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One on Onewith Michael Richards

Michael Richards has been involved in the storage industry for more than 20 years, and got his start in the self-storage software business in 1986. His company, Hawaii-based HI-TECH Smart Systems Inc., entered the industry with the launch of its original DOS application, Mini-StoragePlus, of which some 3,000 copies were sold over a 12-year period. In 1998, HI-TECH unveiled its Windows-based package, known as RentPlus. To date, about one-third of Mini-StoragePlus users have converted to the new package.

Inside Self-Storage recently caught up with Richards to discuss HI-TECH and its future, its ambitious reach into international markets, and the influence of the Internet on the software industry. We are now pleased to present an interview with Michael Richards...

You report that about one-third of HI-TECH's original DOS users have converted to your RentPlus Windows-based software. Is that figure rising--are more users coming around to the newer product?

It's been pretty steady over the last two years or so, as opposed to a mass rush. What we expect is for it to accelerate over the next two years, and the driving force behind that is it's simply harder to get DOS programs to run on today's equipment. Windows ME goes a long way toward eliminating DOS applications, and computers come shipped with USB ports instead of serial ports--all these things affect whether people are going to be able to run DOS.

Elaborate on some of the features offered by RentPlus.

The on-screen map is one of the main features. A map of a customer's facility becomes the main way he interacts with the software. If he wants to take a payment for a unit, he clicks on that unit on the map and chooses "payment" from the menu; if he wants to move someone in, he clicks on a vacant unit. We first came out with the map with our Version 1 software back in April 1998. It seems to be a good way for people to interact in self-storage, because we do think in terms of units. It seems to help new people get started because they learn the facility faster. Users can edit our map themselves--they can set it up, add and remove units, and use the mouse to drag them around. They don't have to come to us to alter their map, the built-in editor lets them do that for themselves.

Obviously, in self-storage, renting by the month is the most popular way to go, mostly because that's been the only way people could keep track of their paperwork. In our software, we allow you to set up rental plans. You can rent by the week, day, month or whatever it is, and the letters and late charges are still automatically going to happen on the appropriate days. It just gives the manager the chance to get more business by accommodating customers' specific needs in that way.

What features make RentPlus unique, or set it apart from other self-storage software packages?

We've always tried very hard to be a complete product, to be the only software package a facility owner needs, as opposed to having to buy several to do the same thing. We provide full accounting software, right through the balance sheet and profit-and-loss statement. We do all the check writing, reconcile the bankbook, all those kinds of things--which is unique. No one else in self-storage provides that level of accounting. Instead, they tell you to go and buy a copy of QuickBooks and export information into that. We'll do that also--we'll export into QuickBooks or any of seven other accounting systems. So if that's what a customer prefers to do, that's fine. But a lot of customers--especially the smaller companies--really like the fact that there's one package that has it all in one system.

We take security very seriously. Every user who sits down at the keyboard has his own unique password, which allows the owner to dictate which parts of the program the person is allowed to access. We also encrypt the customer's data so he can't use another program to look at that information, which is really important when you consider we're storing information such as credit-card numbers and expiration dates. Whenever our software prints a credit-card number, it's always masked so you don't see it. There is a way, with the right security level, that you can go in and get a listing of your customers and their credit cards, but you basically have to be at the owner level to do that.

A very popular option--on about half the systems we sell now--is automatic credit-card processing. This allows operators to sign their customers up to pay their bills by credit card automatically every month. A couple years ago, maybe about a quarter of our customers or less were getting that option. But now, over the last year or year and a half, it's now with at least half of the systems we sell, and I anticipate that continuing to grow to about 75 percent or 80 percent.

RentPlus also provides full inventory control, so we track boxes, locks, cost of sales, inventory on hand, and things like that. We try to always have everything needed to run a business in the program.

HI-TECH has announced plans to expand into Europe. Tell us about those plans.

We're very excited about Europe. We've just completed negotiations and have signed up Reza Chand to be our representative over there. His company is called Self-Storage Web, and he is currently representing our software in the U.K. and the rest of Europe. The marketplace over there is growing tremendously--estimates put the growth at about 100 percent per year right now. What's also very interesting about the market over there is it's not so much of a mom-and-pop industry over there. Very professionally run organizations are building over there, and they tend to have plans to become significant-sized companies with 20-plus facilities. From our point of view, the information system demands of companies of that size are higher. The users tend to be a bit more sophisticated, especially at the corporate level.

We do offer the ability to translate all of our letters and receipts into the local language. The screens are all in English, so the operators have to be English speaking, but the receipts and anything that gets printed to go to a customer goes through a translation program. The ability to do VAT (Value Added Tax) calculations is a very big part of their bookkeeping requirements over there, so we've made the software compliant with that. It also supports different currencies and date formats. One of the big things coming up Jan. 1, 2002, is the conversion to the euro, and in our software we've built in a "convert-to-euros" function so when that day comes, customers will be able to run a function that will instantly convert everything based on the conversion rate at that moment.

