Rocklin tech firm evolves from distributor to software maker
Sacramento Business Journal - February 23, 2007
Staff Writer
A Rocklin company is developing software to help electronics manufacturers track and sell surplus products, marking a shift from its decades-old strategy.
"We changed our business plan to meet the current conditions," said Jeff Hilliard, chief executive officer for Compudigital Industries Inc. "We're very small, but we move quick."
In the 1990s, the company helped electronic manufacturers -- including some industry giants -- deal with a glut of products, from computers to printers. "I sat and watched a major manufacturer dumping product in a Dumpster," Hilliard said.
That was during the dot-com boom when many electronic manufacturers enjoyed record profits and revenue. But when the tech bubble burst, companies demanded belt-tightening efforts and much stricter tracking of products.
Now, manufacturers have better planning tools, namely computers, to help them oversee operations and target production to demand, Hilliard said. "The business is getting much, much tougher than it used to be because manufacturers are getting much smarter," he said.
So Hilliard has transferred much of his business to the Web.
Compudigital is evolving from a hands-on broker business -- buying manufacturers' products and selling them to small electronics stores -- to developing and selling software. Compudigital's software enables manufacturers to track excess material and sell products directly to small electronics retailers, eliminating the middleman.
"The major companies want to deal with fewer distributors," said Oleg Kaganovich, chief executive officer of the Sacramento Area Regional Technology Alliance. He added that the number of technology distributors has been shrinking since the mid-1990s.
The changing landscape has hurt Compudigital's revenue, which shrank from a peak of $10 million in the late 1990s to $2.4 million last year, Hilliard said. But the company is more profitable today, he said.
And its 60,000 square feet for excess inventory has been trimmed to 10,000 square feet. Compudigital has three employees and six contract workers.
Hilliard plans to hire sales representatives to market its software.
The company's two software products are ExcessManager and MeetComp.
MeetComp allows companies to closely monitor and match prices for excess products of its rivals. Hilliard said the software was developed for a Fortune 100 company in the region, but declined to name the customer.
The Web-based ExcessManager software helps manufacturers control the sale of their excess products. Customers can view and purchase items online, either immediately for a set price or by submitting bids. ExcessManager also offers "reverse auction" services, asking buyers if they have spare electronics parts.
"We ask how much they want for them," he said. "Then we get into a bidding auction to buy the products and we do it on behalf of the manufacturer."
The ExcessManager software has been under development for the past four years, Hilliard said. Clients include Hewlett-Packard Co. and Sony Broadband Entertainment.
Both ExcessManager and MeetComp ensure companies are in compliance with the Sarbanes-Oxley Act, allowing certain sales to be audited and tracked, Hilliard said.
Hilliard and his wife and company vice president, Patricia, started Compudigital in 1985. Then, Jeff Hilliard was primarily an inventor. He holds three patents, including a computerized table-management system that allows restaurants to track available seating.
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