Tietoset is a fascinating Finnish company, some 4 years old, building a SaaS-based service where industrial buyers are able to do better sourcing from the manufacturing field. They currently work with the metal industry and have been thinking of taking the model to other industries as well. I know the CEO, Antti Siiskonen, a good friend from university and he stated that the biggest challenges they face are related to the aging owners of the companies – they don’t see the value in doing better sourcing for their business.
The company currently employs 10 people and is on the path to generate revenue around 600k € this year. Last year they turned over close to 400k € with a 15% profit margin. The economic downturn has been good for the company in general, manufacturers are looking for new ways to generate revenue for them and find deals and that’s just what Tietoset is doing.
Their service works in such a manner that companies looking for a batch of certain industrial goods leaves a request to the service with specific details on the parts, delivery schedule and price. This request is then passed on to the network of manufacturers who are able to send a quotation on that request, depending if the buyer has made the request open or directed it to certain manufacturers only.
The service is free for buyers to a certain point, but manufacturers pay monthly fees to use the service. The fees range from less than 100 euros a month to a few hundred euros, depending on what kind of a package they want. While these may seem high for a web service, you have to remember that this is a business critical service. Manufacturers are able to attract more business through Tietoset.
While the service is not the finetuned with the latest user interface solutions, it works well and is a profitable business. The biggest obstacles in selling, according to Siiskonen, are the deeply welded ways of doing business in Finland. Buyers of industrial goods rarely see the value in putting their partners in a competitive position to get a better outcome. Tietoset has also faced challenges that the owners of manufacturing plants did not understand the value in marketing your service through a network like this, not many are that business savy.
So while the service works and there’s a lot of upside to it – it remains to be seen how far Tietoset can go with the current generation of marketing averse metal industry.