Headquartered in Minneapolis, Datacom International, Inc. (“Datacom” or the “Company”) is a privately held Minnesota “C” corporation that develops, markets and supports fully-integrated, web-based enterprise software for the manufacturing industry.

Since the 1970’s, Minneapolis has been a center for the development of Enterprise Resource Planning (“ERP”) software for the manufacturing industry. Many of today’s legacy ERP applications were developed by Minneapolis companies, and while most have since been acquired by larger software providers, much of their ERP software employment remains in Minneapolis. Datacom was founded in late 1998 by a core group of individuals that came out of this ERP software environment.

With a background in ERP software for the mid-manufacturing market, Datacom’s founders aimed the Company’s initial products at that mid-sized, 50 to 300 employee, market. The initial products were very contemporary in their application structure, but were still developed around the legacy client-server, on-premise architecture.

In 2001, Datacom’s leaders envisioned that the ubiquitous communicative power of the Internet, coupled with rapidly progressing communication technologies and standards, would in the not-too-distant future revolutionize the way that enterprise software was architected, delivered and supported. With this vision, they reset Datacom’s strategic direction on to a path of developing an ERP solution that could be delivered over the internet from a centrally hosted server, with multiple customers (tenants) on the same server. This architecture would eventually be referred to as “Software On-Demand” or “Software-as-a-Service” (SaaS), and is today a part of what is referred to as “Cloud Computing”.

This emerging model not only presents a major paradigm shift in the use and application of enterprise software, but in the business practices of selling, implementing and supporting that software as well. Therefore, most industry prognosticators agree that the emergence of the centrally hosted SaaS/Cloud model will cause a “disruptive” change within the enterprise software industry, as legacy providers struggle to transform from field based to internet driven selling and support; and disruptive changes provide the opportunity for new industry leaders to emerge.

There are relatively few ERP competitors today that deliver a suite of fully-integrated back office, front office and eCommerce applications in the true centrally hosted, multi-tenant model, and with the functional depth of Datacom’s solutions. Currently, Datacom’s main ERP competitors are still primarily selling legacy, premise-based applications that were developed in the 1970’s and 80’s. Thus, Datacom believes that it is well positioned to become one of the new enterprise software industry leaders as this paradigm shift occurs, and that is Datacom’s ultimate goal.

While it took some time and investment for the company to perfect its centrally hosted architecture, in 2006 the Company completed the development of its flagship enterprise software suite, dataSTOR, a full featured ERP software application that tightly integrates estimating/quoting, sales order processing, product engineering, purchasing, materials management (including multi-warehouse), manufacturing, project management, job costing, and fully integrated AP/AP/GL financial functions (including multi-company) in a real-time environment to facilitate the collection, processing, storing, analysis, reporting and communication of operational, customer and vendor data.

The Company then further enhanced dataSTOR by developing and tightly integrating front office customer centric applications, such as Customer Relationship Management (“CRM”), directly with its back-office ERP processes, utilizing the same back-office database of real-time information.

Datacom’s solutions are based upon an internet oriented architecture, with all user screens fully browser based. This web-native design allows the applications to be centrally hosted, which provides its users secure browser access from within their facilities and from any Internet location, including from mobile devices such as smart phones and laptops, without the need for client downloads or updates, or intermediary third-party applications.

Because Datacom’s solutions are internet based, the enterprise can easily extend the efficiencies of real-time information sharing to its remote divisions, warehouses, customers, vendors and employees via a simple browser interface, making information exchange with its partners much more efficient, timely and accurate.

When recasting Datacom’s direction, its leaders envisioned that in the early evolution to offsite data the smaller manufacturer, with less IT staff and less job function backup, would more quickly embrace the inherent virtues of the centrally hosted model. Thus they expanded Datacom’s target market on the low end to include manufacturers in the 20 to 50 employee (5 to 20 user) range. Therefore, the Company’s enterprise applications have now been designed most specifically for the small to mid-size discrete manufacturer (referred to as the “SMM” market), which Datacom now defines as companies in the 20 to 300 employee range.

Industry research firms agree that the need for integrated information systems within this SMM market segment is dramatically escalating and represents a multi-billion dollar market opportunity. Using the Governments NAICS database, Datacom has analyzed that just within the twelve primary manufacturing sectors that it is targeting within its 5-year plan, there are over 800,000 SMM manufacturers within the continental U.S. alone; with an average information system investment of $75,000 this equates to a market of over $60B in size.

Datacom’s current long range financial projections are limited to sales within the U.S. and Canada through 2013. Within the current plan, Datacom expands internationally beginning in 2014. As a part of its expansion plan, the Company intends to first expand into Europe and Australia, and then into the Asia/Pacific market, which it believes is a huge emerging market of opportunity. However, the Company’s management team has extensive international experience and Datacom recognizes the advantages of its Cloud model in capturing international markets. So over the next year the Company will examine the feasibility of expanding sooner into international markets.

Datacom’s strategy for gaining and maintaining a competitive advantage in the huge SMM market is to specialize in vertical segments of that market, creating Division or Sector Centers that focus on the needs of a vertical manufacturing industry. Built around a three-tiered architecture, the ease in modifying dataSTOR makes a micro vertical market strategy especially attractive and feasible. It is through this vertical solution approach that Datacom intends to maintain a competitive market advantage as other SaaS/Cloud based ERP competitors emerge.

Prompted by a relationship within the custom sign manufacturing industry, over a six month period in 2006/2007 the Company developed and field tested dataSIGN, a derivative of dataSTOR, customized for the custom sign manufacturing industry. Since the full release of dataSIGN in 2007, Datacom has received orders from over sixty mid-sized custom sign manufacturers, located throughout the U.S. and Canada, and equating to over 650 concurrent users.

All of these dataSIGN customers are centrally hosted (Datacom currently uses OpSource as its hosting partner) and the Company has been utilizing these new customers to further hone its hosting methodologies and its internet based sales, implementation and customer support processes, before its broader expansion into other vertical segments of the manufacturing industry. Breaking new ground in enterprise-wide solutions, and true to the cost efficient SaaS model, Datacom markets, implements and supports all of its dataSIGN customers over the Internet.

While a relatively small vertical within the total SMM market, Custom Sign Manufacturing still represents over 7,000 prospects and a $200M market opportunity to Datacom, within the U.S and Canada alone. Despite the challenges of a slowed economy, Datacom has been successful in establishing a leadership presence within the custom sign manufacturing industry in 2010. For example, Datacom is one of a very few number of vendors that has been approved as a member of the highly respected World Sign Associates (WSA). A number of the WSA leaders are dataSIGN customers.

Datacom is continually adding enhancements to dataSIGN, with new releases on a quarterly basis. During Q1 of 2011 the Company plans to add significant new functionality to dataSIGN, such as a new Project Management module, a contemporary Report Writer that is more interactive with third-party applications, increased bar coding functionality, etc., which will further expand the marketability of its products.

While the company has been doing its model testing with generally smaller customers (5 to 30 users, with a 11.6 user average), the functional expanse of its products, with strong integrated double-entry accounting modules, are generally best suited for mid-sized manufacturers (40+ users). As a part of its expansion plans, Datacom will begin to move its sales focus more towards this mid-tier market.