Your product is said to be very Internet-compatible. Explain this.

Built into the software are links that will take information and send it out via e-mail. For instance, if you're looking at a vacancy listing, there's an e-mail button the operator can press, fill in the e-mail address and send it out to the home office, bankers or owners. Any report that can be viewed on the screen can be sent out as e-mail, and reports are usually sent in Microsoft Excel or Microsoft Word format, so they're easy for anybody to read.

We also have links to websites within our software. For example, there's a link to HI-TECH's website, so if someone has a question they can, from within our program, select the option to go to our website and fill out a question form. We also have a link to the website of the Self Storage Association so people can get information on the industry. We've also put a new modification in our software to comply with the new California late laws, and the link to our website allows access to the text of the law. It's interesting because it does make information much more easily available.

Another use of the Internet is sending data to the home office via FTP, pcAnywhere or a similar direct Internet connection. That's really important because if you're a multiple-site operation, you've got to be able to get the data to the home office. This makes it easier and more reliable for people at the home office to have access to everybody's data.

How else can self-storage operators use the Internet, now and in the future?

One way is sending customers' bills over the Internet. We currently have a feature in our software that allows a statement to be brought up on screen and sent directly to a customer by e-mail. But we don't automatically send out bills via e-mail. There are questions about the legality of things like that. You can't do it as the sole notice of lien, but it's certainly a convenience to customers to get bills that way, and I suspect that will be a feature that becomes real popular over the next few years.

Another thing I think is coming will be the ability for customers to access their own account information and make payments online. Self-service is something for which the Internet is great, and we are, after all, the self-service storage business. The more we can do on the Internet, the less work it is for managers and the happier everyone will be.

Centralized call centers will also get more popular. People will be able to go on the Internet and ask for a storage facility in, say, Peoria, Ill., or they'll pick up a phone and reach a call center. Those centers, in turn, will need to communicate well with the sites so they know what units are vacant, and this means the site has to keep the call up to date as to what those vacancies are. The key thing is to have the data going between the call center and the sites.

Beyond that, one thing that's changing the face of software in general is what's called an ASP (application service provider), where the application software is on the Internet. It obviously has a lot of advantages: updates are instantaneous; you don't have to worry about backup and storage, because that's taken care of by the website managers; and you have all the data in a central location, so there's no need to gather it for a call center or anyone else. The reality is, though, that it's a pretty impractical solution unless you have reliable, high-speed Internet connection--and that's several years off for most of our business. The first companies that will jump on something like that will be multisite operations that focus on urban areas. But eventually, everyone will have it. From our point of view as software vendors, it looks to be a big boon.

HI-TECH hosts a website for the entire self-storage industry. Tell us about that.

It's called Self-Storage On-Line! and is located at www.selfstor.com. It's not for our own software products, but for the industry in general. We have a "Vendor of the Month"; we'll put up articles of interest such as the new California law; we've reprinted articles for Self-Storage Legal Review; we've got facility listings, and so forth. I've been involved in the storage business for more than 20 years, so I have general interest in the industry as well as interest from a vendor's point of view.

The players in the self-storage software business have become numerous in recent years. Are you well situated for the long term despite this, and will that affect your marketing efforts?

We have some pretty exciting things we're going to be doing in Europe over the next six to 12 months, but other than that, there's nothing really spectacular or different. We'll continue to go to the shows and offer our education seminars three to five times a year around the country.

One of the interesting things that has happened over the last few years was the emergence of two or three new software vendors that have come into the industry, introduced new products and been fairly successful with them. They were able to come out with Windows software without having to worry about backward compatibility with DOS programs or meeting the demands of existing customers. The challenge, in many ways, is much tougher for the established companies who have a large customer base. But I think in the long run, those companies that are able to do it will be better off, because we already have the organization for support. I think we've done a better job than most of the others simply because we got our Windows product out earlier and have had the benefit of a couple years of having it out in the field.

What do you see for the future of HI-TECH and for the industry in general?

I think the next couple years will see a big shift in the industry as we move from DOS to Windows. By our estimates, about 66 percent of the industry still uses DOS software, which means that only about a third have adopted Windows. If those numbers--which are, if not completely accurate, at least well in the ballpark--are true, within two years there will be another third that will switch over. That's a significant number--as many as have switched to Windows in the eight years it has been available. After that, the last third is always the toughest in any industry--they're not going to change until they have to, and then will be carried kicking and screaming. For our part, we expect to continue to enhance and develop on our Windows product. We currently plan two to three updates a year, and that will probably continue for the next few years. Looking beyond that, a web-based application will be in the works probably in three to five years, which is about the time the technology will be of age that we'll have enough demand for that type of application. We definitely intend to be in on that.

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