Warren Dedrick is betting big on a new type of software for the collections market.

Funny story about how Warren Dedrick, a collections guy, came to run a software company. “About 23 years ago, I bought a software package called TR Software for a company I owned, Capital Recovery Service. The software package wasn’t working very well, so I worked with the programmers in Connecticut on it for about six months,” he said. But still, the package didn’t do what it was supposed to do.

Dedrick met with the owner of the company at an American Collectors Association trade show. “I told him, ‘You can sell me the company, or I’ll sue you.’ He sold it.”

So Dedrick, who describes himself as not a techie person, found himself in the techie business. It has become his focus. “I have created 26 companies, and most of them I’ve sold,” he said. But CR Software, Inc. is one he’s held on to, with expectations that his strategy to invest heartily to develop and test a groundbreaking product will soon pay off.

Warren Dedrick

“I got rid of the other companies because I felt those particular markets (the consumer debt buying field) had matured to the point that the return was greatly reduced, and I needed the cash to develop the new system,” he said. “I had to sell the companies or let them die a slow death.”

So he got out while the getting was good and turned his attention toward an opportunity within CR Software, which by this time had grown to serve about 200 debt-recovery installations, including one of the largest collections agencies in the world. At that time, CR’s core product, adapted and improved over the years, worked well but was not as efficient as products built using the latest technology.

“We had a choice: either do what everyone has done (adapt the 1980s software to have a GUI) or start from scratch,” Dedrick said.

He opted to invest in the creation of a new, highly adaptive open architecture accounts-receivable system capable of handling the hundreds of millions of files that collections agencies and banks track. “It’s the first product of its kind in this market, with completely open architecture, allowing anyone to attach other software to our software with minimal work,” he said.

Don’t scrimp
Dedrick has never spent so much to develop a single product. So far, Titanium Ore v5.0 has cost about $20 million to develop, and Dedrick plans to spend another $5 million before he is finished.

He said hiring the right people and investing in detailed planning were key. “We spent about $2 million before we wrote the first line of code,” he said. “Believe it or not, we have documentation that is four feet high with all the specifications, gap requirements, and programming requirements.”

Although CR Software already had several programmers on staff, it left that group in place to service existing products and brought in new programmers who specialized in writing from the ground up. “First, you don’t want to reduce the service you’re giving to your current clients,” Dedrick said. “And just because you’re good in C and C++ doesn’t mean you’ll be good in, say, Java.” Good programmers don’t grow on trees, though, so Dedrick tried to make it worth their while to come on board once contacted by one of the company’s four recruiters. “Because of my personal deep pockets, we have hired the best,” he said, referring to competitive compensation packages, employee stock options, and a supportive work environment. “If they want something, we get it for them. We’re always playing with the latest technology, and they love it because we’re challenging them.”

Even with AOL corporate headquarters just down the road in Dulles, Va., CR Software, based in Fairfax, enjoys an extremely low employee turnover rate, Dedrick said. “Maybe it’s because of my smiley face,” he deadpanned. “I know nothing about software, but I know how to run a company,” he said. “And the more a company grows, the more employees’ stock is worth.”

Now being deployed at its first site, Titanium Ore has undergone rigorous testing. “We’re one of the few software companies to have a group of highly intelligent programmers whose full-time job is to break the software,” Dedrick said.

Learning from the mistake a competitor made a few years ago, CR Software has employed a separate team of programmers in Latvia who make the software think there are 9,000 to 10,000 people using it, Dedrick said. (The competitor’s product failed when a large number of terminals were connected.)

Dedrick expects big things from Titanium. Although he publicly anticipates 100% growth each year for the next five years, he privately sees an even brighter future: up to 1,000% growth each of the next two years.

“We have people knocking on our door asking us to give demonstrations; in 22 years, I’ve never had that happen,” he said. “Not only that, but according to my senior team, the product can be transfered into different industries, not just accounts receivable management. We’re looking at government bids and things like that.”

Although Dedrick expects the company’s biggest clients to convert to the Titanium product, he thinks smaller companies will continue to use its core product, Platinum, for years to come. “It’s a good, inexpensive package for smaller clients,” he said. “Titanium Ore is three-tiered; we license a lot of software from other companies, like Microsoft.”

With so much on the line, this is an exciting time for Dedrick and CR Software. “It’s been a mind-boggling two and a half years,” he said. “My goal is to make CR Software the largest provider of accounts receivable software in the world.”

Deborah Geering, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , is a freelance writer based in Atlanta.