Archive for the 'New Zealand IT Industry' Category

Differentiation critical in commodity markets

January 8, 2018

Any business that supplies a product or service that cannot be differentiated against its competitors is at risk of being undercut and thereby losing its customers.

Environmental and Ambient Data

Commodity markets, such as electricity and other energy types are particularly exposed to price cutting, due to the fact that no matter which supplier a customer chooses, the end product, or service, is essentially the same. Sometimes there is a small difference in service or product quality, but often that is not a strong enough argument to compete against a lower price.

The stark choice that businesses in commodity markets face in order to compete, is between cutting prices or finding a point of difference that will motivate customers to choose them over a lower priced competitor.  Cutting prices leads to price wars with competitors and a downward spiral to the bottom, so differentiation has to be the preferable option over price cutting.

In the New Zealand electricity market, Trustpower has proven that bundling electricity with broadband and/or telephony services together in a single offering makes a very compelling proposition to customers. It is also very difficult for other electricity (or broadband) suppliers to compete with, unless they can also provide the same bundled services – which most don’t.

How can you compare the price of an apple with the price of an apple and an orange?

Trustpower’s leadership position in bundling electricity and broadband has been exceptionally successful in the New Zealand market and we are now seeing other suppliers starting to follow in their footsteps.

Another successful point of differentiation is locality.  In the New Zealand region of Taranaki (known fondly as “The Naki”), local managed service provider “NakiCloud” prides itself as being the local guys, who sport Taranaki’s famous black and yellow colors.  NakiCloud (and their sister company “Speedster”) offer locals the same products and services as the big guys in Auckland, but when things go wrong they are there on the spot to help, which is far preferable to the locals than spending hours on the help queue for one of the bigger providers.   This point of differentiation is working exceptionally well for NakiCloud in the Taranaki region.

In a reversal of Trustpower’s bundling, NakiCloud is in the process of bundling electricity with their current offerings, thereby adding a further point of difference for their customers – as well as an increased revenue stream from their existing customer base.

This bundling is facilitated by NakiCloud’s use of the Datagate billing portal, which can combine telecommunications services, data services and electricity on the same invoices to their customers.

In my role as CEO of Datagate Innovation, I see that a big part of our purpose is helping our clients differentiate their service offerings through various means, including bundling different services from a multitude of suppliers, improved information flows with our clients’ customers and superior invoice & data presentations.

As they say…“Differentiate or Die”.




The Age of the IT Service Re-seller

December 19, 2017

New business models appear as the technology landscape evolves.  Most of the sales and service companies within the ICT sector have now evolved into service re-sellers, or service aggregators.  This is a direct result of the Internet and Cloud computing.

Inspiring productivity with a wealth of technology

Businesses today have access to a huge range of cost-effective, scale-able, public-cloud computing and communication resources, available on subscription or usage-based pricing plans that can scale along with business growth and demand. “Everything as a Service”.

What do businesses need to make productive use of all this readily available ICT resource?

Most businesses need external expertise and support to provide a service layer over the top of these on-line resources to produce functional business solutions that perform correctly for the business’ requirements.

This service layer of expertise and support is typically provided by Managed Service Providers (MSPs) and in some cases, Value-Added Re-sellers (VARs) that focus on particular business applications, such as ERP or accounting software, CRM solutions, communications, inventory or production solutions.

MSPs and VARs typically have a good understanding of  their customers’ business models, workflows and processes. They are able to recommend, advise on, design and sell business solutions to suit the customer’s business requirements. These solutions are often hybrid, meaning that some parts of the solution might be their own services, while other parts may be on-line services wholesaled by other suppliers.

Convergence of IT and communications (computers and phones have merged) means that IT-focused MSPs are now being looked upon to provide voice solutions, such as VoIP, virtual PBX and mobile along with data and connectivity services.  We are even seeing electricity sales converging with telephony, to add to the mix.

Businesses customers are showing a clear preference for simplicity and buying their ICT and on-line services from a single supplier, who can be held accountable for their entire technology framework, including voice and data connectivity – maybe even electricity as well.

What is the biggest challenge for MSPs re-selling services and hybrid solutions?

The biggest challenge of the Service Re-seller is to combine a collection of services from any number of suppliers (both internal and external) and then bundle, price and present it all to the customer in the most simple and easily understandable form – a single bill. This is no easy task because often the services involved have a different pricing basis, different display requirements, different suppliers and may need to all be bundled together on the same invoice.

Billing of voice and mobile services is already complex, let alone when it is combined or bundled with other types of services.

What solutions are available to help service re-sellers manage the complexity of combining multiple services?

