For Irish entrepreneur John Dennehy, the arrival of cloud computing offered a powerful argument to launch a new company. Dennehy was convinced that many smaller businesses would shift to buying software and computer services delivered and managed over the Internet – the so-called cloud – because it would allow them to save money, grow faster and go global at a fraction of the cost.
“In less than one hour of engineering time, you can re-create your company’s entire infrastructure anywhere in the world,” says Dennehy, founder and CEO of HRLocker, a cloud-based computer services start-up based in Cork, Ireland. In 2009, he set to work offering low-cost human resource (HR) management tools to companies that had outgrown informal HR management based on spreadsheets and paper records, but remained too small to justify the investment of large-scale ”enterprise” software systems.
HRLocker already provides HR services to 30 companies and expects to be profitable by 2011. Early adopters range from an Irish filling station using HRLocker to roster its part-time staff to an international Fortune 500 electronics firm. The electronics company has rolled out the software to 120 staff based across 14 countries as an alternative to adding them to its existing enterprise resource planning system.
Irish web analytics firm Bluemetrix, with offices in Dublin and Tokyo and a staff of 25, uses HRLocker for time-keeping and holiday-tracking, and plans to deploy it for project management. “The implementation of the software was easy and gained rapid acceptance from the company’s employees,” says Bluemetrix Finance director John Shannon.
Dennehy spied a gap in the market for human resource services while managing global operations for other companies. “I realised there were many HR issues [at smaller companies] that couldn’t be easily solved,” he says.
A serial entrepreneur who founded Upstart Games, Dennehy launched HRLocker with €50,000 of his own capital and €250,000 in seed funding from Irish investors including Enterprise Ireland, the state economic development agency. The company’s venture backers saw competitive advantage in a business model offering cloud computing services to smaller companies. “Two or three years ago, start-up technology companies would have been forced to use inferior technology to try to compete with the biggest and best-funded companies in the world,” says Frank Walsh, a partner at Enterprise Equity in Cork, which invested €100,000 in HRLocker. “Now, the availability of infrastructure in the cloud has levelled the playing field, giving smaller technology companies a fighting chance against the big guys.”
The cost savings for a company of HRLocker’s size and stage of development are significant. Dennehy was able to avoid the expense of buying and managing his own in-house global technology platform – which would have cost several hundred thousand euros. Instead he “rents” IT infrastructure from Microsoft. “It removes all the pain of managing infrastructure, and we can rely on Microsoft to deal with that,” says Dennehy. By buying powerful software and server capacity delivered over the Internet, companies can better map their costs to revenues.
The shift to cloud computing also allows small companies to decouple their service offering from a geographic location. One-year-old HRLocker is already marketing throughout Europe and Asia. While in China recently, Dennehy was able to show HRLocker’s software to potential clients by tapping into a Microsoft data centre in Hong Kong with no need for remote deployment, configuration or testing. “Our solution has to be available everywhere, and cloud computing avoids the need to install servers in other people’s premises, which is a nightmare to manage.” New software versions can be rolled out in real time.
Companies that use cloud services pay a monthly information technology bill, like an electricity bill. HRLocker’s monthly charges are currently under €1,000. That low-cost approach helps makes start-ups like HRLocker attractive to investors. “We’d much prefer to be involved in a company’s core technology and value creation rather than in building the infrastructure to start that process,” says Walsh.
HRLocker also benefited from Microsoft’s BizSpark start-up programme. The scheme provides young companies with free access to Microsoft development tools for the Windows Azure cloud-computing platform, and to its office productivity software. Support, training and business development assistance are also part of the package.
As Dennehy zips around the globe, he embodies the virtues of cloud computing: he’s geographically uncoupled and ”always on”, answering emails sent from Europe instantly – while drumming up business half a world away in China.
His top priority: grow the numbers. “Our business model requires us to get a large volume of users.” As sales increase, scaling up its infrastructure is not a problem. HRLocker can upgrade any time to more powerful software and server capacity — and enter far-flung markets the minute Dennehy clinches a deal. For start-ups, going global is now a more viable game.
HRLocker CEO John Dennehy and his team set up operations overnight in China.
This article was first published in Microsoft's Futures Magazine. Click here to download the full PDF.