting solutions to a variety of oil and gas companies across the globe, resulting in substantial growth to the company. "We've won several awards as a result of that growth," says Slack.

In October of 2009 WellPoint was ranked 28th on Deloitte's Technology Fast 50, a list of the fastest growing technology companies within Canada. Even more impressive was their 250th spot on the Deloitte Technology Fast 500, cataloging the fastest tech companies across North America. It was the company's 537 per cent revenue growth over the past five years that led to the win.

"We've been on several of the award lists over the past year," says Bharat Mahajan, Chief Financial Officer, "and we'll probably continue on that path."

Along with a diverse customer base is a diverse product line. While Slack admits accounting applications may not be terribly exciting, the oil and gas industry deals with very complex problems and is in need of streamlined solutions.

Slack provides a layman's example: One well can potentially generate thousands of accounting entries per month. A medium-sized company however, might have 20,000 wells. Suddenly a company is dealing with hundred of thousands, if not millions, of accounting entries every month.

"We have applications that address those types of problems in the accounting world," says Slack. "But we also have applications that address different types of problems."

He relays that once the oil is out of the ground, many steps follow, including marketing, selling and tracking the oil. WellPoint's applications have the ability to track the amount of liquid going through a pipeline, the customers purchasing that liquid and the different price points associated with it.

"You can go and get a generic solution that may be broad, but it won't be very deep, because [some companies] haven't had the years that are required to understand all the levels," says Slack. He believes that it's WellPoint's depth of industry knowledge that separates them from the crowd.

Another unique product recently released by WellPoint is IDEAS 5.0, an accounting system designed to meet the needs of multi-national oil and gas operators. Slack believes that in such a global industry, many companies need new ways to maintain international subsidiaries, and IDEAS 5.0 is a perfect fit. With the software currently being used at over 200 sites worldwide, the market seems to think so as well.

As CFO, Mahajan speaks for the investor: "We deploy our staff throughout the world to make sure we've got resources in the most prospective regions," he says. "When enhancing new products, we look at whatever's going to give the most significant return on investment."

WellPoint has ambitious plans for the future. By 2012, the company hopes to generate over 50 per cent of its revenue through international clients. Slack is determined that with the company's mature and marketable product portfolio, dedicated team and decades of experience, their goals are achievable.

"Energy is truly a great space to be in," says Slack. "It's had its fair share of challenges but in the end the world is going to grow, and as they grow they'll need more energy, so we expect to grow."

It's simple.

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