FlexiInternational Software, Inc. (FLXI)
Interview with: Stefan R. Bothe, Chairman, President and CEO
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FlexiInternational Software – finding a faster way to the marketplace through partnering

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Software & Programming 

FlexiInternational Software, Inc. 

Two Enterprise Drive 
Shelton, CT 06484 
Phone: 203-925-3040

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Stefan R. Bothe 
Chairman, President and 
Chief Executive Officer 

Interview conducted by: 
Lynn Fosse 

March 2003

Bio of CEO,

Stefan R. Bothe, age 54, has served as Chairman of the Board of Directors and Chief Executive Officer of the Company since March 1993.  From November 1991 to February 1993, Mr. Bothe was President and Chief Executive Officer of DSI Group N.V., a Dutch-based international software company.  From 1989 to 1991, Mr. Bothe was President and Chief Executive Officer of GEAC Computer Corporation Limited (“GEAC”), a software company.  Prior to joining GEAC, Mr. Bothe was President of the Application Products Division of Computer Associates International, Inc. (“Computer Associates”), one of the largest software companies in the industry.  While at Computer Associates, Mr. Bothe held numerous senior management positions, including President of the International Division, President of the Micro Products Division and Senior Vice President of Marketing. 

Company Profile: 

FlexiInternational Software, Inc., (OTC: FLXI) headquartered in Shelton, CT, with operations in the US and UK, is a leading provider of Internet enabled financial and accounting software and services.  The Flexi Financial Enterprise Suite consists of FlexiFinancials, a full range of accounting solutions and financial management and data warehouse applications that offer efficient processing and analysis of enterprise financial data for mid-size and large companies.  Flexi markets its software for in-house installations at its target companies as well as a business process outsourcing (BPO) service to those companies who want to outsource their back-office accounting operations.  FlexiInternational sells it’s software and provides its services through various partner channels including Value-Added Reseller (VAR) partners, Flexi Industry Partners (FIPs) and other partnership arrangements.  

The Flexi solution is based upon robust technology that provides significant advantages over traditional financial accounting software.  Advantages include greater transaction throughput; ease of implementation and use combined with reduced cost of total ownership.  Flexi software’s architectural design supports a variety of platforms, new technologies and software as they develop. 

The Flexi Financials® are an enterprise-wide client/server accounting system for capturing, synthesizing, and distributing financial and management information.  The Flexi suite of applications is designed to meet the sophisticated information requirements of the modern enterprise, be it single-site, multi-site, multi-company, or multi-national. They include all the modules below: 

Flexi FMS™: Accounting Process Outsourcing is a way for companies to do away with software obsolescence, inefficiency and the daily hassles of non-strategic, non-revenue-producing corporate functions. 

Flexi Financial Datawarehouse™: A high-performance financial and operational tool for performing analysis with multi-dimensional roll-ups, and drill-down and multi-currency capabilities. 

Flexi Financial Rules Engine™: FlexiFRE provides an efficient, effective way to clean, enrich and transform data from all of an organization's source systems.  It creates a single, standardized layer between front- and back-office source systems and a data warehouse or back-end reporting system.  Just as important, it enables you to use a graphical interface to build your organization's business logic directly into the data capture process. 

FlexiLedger®: General ledger system supports an unlimited number of currencies, multi-currency accounts, multi-currency sets of books, and companies.  Flexible account key satisfies unique accounting and reporting needs.   Powerful consolidation and revaluation features perform automatic translations and conversions. 

FlexiPayables™: Provides the tools needed to efficiently manage and track vendors, invoices, cash disbursements, and employee expenses.   Supports centralized or decentralized accounts payable processing through powerful import and export utilities. 

FlexiReceivables™: Accounts receivable module lets you establish a broad range of business rules governing cash management, collections, and customer maintenance.  A selection of standard queries and reports for cash forecasting and invoice aging, as well as tax reporting, aids in managing receivables. 

FlexiAssets™: A full-function asset management and tracking system that streamlines the management of fixed assets and provides a facility for tracking the physical location of all assets and their associated components. 

FlexiProjects™: Tracking capital projects efficiently and accurately - without requiring additional accounting resources or extra reconciliation steps, is vital to any organization. FlexiProjects™, a recent addition to the FlexiFinancials® integrated suite of accounting applications, allows for the management of costs for any type of capital project, whether it is software development, building a new facility, or building improvements. FlexiProjects™ stores, tracks and analyzes all project costs and ensures that project information is always reconciled with general ledger, purchasing, and other financial data. 

CEOCFOinterviews: Mr. Bothe, please give us a brief history of FlexiInternational. 

