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One on One 4557

February 1, 2001

11 Min Read
One on One

One on One

with Michael Richards

MichaelRichards has been involved in the storage industry for more than 20 years, andgot 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 ofits original DOS application, Mini-StoragePlus, of which some 3,000 copies weresold 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 haveconverted to the new package.

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

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

It's been pretty steady over the last two years or so, as opposed to a massrush. What we expect is for it to accelerate over the next two years, and thedriving force behind that is it's simply harder to get DOS programs to run ontoday's equipment. Windows ME goes a long way toward eliminating DOSapplications, and computers come shipped with USB ports instead of serialports--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 facilitybecomes the main way he interacts with the software. If he wants to take apayment 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 ona vacant unit. We first came out with the map with our Version 1 software backin 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 startedbecause they learn the facility faster. Users can edit our map themselves--theycan set it up, add and remove units, and use the mouse to drag them around. Theydon't have to come to us to alter their map, the built-in editor lets them dothat for themselves.

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

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

We've always tried very hard to be a complete product, to be the onlysoftware package a facility owner needs, as opposed to having to buy several todo the same thing. We provide full accounting software, right through thebalance 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 elsein self-storage provides that level of accounting. Instead, they tell you to goand buy a copy of QuickBooks and export information into that. We'll do thatalso--we'll export into QuickBooks or any of seven other accounting systems. Soif that's what a customer prefers to do, that's fine. But a lot ofcustomers--especially the smaller companies--really like the fact that there'sone package that has it all in one system.

We take security very seriously. Every user who sits down at the keyboard hashis own unique password, which allows the owner to dictate which parts of theprogram the person is allowed to access. We also encrypt the customer's data sohe can't use another program to look at that information, which is reallyimportant when you consider we're storing information such as credit-cardnumbers 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 securitylevel, that you can go in and get a listing of your customers and their creditcards, 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 automaticcredit-card processing. This allows operators to sign their customers up to paytheir bills by credit card automatically every month. A couple years ago, maybeabout a quarter of our customers or less were getting that option. But now, overthe last year or year and a half, it's now with at least half of the systems wesell, and I anticipate that continuing to grow to about 75 percent or 80percent.

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

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

We're very excited about Europe. We've just completed negotiations and havesigned up Reza Chand to be our representative over there. His company is calledSelf-Storage Web, and he is currently representing our software in the U.K. andthe rest of Europe. The marketplace over there is growingtremendously--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 ofa mom-and-pop industry over there. Very professionally run organizations arebuilding over there, and they tend to have plans to become significant-sizedcompanies with 20-plus facilities. From our point of view, the informationsystem demands of companies of that size are higher. The users tend to be a bitmore sophisticated, especially at the corporate level.

We do offer the ability to translate all of our letters and receipts into thelocal language. The screens are all in English, so the operators have to beEnglish speaking, but the receipts and anything that gets printed to go to acustomer goes through a translation program. The ability to do VAT (Value AddedTax) calculations is a very big part of their bookkeeping requirements overthere, so we've made the software compliant with that. It also supportsdifferent 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 beable to run a function that will instantly convert everything based on theconversion 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 outvia e-mail. For instance, if you're looking at a vacancy listing, there's ane-mail button the operator can press, fill in the e-mail address and send it outto the home office, bankers or owners. Any report that can be viewed on thescreen can be sent out as e-mail, and reports are usually sent in MicrosoftExcel 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 alink to HI-TECH's website, so if someone has a question they can, from withinour program, select the option to go to our website and fill out a questionform. We also have a link to the website of the Self Storage Association sopeople can get information on the industry. We've also put a new modification inour software to comply with the new California late laws, and the link to ourwebsite allows access to the text of the law. It's interesting because it doesmake 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 importantbecause if you're a multiple-site operation, you've got to be able to get thedata to the home office. This makes it easier and more reliable for people atthe home office to have access to everybody's data.

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

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

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

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

Beyond that, one thing that's changing the face of software in general iswhat's called an ASP (application service provider), where the applicationsoftware is on the Internet. It obviously has a lot of advantages: updates areinstantaneous; you don't have to worry about backup and storage, because that'staken care of by the website managers; and you have all the data in a centrallocation, so there's no need to gather it for a call center or anyone else. Thereality is, though, that it's a pretty impractical solution unless you havereliable, high-speed Internet connection--and that's several years off for mostof our business. The first companies that will jump on something like that willbe multisite operations that focus on urban areas. But eventually, everyone willhave 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 usabout that.

It's called Self-Storage On-Line! and is located at www.selfstor.com. It'snot 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 thenew 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 storagebusiness for more than 20 years, so I have general interest in the industry aswell as interest from a vendor's point of view.

The players in the self-storage software business have becomenumerous 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 overthe next six to 12 months, but other than that, there's nothing reallyspectacular or different. We'll continue to go to the shows and offer oureducation seminars three to five times a year around the country.

One of the interesting things that has happened over the last few years wasthe emergence of two or three new software vendors that have come into theindustry, introduced new products and been fairly successful with them. Theywere able to come out with Windows software without having to worry aboutbackward compatibility with DOS programs or meeting the demands of existingcustomers. The challenge, in many ways, is much tougher for the establishedcompanies who have a large customer base. But I think in the long run, thosecompanies that are able to do it will be better off, because we already have theorganization for support. I think we've done a better job than most of theothers simply because we got our Windows product out earlier and have had thebenefit 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 ingeneral?

I think the next couple years will see a big shift in the industry as we movefrom DOS to Windows. By our estimates, about 66 percent of the industry stilluses DOS software, which means that only about a third have adopted Windows. Ifthose numbers--which are, if not completely accurate, at least well in theballpark--are true, within two years there will be another third that willswitch over. That's a significant number--as many as have switched to Windows inthe eight years it has been available. After that, the last third is always thetoughest in any industry--they're not going to change until they have to, andthen will be carried kicking and screaming. For our part, we expect to continueto enhance and develop on our Windows product. We currently plan two to threeupdates a year, and that will probably continue for the next few years. Lookingbeyond that, a web-based application will be in the works probably in three tofive years, which is about the time the technology will be of age that we'llhave enough demand for that type of application. We definitely intend to be inon that.

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