A new generation of Cloud-based billing solutions, such as Datagate, is designed to simplify and automate the job of combining, rating and billing different types of services from any number of suppliers. Datagate will also present usage data and invoices to end-customers via a white-label, end-user portal. It also integrates with most common accounting or ERP systems, such as Xero, Quickbooks, MYOB, SAP, Sage, Microsoft and others, meaning invoices get passed through to the re-seller’s accounting system, without the need for any re-keying.

Where is this all heading?

Worldwide, across so many industry sectors, there is a growing trend towards subscribing to services and paying based on usage of those services. This behavior is being driven by the dominance of the Internet (or Cloud), which itself has a predominantly service-based business model.

Service re-sellers are the way of the future!



Why “owning” the customer relationship is so important for service re-sellers

November 15, 2017

Sales and billing models have been top of mind for me recently, particularly as Datagate is in the process of expanding into the North American market and getting an understanding the dynamics of the service re-sellers and vendors who operate there.


In the ICT industry – in particular, business computing and communications – we have seen a huge shift towards the “as-a-Service” model and a shift away from the earlier model of selling hardware and desktop software solutions.  This has brought about what we refer to as the age of the service re-seller.  Service re-sellers are everywhere at this time – you just need to know how to recognize them.

Service Re-sellers

Within the ICT industry, service re-sellers are businesses that sell on-line services that are built, owned and supplied by another another party – a service vendor.  Typically in the ICT Industry,  service re-seller are Managed Service Providers (MSPs), Business Solution Providers, Value-Added Re-sellers (VARs) and Telecommunications specialists.

Often, service re-sellers have the advantage of being able to offer a closer, more personalized service than what the large service vendors can offer. MSPs can often position themselves as a single point of contact for all ICT services to their end-customers. Service re-sellers will often combine and bundle services together from different vendors to create unique value offerings – which are more difficult for competitors to displace.

With any online service sold by re-sellers, such as cloud solutions, telecommunication and data services there are a number of different marketing, sales, billing and support models that are possible.  Each is model is significant as to who “owns” the customer relationship.

Who “owns” the customer relationship?

Any relationship has at least two parties and obviously the customer owns one side of the relationship.  But on the the other side, the ongoing supplier relationship; who “owns” it will depend on who controls it and who is more visible to and engaged with the customer.  Most important is the flow of money; who bills the customer and under what brand?

If the re-seller sells, bills and supports the service under the re-seller’s brand and also holds the supply agreement with the customer, then clearly the re-seller fronts and owns the supplier side of the customer relationship.  If the re-seller allows the service vendor to perform any of these functions under the vendor’s brand (particularly billing and the flow of money), then it cannot be said that the re-seller owns the relationship.  If the service vendor performs all or nearly all of these functions under their brand, then the service vendor owns the relationship.

Why is owning the customer relationship so important?

The “owner” ultimately gets the most business value from customer relationship, in terms of control of the service and also the boost in valuation of their own business.

If the re-seller is the relationship owner, then the re-seller has more power in negotiations with service vendors and is often able to change or re-negotiate service contracts or change vendors in the background to the customer relationship.

Business valuations are most often calculated on multiples of revenue.  Locked-in monthly recurring revenue  (MRR), such as what you have with contracted on-line services, is valued significantly higher than other types of revenue.  This is because MRR is the best quality revenue – in that it is regular, ongoing and largely predictable – a solid cash platform for building valuable businesses on.

How to own customer relationships in the service re-selling model

For a service re-seller to “own” a service relationship (such as telecoms, Cloud software & services etc), those services must be named, billed and supported under the re-seller’s name and/or brand.

This typically requires a white-label service-billing solution, such as Datagate that can plug into usage data supplied by service vendors, apply pricing plans created by the re-seller and the automatically create & distribute re-seller-branded bills to the end-customers.  Datagate also provides re-seller branded portals where the end-customer can view invoices, reports and analysis of their service consumption.

Datagate’s mission is to enable service re-sellers (who are typically MSPs in the ICT industry) to maximize the value of their business and “own” their customer relationships in the areas of telephony and other on-line utility services.

We are also committed to helping service vendors maximize their sales channel growth through service re-sellers.



Paradox of the Telecom Sector

August 20, 2017

The telecom sector is facing a paradoxical mix of circumstances. On one hand it provides the mission-critical technology platform for innovation, growth and disruption across nearly every industry; whilst on the other hand, it faces enormous changes and disruptions to its own traditional business model and revenue streams, more so than perhaps any other sector.

Furthermore, the average revenue per user, across the entire global telecom industry, is falling every year.


The telecom sector provides the platform for innovation and disruption across nearly every industry, yet faces the challenge of innovation and disruption itself, perhaps more so than any other sector.

