Australia-based business intelligence company Rapid Ratings is bringing its service to the web, retaining a New Zealand software developer to do the work needed to extend its reach globally.
But an Australian investor will profit by any success of the company.
Founder and managing director Patrick Caragata says he would have preferred to base Rapid Ratings, which advises banks and investors on an appropriate ranking for the performance and soundness of businesses, in New Zealand. Born in Canada, Caragata has taken New Zealand citizenship and has had a distinguished career in the local finance industry, “but there just wasn’t an investment company here willing to take a big enough risk with my idea”.
New Zealand, he suggests, loses out for this reason on many other opportunities to commercialise ideas conceived on its shores. “I had to site the company head office in Brisbane because that’s where my investor is,” he says.
The company’s rating service uses complex calculations on financial ratios in the company’s accounts, and is delivered as a set of charts and boilerplate text sections comparing other companies in the same industry. Industries have identifying characteristics that count significantly towards an evaluation of the worth of a company, Caragata says. So different weightings are applied in the model to businesses in each industry sector.
Caragata began developing the procedure himself from 1991, started commercialising it in 1997, and took it to the market as a fully-developed service in 2000. Until now, customers got their results by email.
Sytec Resources of Auckland developed the website and associated computer architecture, which is based on Sun hardware and Solaris — though the web server uses Linux with Apache. Oracle provides database management, BEA-Web-Logic the applications server and applications are written in Java.
Security was a key concern as with any financial transaction environment, says Sytec business development manager Pat Ryan, and sophisticated routines were required for the batching, orderly processing and monitoring of report preparation. XML and its business reporting incarnation, XBRL, is used extensively in the system. Inputs from the companies and stock exchanges are converted into that format.
Early implementation of Caragata’s algorithms used Microsoft Excel spreadsheets and Word, because they were the most widely used tools at the time and were comparatively economic as against hand-building a specific system.
“But we eventually maxed them out,” Caragata says. They could no longer deal with Rapid Ratings’ workload.
Rapid Ratings claims to have predicted the collapse of Enron and Australia’s HIH Insurance, and the troubles of Air New Zealand and the Brierley group, several months in advance when the leading agencies, relying on a mix of mathematics and human interpretation, were still rating them highly.