Telling the truth about SME life today

Karen Paterson: Mover. Shaker. Innovator

Her pay-as-you-go model, which can be easily scaled up to 1,000 employees in Mumbai or down to three employees in Malta, is a flexible and efficient alternative to clunky ERP systems, where country coverage is often limited or has expensive software-licence costs.

In 14 years, Paterson has built up, block by block, a £10.5m-turnover business employing 200 people, 69 of which are highly skilled technical developers.

It’s the scale of the market opportunity that makes her business stand out. The SaaS international payroll sector is worth an estimated $180bn – and Paterson’s technology is three years ahead of other known products on the market. She has taken her business into global markets, putting her Salisbury start-up on a direct collision course with technology giants such as ADP and Ceridian.

Paterson’s background is in retail banking and corporate finance. It was in 1996, after completing an MBA in international information technology strategy at Southampton University, that she decided to start up her eponymous consultancy business. “It was tax. It was strategic consulting. It was corporate finance. It was basically anything that anybody would pay me to do!” she says, with her wide grin.

One of her first contracts was with Virgin Interactive Entertainment. The company had started out with four developers writing games programmes under Richard Branson. When Paterson visited, it had just been bought by Viacom and had grown into a sprawling giant, with nearly 3,000 employees across eight countries. “The HR director had no visibility on headcount,” explains Paterson. “She had no idea what the cost of her payroll was. She had no clue whether the payrolls were compliant or not. She was tearing her hair out. She’d tried ADP. She’d tried Ceridian. She’d spoken to PricewaterhouseCoopers and Ernst & Young. But nobody could help her – and she needed to have the answers on her desk by the following month.”

Paterson designed a system for Virgin using password-protected Excel spreadsheets. It wasn’t fancy, but it worked. Other companies started to come forward with the same problem. As Paterson took on more and more clients, including the likes of and Gameplay, she watched and learned. “Many of the companies I worked with had great ideas but no business sense. They made terrible technology mistakes. They rushed into markets such as online gaming even though there simply wasn’t enough bandwidth over modem connections.”

Paterson wasn’t going to make the same mistake with her own business. She waited until 2000 – the advent of broadband – to start assembling the company’s signature SaaS platform with the help of John Hollis, the entrepreneur behind Quicksilva, one of the most successful British video-game publishers of the eighties. The pair shipped the first release of their international payroll system in 2001.

Paterson began her assault on international markets in 2006, opening an office in Singapore. Again, it was a measured move. Government stability, bandwidth, local skills, exchange rates and currency fluctuations were all on her checklist of considerations. “We chose Singapore as opposed to Hong Kong because, geographically, it’s behind Indonesia,” says Paterson. “Even if there’s a tsunami, our internet cabling is protected and we don’t lose bandwidth.” This woman thinks of everything. After Asia, she took on America, China and France.

Today, the Patersons payroll platform is more than 1.8 million lines of code and available in 30 languages. Nearly eight in ten of the company’s clients are US multinationals with offices spread around the world. Global market analyst IDC predicts that the percentage of US firms that plan to spend at least 25 per cent of their IT budgets on SaaS applications will increase from 23 per cent in 2008 to nearly 45 per cent in 2010. “I often laugh and say that we solved a problem the Americans couldn’t solve for themselves,” says Paterson. “Go British company!” “

"I love Paterson’s story which is grounded in the drive and tenacity that is at the heart of any entrepreneur,” comments Andrew Haigh, a managing partner at Coutts, a sponsor at our Growing Business Awards. “What makes her special, though, is the way she has harnessed those attributes in a focused way. Her business’ growth is considered; she learns and builds on things that have not gone well and she has stayed grounded – just the sort of business person who deserves to be Entrepreneur of the Year.”

Read the full interview with Paterson in the January/February issue of Real Business magazine.

Related articles:Growing Business Awards 2009: How it went down


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