Incumbent telecom providers need not be the victims of disruption and reducing revenues in their own industry; they can be the agents of change and disruption, by recognizing (or even creating) shifts in the market, differentiation and moving faster than their competitors to meet the new market dynamics.

Recognition of new trends, agility and speed of execution are critical factors. Reinventing business models, bringing new offerings and services to market must be done in quick time.  A major factor, once new offerings are selected, is how quickly billing systems can be adapted to facilitate new offerings, bundles with new services and pricing plans. Billing is so often the Achilles heel in the telecom world.

Differentiation between Telecom providers can be achieved by bundling complementary or value-adding services or offerings with standard telecom services. This can often be achieved through partnerships with service providers outside the traditional telecom sector.

A significant disruption (or opportunity) for the telecoms sector is its convergence with other on-line service providers.  Telecom services are now being successfully integrated and sold by the I.T. industry, managed service providers (MSPs) and other service sales businesses. Electricity companies are bundling telecom services such as broadband with their offerings. Cloud software businesses are also selling and bundling telecom services.  Phones and computers are now one and the same.

Billing is so often the Achilles heal in the telecom world.

Bundling different yet complementary service types under a single pricing plan, on a single invoice makes it more difficult for competitors to undercut pricing with only a single service type. Service bundling is said to make telecom customers more “sticky” and provide differentiation.

Rather than competing with and resisting new convergent players in the sector, some telecom providers are actively embracing and pro-actively driving this convergence. A prime example in New Zealand, is Spark Wholesale that offers a range of telecom services to its clients, to enable them to sell telecom services under their own branding, giving Spark access to more customers and markets that it might not otherwise be able to reach.

Wholesale telecom providers enable service businesses, such as Managed Service Providers (MSPs) – who have trusted adviser status with their customers, to market and sell telecom services such as broadband, SIP, VoIP and mobile offerings to predominantly business customers.

Telecom resellers require specialized automated usage-billing solutions. Datagate is an agile, white-label, cloud-based billing solution which partners with Wholesale Telcos to get new telecom re-sellers up and running quickly, with billing functionality that integrates with the Telco’s usage data to rate, produce and distribute invoices to their end customers. Datagate can connect to and bill most usage-based services and make it easy for convergent bundling of service types, where multiple service types are combined on a single invoice.

Embracing new business models, new offerings, partnerships, agility and speed to market are the key requirements for success in the telecom sector of this new disruptive, paradoxical world.

Building Business Networks

July 19, 2017

“It’s not what you know, it’s who you know” is a well known statement that I partly agree with. It implies that powerful business networks are all that matters, but I would argue that you also need a good reputation and a strong value proposition to go with it.

Can you imagine how hard it would be to be successful in business with a strong network but a bad reputation?  The strong network would certainly ensure that nobody would do business with you.

Building your business network and building your reputation go hand in hand.  You must invest in both throughout your career. Doing this will make your business career easier and more rewarding as time goes on.

I am very fortunate to have worked for the last 30 years within the same closely connected industry sectors and have built up networks throughout New Zealand, Australia, USA, Canada and other countries.  I consider my participation and membership of these networks to be a major asset, that I would argue is worth millions of dollars – certainly that would be the cost of rebuilding networks of that size and reach.

By staying within the same industry sectors throughout my career, the networks that I have built up over time are now shared with and valuable to my company and employer, Datagate Innovation.

To maintain any asset, you must continue to invest in it. Datagate and I continue to invest in our networks through participation in industry events, conferences, newsletters, Social Media and industry networking groups.


Ryan Ashton, AFQY

This month, Datagate signed up with a New Zealand ICT networking group called AFQY (A Few Quiet Yarns). It’s leader, Ryan Ashton is a prolific networker and LinkedIn guru. AFQY has strict rules, such as “no selling allowed” and “meet as many people as you can” in place for the networking events, that are held in bars at strategic locations around the countryside.   The events are great opportunities to invite people from the respective regions around New Zealand to come in, have a drink and get to meet and talk with new industry contacts.

My advice to people at all stages of their career, is to keep investing in your networks and reputation.  Make sure all your business deals are a winner for all parties where possible, whether the deal is with an employer, colleague, customer, investor, supplier, partner or acquirer of your business – that way you are building a positive network, not a negative one.  Get out and meet new people on a regular basis – join networking groups and associations. Keep investing…


Arron Patterson joins Datagate’s board

January 23, 2017


This week at Datagate, we are pleased to announce that Arron Patterson has joined our board as a non-executive director.

The board and I are delighted to welcome Arron to this formal role with Datagate. He has previously been an investor and supporter of Datagate through the Flying Kiwi Angels over the last year and has an excellent knowledge of our business, our technology and the IT service provider market in which we operate.

Click here for the full story.