Mr. Bothe: “We started out as an accounting software vendor in 1992 when a new technology platform called client/server came along and required the existing Legacy applications to be rewritten onto this new technology platform.  That grew the company very rapidly as people started replacing their Legacy systems.  We went public in 1997 and our focus through the IPO until shortly thereafter was exclusively in the software accounting market space.  

Recently, we saw the trends in the accounting industry change towards accounting outsourcing of the back-office accounting operations.  We recognized an opportunity as an established software vendor to take the software that we have and make it available on an outsourcing basis, either by us offering it as a direct service to clients or through partners that we would sign up around the country who would actually utilize our program to offer accounting outsourcing to their clients. These regional firms could be outsourcing specific companies or they could be regional CPA firms that decide that this could be a good extra business for them to get into.   

We have slowly expanded without abandoning our accounting software business; it is still a big part of our business and we still continue to sell it but we see the direct/in-house accounting software business eventually declining over time, for us as well as the industry, and we see accounting reseller and outsourcing partnerships becoming a more accepted part of that space.  Today it is just starting; if you talked to me about an HR vendor or a payroll vendor, we would all recognize that outsourcing is done more than half the time in American companies.  If you are in the IT area, outsourcing is the most readily accepted and it is just beginning to be accepted in our space.” 

CEOCFOinterviews: How do you get your software and services more accepted? 

Mr. Bothe: “Part of it is supporting industry organizations that promote outsourcing as a viable option.  These are companies like Firmbuilder.com, The Outsourcing Institute and Gartner Group (Gartner, Inc. – NYSE: IT & ITB). Today, accounting outsourcing is probably being done by about 13% of American companies in one form or another, in outsourcing your billing services or collection services for example.  Over time, people will start looking at the back office, which we consider the accounts payable, general ledger, accounts receivable, etc, but it will take time just as it takes time for many of these trends.  

When we got going in client/server computing back in the 90’s, it certainly was not readily accepted and it was the pioneers that said this is the way the future is going to go because it is more user-friendly, more flexible.  At that time, you maybe had 10—20% of the companies saying they were ready to go, and by now most of the people have switched off the Legacy system.  We need to help support outsourcing and to help support these organizations and make sure success stories are published.” 

CEOCFOinterviews: Are the people that are using your software now more receptive than prospective clients to using your outsourcing programs? 

Mr. Bothe: “Companies are certainly receptive to using it if they are internally ready to make that move.  I would say our clients are in a similar situation to the rest of the market; fifteen percent are thinking about it or doing it in one form or another.  It is probably more likely that outsourcing clients in the short term will come from these regional partners that we are signing up.  We are certainly ready to take our existing clients and move them over; we would love that as a way of continuing our relationships with these clients.” 

CEOCFOinterviews: Tell us about your flagship products and what sets FlexiFinancials® apart from the competition? 

Mr. Bothe: “From the very beginning, we had a couple of areas where we are completely different. The first area, on the technology side, was written on an open industry language; we are not using proprietary technology.  It is easy to extend and easy to adapt. With that kind of openness and flexibility that comes with it, we have always had a lower cost of ownership advantage for our clients.  We are easy to install and implement.  You are using tools and technologies that are readily known by people.  We have seen studies that Gartner and others have done, where they showed up to 50% lower cost of ownership and lower cost of operation with FlexiFinancials.   As we move into outsourcing, most of those benefits are equally important to clients, and we use our standard software for outsourcing.
We also recognize that companies have some unique ways of using the systems or some unique reporting requirements or something that needs some minor modification of the system than being in open standard industry language, we can do it faster than anybody else.  At the same time, by having this lower cost of operations, we can also price our accounting and outsourcing services in an attractive manner because we know that our cost of maintaining these systems for our outsourcing clients is much less than it would take someone else.  From a partner point of view, as we are signing with partners that are representing our software, we are unique in our interest of working with partners in outsourcing, compared to any of our major software competitors.  We have made a partner commitment and we want to work with them on a basis where we don’t charge them up-front for a license; we will take a piece of the revenue that they collect from their clients each month and get paid on that basis. This makes it more attractive for them to enter this market without the heavy investment.” 

CEOCFOinterviews: It sounds like you are positioning yourself way ahead of the game, to be ready when outsourcing becomes in the mainstream. 

Mr. Bothe: “Yes, we are pioneering again.  We pioneered in 1992, when client/server came along and we see ourselves in the same position again.   We are banking on this market evolving.  At the same time, we have a business to run today so we are not taking our focus off the software business.  We are signing up new partners who are resellers of our software.  We have had partners that are selling our software into the hospital and insurance market space for years.   They are taking our software, bundling it in with the industry’s specific vertical solutions to their respective markets and then offering it as a total solution to their customers.  That has been successful for us and it is a good way to expand into markets where the industry specific expertise is definitely very important.  It is a fast way to market for our partners, with long-term good revenue flow for us. Strategically, we do believe that accounting outsourcing is the next big growth phase and we believe we are well positioned to take advantage of that.” 

