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TWST: Would you begin with a brief historical sketch of ServicePower (London: SVR.L) and an overview of where you are now?

Mr. MacKinnon: ServicePower was formed in 1996 as a management buy-out from ICL Fujitsu, and was listed on the London Stock Exchange in April 2000. Our operation is world-wide, but currently we are focused on companies in the U.S. and Europe. ServicePower specializes in workforce optimization software which applies state-of-the-art IT, based on artificial intelligence (AI) techniques, to optimize utilization of “service workers”. At the heart of the system is a sophisticated and powerful real-time scheduling engine. This engine is comprised of two schedulers that work together in phases to create and maintain an optimal schedule. Our product enables businesses to manage their service level agreements, make sure that they meet customer service, and do it all very efficiently, minimizing the use of staff and making sure that they get the right spare parts to location. Currently, our share price is around 12p and our brokers have just done a report and believe our share price represents an 8 times multiple on their forecast for next year’s earnings. They expect us to be profitable and cash generative. So it’s a very reasonable valuation with a lot of upside.

TWST: Can you explain the contractor model in more detail? Does that mean your customers are also potential partners?

Mr. MacKinnon: Currently, the majority of our business involves selling to large, enterprise type companies who have their own field service resources. However, we also wanted to address a growing trend amongst these companies to employ contract staff to complete work previously done by their own staff. As I mentioned, we’ve recently joined up with GECP to work on this contractor model, and we are looking to tie up with a second customer in the near future. According to the statistics there are currently about 3.5 million contractors in the U.S. who are working in small companies of under-50 people. These smaller companies have to carefully balance their IT requirements against other business needs, and investment in technology is usually quite low— they simply can’t afford the sort of sophisticated workforce optimization software that we offer to large companies. Therefore, we are looking at an ASP model that will enable us to provide them with access to these systems at a more affordable price. Essentially, we’ve been tying up with companies that I call ‘brokers’. For example, Installs Inc., (formerly DigiVision) the largest installer of satellite dishes in the U.S., receives work from Radio Shack and then passes that work out to independent contractors. Working directly with Installs, we are paid on a per-transaction basis. We also aim to encourage these contractors to not just do the work they are currently getting from Installs, but also to use the systems for scheduling the work they generate on their own. We believe it is a very big opportunity for us.

TWST: Is this something you’ve been investing in and been heavily focused on over the past year or so, and are you basically ready for that opportunity now or is there some more work to be done?

Mr. MacKinnon: We have recognized that the small company market is very attractive to us and are investing in it. A majority in this market are badly served by IT, but at the same time, its a very difficult market to enter. Most of last year’s development was aimed at further extending the scalability of SERVICEPower. For example, SERVICEPower used to be able to handle 20,000 technicians doing approximately 10,000 jobs an hour, which is a pretty damn good rate. We have now extended that capability so there is effectively ‘no limit’ to scalability. We have tested and proven the system on 128,000 jobs an hour and that’s the sort of throughput you need if you are going to have a large web-based application, handling many thousands of contractors, all getting their work through the Internet.