Baby Blue Chips: Hansen Information Technologies Inc.

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All in the Family No More 

By Mark Larson

When you ask Chuck Hansen about his company, Hansen Information Technologies Inc., he doesn’t hesitate to give his late father full credit for starting it all 24 years ago.

“This is a family business,” he says.

The Rancho Cordova-based Hansen has 330 employees and software clients that include more than 700 state and local governments worldwide. A year ago, just as a majority share of the company was sold for $50 million to Golden Gate Capital of San Francisco, Hansen’s annual revenue was $30 million.

Hansen retained 40 percent ownership. A month after the deal, he bought San Francisco-based Spear Technologies, a public transit management provider, for undisclosed terms. For its fiscal 2007, which ended in January, the company revenue had grown to $47 million.

In May, family ownership of Hansen Information Technologies came to an end when software giant Infor Global Solutions bought the company for $100 million.

A retirement sale that never happened The road toward the $100 million acquisition and the end of a dynasty of sorts for the Hansen family began when Chuck’s dad, Robert Hansen, sold IBM mainframes to state transportation departments, and then struck out on his own in 1970 in Sacramento. He sold customized computer systems to the Department of Motor Vehicles and various health care systems. He sold the business and retired in 1980.

Chuck, 51, came to work for the company in 1986 after first having the notion he would help his father put what was then Hansen Software up for sale. Instead he stayed, leaving behind a budding career in investment banking. Tall with long brown hair, Hansen looks 20 years younger and energetic enough to be regularly carving waves on a surfboard.

Hansen had managed to grow his company with constant innovation, giving it solid footing as a provider of asset management software for state and local governments across the United States, Australia, Canada and the United Kingdom. He was the first to introduce color screen monitors, client-server systems and web-based software to the market. The company is comfortable when it bids against industry giants IBM, Oracle and SAP.

Humble beginnings
In the company’s early years, Hansen senior sold software to automate the management of public works operations for state and local government agencies. It was automating a task that up to then had been done manually. But the company attracted the likes of Infor Global Solutions probably because of a major career change by Chuck Hansen and his ultimate vision for the company.

He went to Cal and received an accounting degree, then to UCLA for a master’s in finance. In 1980, he helped his dad sell his 10-year-old Sacramento-based business, R.J. Hansen Associates, to Grant Thornton International. But his dad then discovered that retirement was suddenly an exercise in not knowing what to do.

“He was bored out of his skull,” says Chuck. “He wanted to start a new company to do for PCs what he did for mainframes.”

So he started Hansen Software, and Chuck and his brother Scott were the two other principals in the new company. “We had no idea what he was up to,” says Chuck.

The elder Hansen hired five programmers from Sacramento State to staff his new business. In 1985 Chuck went to work for a Silicon Valley venture capital firm. He worked as a “turnaround CFO” for acquired companies. His job was to improve the bottom lines of slumping portfolio companies and find buyers for them. A year later, after he’d sold one company; his father had what was the first of three heart attacks. Chuck was just about to take a position in a pre-IPO company, and thought at the time his future would be one of travel and financial freedom.

But because of his dad’s heart attack he agreed to come to Sacramento to quickly help sell his fledgling software business. Instead, his dad recovered quickly. And Chuck decided to bid goodbye to Silicon Valley and jump in to build what looked like a promising family business.

Sharing an office with his dad, he got a quick indoctrination to the world of low finance.

“That month we had $5,000 in revenue,” says Chuck. “It was just horrible. And then, if you weren’t in agriculture, nobody would loan you money.”

The company finance strategy was to use credit cards and multiple home mortgages to pay for the slow but sure development of new products. On pay days, Hansen senior was the last one to get paid, and sometimes went without.

Hey, this could really fly
Chuck saw room for more than providing just sewer and water maintenance software. He saw a government agency need for similar automation and accounting of all of its public utility services. From 1986, when he started, through 2000, Hansen set the company on a course to develop and market a line of such products.
Ten years ago, he realized the balance sheets of public agencies are 80 percent capital assets. With prompting from customers in Adelaide, Australia, and the city of Vancouver, British Columbia, he saw that the future needs of public agencies would be an asset accounting system. He then put Hansen on a course to offer just that. Last year Hansen beat SAP and Oracle to win such an account with Vancouver.

Five years ago, the company had its biggest win to that point, a $10 million contract with Caltrans to track the maintenance costs of every state-owned road. It was the largest information technology contract ever awarded by the state and opened up for Hansen international markets in New Zealand and Australia.

And all the while the company has racked up a lot of happy customers.

Bruce Seigle, chief information officer for Louisville/Jefferson County Metropolitan Service District in Kentucky, said he’s been working with Hansen software since the early ’90s. It is used to handle the region’s 311 call center. Since then the city/county agency has upgraded and added to its tasks all handled by Hansen. The company now does asset management chores there.

“About four or five years ago we evaluated the market,” said Seigle. “Hansen, we felt, was much better. The way we look at it is Hansen is developing software for people that use the system; they actually work with the user.” Competitors don’t have that approach, he said.

Alan Tanana, business analyst for the city of Tempe in Arizona, says that the city first used Hansen software in 1995, and has continued buying more for various city tasks such as sewer and water management, street signs and signals and facility maintenance. Tanana says the city will likely eventually have all its departments using web-based Hansen software.

“They know our business,” Tanana says. “They don’t throw people at us that really don’t understand what we do.”
Last year, when Hansen approached Golden Gate Capital for help in buying a small piece of an Australian company that could help it win more business, an unexpected $50 million pot of gold presented itself. Golden Gate Capital agreed to buy a majority stake of Hansen and suddenly the company had the capital it needed to compete on a larger stage.

Sacramento attorney Gilles Attia worked on the Golden Gate Capital purchase of Hansen shares, and he has his own theories on the company’s success. He points to Chuck Hansen.

“What Chuck was able to do was not just grow the company but adapt technology for a market that is not on the leading edge of adopting technology.

“His did a good job of creating the technology, but it was fairly basic stuff,” says Attia. “What Chuck did was take it to cutting edge. He took a good database and network and really turned it into probably one of the leading companies of that space. That doesn’t happen naturally. That happens because you have a big personality. What makes a difference in a company with that kind of person, like someone with Chuck’s vision and charisma, is that they make big things happen.”

And it’s that big personality, vision and charisma that translated into a company worth $100 million.

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