CEOCFOinterviews: Are there industries where you would like to be more involved through partners? 

Mr. Bothe: “Areas that we have done very little in are the manufacturing space and the government and higher education spaces.  For a variety of reasons we have not been selling actively in those industries, and so we would welcome partners in those areas who would take our accounting software and combine it with their manufacturing solution, for example, and move into that market space.  As a company, we have been very successful in financial services, insurance, and healthcare.  We would like to branch out and partner with other software vendors into their industry space.” 

CEOCFOinterviews: Please tell us a little about the financial condition of the company? 

Mr. Bothe: “We are a small vendor. We went through some financial difficulty just post Y2K.  A year prior to Y2K, people abruptly stopped buying accounting software as they focused on fixing the existing systems.  However, we successfully managed through that. We have been profitable over the last eleven out of twelve quarters.  We have seen progress that makes us feel encouraged as we look into 2003 and beyond.

Last year we signed a major deal with Swisscard AECS AG, a joint venture for American Express in Switzerland, which manages all the credit card operations for American Express, Visa and MasterCard in Switzerland.  There are companies that will buy from us and look beyond the financial liability issues.  Partners who are software technology type people look quickly past the financial issues.  If you are in the software business, you have people that can take that software and continue to support and move forward.  If you are not a technology vendor, you do not have resources in-house to manage the software solution.  That type of risk may be too great for them.   Fortunately, enough companies see beyond that.  We are showing a steady pattern and after awhile we will overcome these historic problems we have had."

CEOCFOinterviews: It would seem the quality of your product, your partners and customers are a factor when people look at you? 

Mr. Bothe: “It certainly is and it certainly will ultimately be considered by them.  That is why they will realize that we have too much going for us not to be considered.” 

CEOCFOinterviews: In closing, why should potential investors consider FlexiInternational? 

Mr. Bothe: “I think they should look at the long history we have had with the successfully sold and installed product that is in companies such as Wells Fargo & Company (NYSE: WFC) and Citibank (Citigroup – NYSE: C).  FlexiInternational is a company that has history and staying power.  We have been well recognized by industry experts such as Gartner, Meta Group and others as having a very competitive product.   I think another good reason to consider investing in us is that we have lowered the risk due to the most recent history of having stabilized the business.  We have put a strategy in place for the future, which says that we are not going to sit on our laurels as a software company with good software products.  We recognize that our industry, like many industries, is in a constant state of change and accounting outsourcing will become a reality.  

There are studies by CEOs, which have indicated that they spend about 70% of their time on non-strategic issues and 30% of their time on strategic issues.  They would very much like to see that switch around to 70% of their time on strategic issues and help their company with growth strategies.  One way to accomplish that is to outsource their back-office accounting operations; they no longer will have to deal with those headaches, and they will have time to be a good partner to the CEO and determine how they can together, grow the business.  We are offering something that I think will be very compelling over the next few years to CFOs and CEOs of companies, which shows that we have a good plan for the future. Those things combined are reasons to look at us carefully and consider making an investment.”


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SHELTON, CT, July 29, 2003—FlexiInternational Software, Inc. ("Flexi") (OTCBB:FLXI.OB), a leading designer, developer and marketer of financial and accounting software and services, announced today that Nick [John K.P.] Stone, III has been elected to the Company’s Board of Directors.

Posted: 8/5/03 - CEOCFOinterviews.com


Expanded business relationship for Flexi expected with new Company                                

SHELTON, CT, April 29, 2003—FlexiInternational Software, Inc. ("Flexi") (OTCBB:FLXI.OB), a leading designer, developer and marketer of Internet based financial and accounting software and services, today announced the sale of its business process outsourcing (BPO) partner, Core3, Inc., based in Phoenix, AZ, to Ephinay of Charlotte, NC, a finance and business process outsourcing firm.  For its ownership share in Core3, Flexi received $357,000 in April 2003 and stands to realize an additional potential gain of up to $400,000 subject to certain earn-out targets to be achieved by Core3 over the next two years.  Flexi invested $270,000 in Core3 during 2001 and 2002.  Core3 will become Ephinay's Phoenix Service Center and its founder, Gregg Scoresby, will become Ephinay's Executive Vice President of Client Services.    Ephinay is backed by ChrysCapital, a leading investor in BPO companies, and also has a large service center in India.

Posted: 5/30/03 - CEOCFOinterviews.com

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