Deltek charts int'l course

Project software has global appeal

Deltek Systems Inc.

Location: Herndon, Va.

Leadership: Kevin Parker, president, CEO and chairman

Employees: 800

Activities: Provides project management software for accounting firms, aerospace and defense companies, architectural and engineering firms, construction companies, government contractors, IT and professional services providers, management consultants, non-profit organizations and systems integrators.

URL: www.deltek.com

2005 revenue: $150 million

2004 revenue: $121 million

Kevin Parker, president and CEO of Deltek Systems Inc.

Photo courtesy of Deltek

Kevin Parker is blowing the cover on his "very well-kept secret inside the Beltway."

The president and CEO of Deltek Systems Inc. is taking the Washington-area software company global as one of several efforts to maintain its double-digit growth. Parker predicted that demand for Deltek's specialized project management software for government contractors and architectural and engineering firms will come from Europe and Asia.

This year, the Herndon, Va., company has opened small offices in the English-speaking world outside the United States. Between 20 and 25 company employees now staff offices in Australia, Canada, New Zealand and the United Kingdom, where Deltek previously had only a casual presence, Parker said.

Next on the agenda: Deltek plans to translate its software into other languages and possibly move in 2008 and 2009 into China and other parts of the Far East and Southeast Asia to capitalize on the building boom there, Parker said. Large architectural and engineering firms in Europe and Asia are potential Deltek customers, he added.

"There are project-oriented businesses around the world, and we should be in a good position to provide them with solutions in the years to come," Parker said.

Deltek added an office in Hong Kong when it acquired Welcom Corp. in March. Another office in the Philippines serves as a product development facility with no sales presence.

Hitting its stride

Parker, a former PeopleSoft Inc. executive who in June 2005 became Deltek's president and CEO, was selected this month to succeed company co-founder Kenneth deLaski as chairman of the board. DeLaski, who started Deltek with his father, Donald, in 1983, served as the company's president and CEO from 1996 to 2005.

With $150 million in revenue in 2005, a growth rate of about 24 percent over 2004, Deltek can well afford to expand into international markets. It holds the No. 2 spot on International Data Corp.'s latest ranking of project and portfolio management software vendors, based on their 2002-2004 revenue.

The company's acquisitions and the international expansion projects have been self-funded. This year, Parker said, sales and net income growth likely will be around 20 percent each, with revenue hitting about $190 million. In three to five years, it could reach several hundreds of millions of dollars, he added.

"2006 looms as the year when Deltek's expansion should hit full stride," IDC said in its December 2005 report.

Deltek also remains focused on expanding its products in the United States through acquisitions. Deltek in October 2005 acquired Wind2 Software Inc., a financial management software company, and in March acquired Welcom Corp., a provider of project management software.

Roughly 20 percent, or 2,000, of Deltek's more than 11,000 clients are government contractors, Parker said.

Some of its large contractor clients are Anteon International Corp., Computer Sciences Corp., CACI International Inc. and L-3 Communications Corp. All rank in the top 20 of Washington Technology's 2006 Top 100 list of the largest federal IT contractors.

Although most of the other 9,000 clients are in architecture and engineering, government contractors account for almost half the company's revenue.

The opposition

Deltek's competition includes both small rivals that have cropped up in recent years and large IT firms such as Microsoft Corp., Oracle Corp. and SAP AG, said Asif Mahmud, director of internal systems for Pearson Government Solutions Inc., who has worked extensively implementing Deltek's solutions overseas and now implements them for Pearson.

Deltek can compete with these companies, but should bolster its image beyond that of a provider of U.S. government accounting systems for contractors, he said.
"From a project accounting perspective, what the Deltek products bring to the table are pretty much on the forefront ? but it's a matter of re-imaging the government kind of niche that they have in the United States," Mahmud said.

Parker is making other changes to get the word out about Deltek's products, publicize them beyond the Washington area and push the company's portfolio into consulting firms, IT companies and project manufacturing companies.

"I've described Deltek on several occasions as a very well-kept secret," Parker said. "Inside the Beltway, it's a very well-known commodity, but moving outside that, it is not."

Until now, the company has depended on word-of-mouth recommendations for new business. Last year, Deltek overhauled its marketing functions and is hosting more seminars and customer activities. It also created a new logo and tagline: "Project-proven. Industry smart."

Deltek also has started to create partnerships to augment its expansion. So far, it has teamed with Beers & Cutler PLLC, a Washington accounting firm that offers services for government contractors, and Watkins, Meegan, Drury and Co. LLC, a Bethesda. Md., accounting firm that serves the government, federal contractors, the construction industry and non-profits.

Until now, the company has had no alliances with software resellers, hardware vendors or consulting firms.

At least for now, Parker has no plans to prepare the company for a sale or an initial public offering. Deltek went public in 2000, but reverted to private ownership when its earnings and stock price dropped as the dot-com craze deteriorated.

At the moment, private equity firm New Mountain Capital Management LLC owns 75 percent of the company, which it bought in April 2005, and the deLaski family and management board members own the rest.

Parker said his hands are too full with his international expansion campaign to contemplate an IPO.

"That's enough to keep us busy for the moment," Parker said. "We haven't had a moment to think beyond that."

Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com.

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