Update: Unfortunately Arron had to stand down from Datagate’s board on 10th February 2017 due to requirements of his employment. Arron remains involved with Datagate as an investor through the Flying Kiwi Angels. 

Billing sorted for Telco resellers

December 9, 2016

Spark Wholesale

This week Datagate received a great endorsement from Spark, New Zealand’s leading Telco, for the work we’re doing with their wholesale resellers.

Spark and Datagate have worked together to make the normally-complex job of billing Telco services as painless and efficient as possible for Spark’s wholesale resellers, – whilst also providing portal-access for their reseller’s customers, so they can analyse their service consumption and view & pay their bills on-line.

Making Spark’s resellers more competitive and profitable is what it’s all about. Their success is our success.

Read all about it in the Spark Wholesale Case Study.

Opportunities in the “Usage Economy”

November 20, 2016

Given my location in New Zealand and all the earthquakes that have occurred here recently, I’m not sure if it’s in good taste for me to talk about “seismic shifts” in business, but that’s certainly how I would describe the enormous change in consumer behavior that’s been evolving over the last decade and which is still evolving rapidly at this time.

The Cloud and smart phones have influenced customers’ attitudes and expectations. Consumers now expect a more immediate service experience and they are more inclined to subscribe to services than in previous decades. I refer to this as transition to the “usage economy”.

The “usage economy” is that which is based on consumers paying to use a product or service. Rather than buying an asset, they are more inclined to just pay for the use of that asset. The amount they pay is usually based on how much they use the product or service. This is the fundamental business model of the Cloud, on-line services, IoT, utilities and many other business categories (both new and old). This is the “usage economy” and this is where fast business growth is happening.

An interesting development within the “usage economy” is the emergence of service re-sellers. These re-sellers are businesses that typically have existing customer bases, maybe they are I.T. service companies or support organizations, utility re-sellers or agencies. These service re-sellers have the opportunity to aggregate numerous complementary services within their offering, to become a one-stop service shop – in the same way bricks & mortar shops sell numerous products to a defined customer demographic. Combining services, gives them more sales traction, more opportunities for increasing their sales margin and differentiating themselves from their competitors.

My company, Datagate is in the business of Usage Billing for Re-Sellers. We provide a white-label, on-line billing and reporting portal that connects to usage information and generates bills and reports that can be accessed by the re-seller and their customers via on on-line, re-seller-branded portal. Today we provide this essential service to re-sellers of telephony, utilities and on-line Cloud services, but the growth of the wider “usage economy” is bringing in new opportunities for us to service an increasing range of usage-based businesses.

“Internet of Things” (IoT) offers exciting business opportunities

March 14, 2016


As part of my work with Datagate Innovation, I enjoy helping our clients investigate and monetize new billing opportunities.

Datagate provides a comprehensive Cloud platform for billing recurring charges, plus variable charges for measured consumption of services – and it’s amazing how many on-line businesses and new business opportunities tend to fit this model.

One of the most interesting subjects I’ve investigated recently (that fits the Datagate billing model), is the level of maturity and viability that “Internet of Things” technology is currently reaching. New cost-effective, low-power consumption devices are now being produced that can run for up to ten years on a built-in battery and be used to remotely measure and report on all sorts of things. These devices connect to a standardized LoRa radio network which will soon be widely available in New Zealand and around the world.

LoRa networks are cost-effective, low-bandwidth and can reach areas that traditional cellphone networks can not. The LoRa networks are in-turn connected to the Internet and enable Internet applications to access low-cost measurement devices in remote locations.

To my mind, the technology and the levels of standardization are reaching the point where new viable high-growth business models are now within reach.

Business and consumer applications for IoT devices and applications seem limitless, especially in areas where remote monitoring and reporting is required. These include applications for security, agriculture, automobiles, medicine, military – to name a few. Official estimates for future take-up of IoT are astronomical. 50 billion IoT devices on-line by 2020…

This is definitely a fertile space for application-developer entrepreneurs – …and Datagate‘s billing model.

Flying Kiwis invest in Datagate

February 6, 2016

FKA logo

This month I am very pleased to welcome the Flying Kiwi Angels as new investors in Datagate.

The Flying Kiwis have invested $242,000 of new capital in to the business. In addition, they bring a wealth of business experience and valuable industry contacts for Datagate.

This investment brings Datagate near to completion of our current investment round where we sought to raise $1.5M of new capital in order to expand and accelerate sales of Datagate’s Cloud Billing & Customer Service Portal. The Flying Kiwis’ investment brings us to a total of $1.46M raised in this round.

The Datagate shareholder-base now includes NZAX-listed Enprise Group, the Ice Angels, NZVIF and the Flying Kiwis, among others.