Monday interview: Keith Neilson, chief executive, Craneware

Brought up in Ratho, west of Edinburgh, Neilson first set eyes on the friend with whom he would later build a 15 million-turnover company when they were both just knee high to a grasshopper.

"We were nerdy, spoddy computer geeks when we growing up together," Neilson recalls.

The pair went to separate high schools - Neilson to Balerno, Craig to Currie - but the solid friendship formed over Sinclair Spectrums, Ataris and other computers that were around in the eighties served them well later in life when, in 1999, the two pals decided to form Craneware.

Now Neilson and Craig are sitting on an expanding software business with a market capitalisation of almost 140m.

Although Craneware suggests a tie to the construction industry, its name is a little misleading.

But then there's a lot about this Scottish technology outfit that isn't immediately obvious.

It employs some 75 developers and customer service staff at its headquarters in Livingston and yet not one iota of what comes out of this ordinary looking building on the Rosebank Road is sold in the UK - or even Europe for that matter.

This enigmatic Aim-listed firm, which is fast becoming one of Scotland's biggest technology success stories, has developed an unusual but highly lucrative niche in developing software for the multi-billion dollar American healthcare system.

Neilson admits it may seem strange to outsiders that a couple of muckers from Edinburgh have ended up developing payroll and other systems for large American hospitals.

He also admits that there was something "serendipitous" in the way it all came about but either way, with full-year profits soaring to $7.3m (4.6m) last year, up 24 per cent, Neilson knows he has hit on a winning formula.

"Originally we wanted to set up a software company but without really knowing what we were going to do - we thought of telecoms, banking solutions, that kind of thing," he says.

"We ended up meeting a healthcare consultant called Nora McNeil over in the US .It became apparent through discussions with her that there was a great need for software to do the healthcare consulting that she was dealing with."

Neilson didn't need much persuading.

He was already a regular visitor to the US - his girlfriend at the time, now his wife, was American and it was at a family Thanksgiving celebration that he met McNeil.He and Craig began developing the kind of technology they believed US hospitals were crying out for - to keep them abreast of the latest regulations and the products and services for which they could claim reimbursement.

Unlike the UK and Europe, Neilson says Americans were - and still are - more willing to take a risk on the little man: small companies like his which may not have an established brand but which offer the best solutions.

"That's something that is very rare over here in the UK, the willingness to invest in small companies. Here, big companies tend to look to other big companies.

"In the US, it's very much focused on getting the best and getting quality. Yes, that sometimes comes from large companies but they're not afraid of taking risks with small firms as well. There's a lot less snobbishness about both background and size of a company."

More than a decade later and Craneware has five products on the market with a sixth due to be released before the end of the year.

It has opened two further offices, one in Atlanta, the other in Arizona, with a total global workforce of around 150.

Neilson spends one in every six weeks flying to various locations across the Pond but his success certainly hasn't gone unnoticed on this side of the Atlantic.

When the firm floated on Aim in 2007, its 20m placing was twice oversubscribed. Craneware's share price has jumped from 128p to 550p over the past three years.

When US President Barack Obama's historic healthcare reforms receive the final rubber stamp, analysts expect the maverick firm to go stratospheric as a further 40 million uninsured US citizens are added to the system.

But with opinion on Obama's time in office divided and suggestions that he could suffer a defeat at the next election, Neilson is careful not to tie his fortunes too closely to any politician.

He insists Craneware's market will grow regardless of the controversial Obama reforms. Hospital software and services spend is forecast to grow from $23 billion to $28bn by 2013, he says. "There's a lot of talk at the moment about the importance of President Obama's healthcare reform but really all that is doing is encapsulating something that is already happening. More people in America want to receive healthcare and hospitals have to find a way for paying for it."

Craneware is also seeking to grow via acquisitions. It has a war chest of $30m to gobble up other US software providers and in Neilson's words "has a health pipeline of opportunities right now".

But with Craneware's future so dependent on America, would it not make sense to uproot the firm from Livingston to the US?

Neilson shakes his head vigorously.Not only does he think the business would miss Scotland's "talented developer community" but our American cousins are also lacking another vital skill: the ability to play rugby.

"From the outside there are obvious reasons why it would appear better to put everything in one country. However, I think we benefit from having the split.

"Both myself and Gordon are also passionate about rugby. I am proud of where I come from and what we do here in Scotland."