Class Ltd & Aconex Ltd: 2 top companies for your watch list

It’s sometimes worth taking a moment to think about the reasons why particular companies on the ASX actually exist.

Of course, every company out there has a story to tell.

Woolworths Limited (ASX: WOW), for example, has been around since 1924 focusing mainly on grocery retail (we won’t mention hardware), and it does a reasonable job of this, as does Wesfarmers Ltd (ASX: WES) via its ownership of Coles.

Then there are financial institutions such as Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Limited (ASX: BOQ), which aim to compete with the likes of the “big-four” on the premise they’re not like them, but also because customers may be attracted to perceived higher levels of service.

But there are also companies out there that provide customer solutions to potentially complex problems and/or provide customers with excellent value. For business customers, these solutions enhance efficiency and, most importantly, they’re good at removing drudgery.

Take SMSF administration as an example.

Once upon a time, trustees of SMSFs would arrive at their accountant’s office at tax time with a jumbled mess of paper inside a shoe box. Inside would be copies of (or even original) contract notes, dividend statements, bank statements, deduction expense receipts, actuarial statements, etc. All of these were then were left for the accountant to make sense of and piece together the information required for the SMSF’s financial statements.

Of course, this is assuming there’s no back-and-forth between the accountant and the trustees querying discrepancies in transactions.

Once sorted, the SMSF’s transactions would be entered manually into the General Ledger where data-entry and reporting errors became rife.

Enter Class Ltd (ASX: CL1).

Paper-based administration? Not here.

What Class Ltd neatly does is streamline all aspects of SMSF administration via its very clever use of technology and “cloud computing” (today’s buzzword).

With one simple platform, and using transactional data straight from its source (the SMSF’s bank for example), you could say that Class Ltd has been quite effective in removing the daily grind from the lives of accountants, tax agents, administrators, and fund auditors everywhere.

Yes, there are competitors in this space, but going on Class Ltd’s 99% customer retention rate, its industry award wins for products, service excellence, and 21% market share, it’s doing something right.

Speaking of doing something right, Indira Gandhi International Airport (IGIA), run by a public-private consortium led by India’s GMR Group, tendered for the construction of its Terminal 3 in the mid-2000’s to facilitate growth at what was already India’s busiest airport.

IGIA chose Australia’s Aconex Ltd (ASX: ACX) to provide a single on-line platform allowing all stakeholders to collaborate in the one place, manage all project documents and communications, automate workflows, and provide an audit trail for all project decisions.

The results?

With the project commencing in February 2007 and finishing 37 months later in March 2010, Aconex was instrumental in managing the 300,000 documents and 1 million emails between IGIA’s designers, construction contractors, material suppliers and project management consultants.

With all communications and documents managed online, and hence accessible and searchable from remote locations, Aconex’s online solution allowed the construction of the terminal to avoid being bogged down in inefficiencies and cost overruns that would have undoubtedly extended the construction time of the project.

It was just as well the Terminal was completed when it was, given the Commonwealth Games were due to start a mere eight months later.

Foolish takeaway

When looking to make your next investment, you may wish to better understand how your next company pleases its customers and whether or not it’s helpful to making customers’ lives better, less costly, or more efficient.

It also helps too if your company has a first-mover advantage, such as that of Class and Aconex, allowing the company to potentially increase its competitive strengths in relation to competitors in the same field.

However, pleasing customers isn’t confined to technology-related business of course.

Nick Scali Limited (ASX: NCK) has a growing population of satisfied furniture customers, as proven by its rapid revenue growth over the last 10 years, and 1300 Smiles Limited (ASX: ONT) has its $1-a-day dental payment plan allowing more customers to receive dental care than otherwise would be the case (a very good social outcome).

Yes, every company has a story and a reason for its existence, but keep your eyes open to the companies out there that do more than the bare minimum.

Those companies that can delight their customers consistently and over many years, in my view, exhibit at least one indicator of quality that may potentially lead to above-average returns over the very long term.

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Motley Fool contributor Edward Vesely owns shares of 1300SMILES Limited and Class Limited. The Motley Fool Australia owns shares of Class Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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