Archive for the 'New Zealand IT Industry' Category

20 years on: Exonet – my first major software start-up exit

July 30, 2020

In July 2000 I was on top of the world. My co-founders and I had just sold “Exonet”, our New Zealand-based financial software start-up, to an Australian listed company called “Solution6” for AU $30M.

It was the culmination of a fast and furious two years since we started the business. I was the developer who had the outlandish idea to start writing an accounting system and bring in co-founders Maurice Bryham and David McKee Wright to help build a business around it.

Exonet was a “new generation” ERP client-server accounting system with a Windows interface, running on an SQL database. It was all new technology back then, when most accounting systems for SME businesses were still running on MS-DOS with proprietary databases.

Exonet opened offices in New Zealand, Australia and Singapore. Hwa Lian Tan led our business in Singapore and Simon Butler led our Australian business. Simon’s M&A experience was invaluable in our negotiations with Solution6.

Due to widespread fears about how old accounting software would handle the year 2000 and the market’s desire for the new technology that Exonet was built on, our sales “went ballistic” from the start and exhibited the upward “hockey stick” sales trend that software start-ups still aspire to. This was what attracted Solution6 to acquire us.

Exonet’s main investor was a VC company called IT Capital. At the time of the exit, I recall they had been with Exonet for about 18 months, had invested NZD $1.5M and effectively owned about a third of the business. A $12.7M return on an 18 month investment of NZD $1.5M – that’s still got to be one of the best investments ever made in the business history of New Zealand!

Following its acquisition of Exonet, Solution6 merged with another large Australian software business called MYOB (“Mind Your Own Business”) and so the Exonet software was renamed to MYOB-EXO. Today MYOB-EXO is perhaps the most widely used of the mid-market ERP accounting packages in Australia and New Zealand, with many thousands of companies using it.

Some of the lessons I learnt from the Exonet experience are;

  1. Success comes from a combination of skills, lots of hard work and lots of luck.
  2. Much of the skill required is in recognizing the luck that surrounds you, and knowing what to do with it.
  3. Business success invariably comes from a team of people; specifically, the combined skills, motivation and dedication of those people and the interplay of how they work together.
  4. It’s all about the journey, not the destination.

After the exit, I worked for the Exonet business within Solution6 for a short while and then decided to take some time out, away from business. It was during that time out I realized that, although I reached the destination of an exit, I still missed the journey of getting there. I missed the energy and engagement of the business world, so I dived back in again and co-founded two new software businesses; Enprise and Datasquirt.

Much of the skill required is in recognizing the luck that surrounds you, and knowing what to do with it.

Enprise became of a group of businesses, of which two operated internationally, with a particular emphasis on the United States. One of those was EMS-Cortex, a SaaS software provisioning system that we sold to Citrix in 2011 for US $11M. Also in 2011, we sold ASX-listed Datasquirt to Silicon Valley-based LiveOps for a similar price.

The international software business experience and contacts I gained through Enprise and EMS Cortex set me up for my current role as CEO of Datagate, where I am now based in Vancouver, Canada. Datagate is a SaaS billing solution for MSPs who sell telecom services, which we sell into the USA, Canada, UK, Europe, Australia and New Zealand.

Another thing I’ve learnt over the last twenty years since the Exonet exit; it normally takes much longer than two years to build a good business!

Cognition360 analytics is boosting visibility and profitability for ConnectWise and Datagate users

May 23, 2020

In this time of Covid-19, more than ever, business leaders need to keep a close watch on what’s happening in their businesses in real time. They need to see trends, issues and opportunities as they occur, so they can swiftly tune their businesses to protect and maximize their bottom line.

Cognition360 Business Analytics platform

This is why I’m so impressed with Cognition360, which a “next generation” analytics solution that uses machine learning and predictive AI. It’s optimized for users of ConnectWise Manage and is now being further optimized for users of Datagate telecom billing.

Cognition360’s president and co-founder is Ken Davis, who has an impressive IT industry track record, having built and exited a large and successful MSP business in New Zealand. Ken understands the MSP business model implicitly, and that expertise, combined with his knowledge of ConnectWise comes through clearly in Cognition360.

Instead of static monthly reports that show where the business has been, Cognition360 drills down into interactive reports using live data to reveal what is happening in the business right now, day by day. Instead of reacting to what happened last month and not understanding why, you can track your KPIs day by day, immediately seeing what changes you need to make. Your reports become a dynamic part of your day by day tuning of your business.

Now with more than 30 million tickets in its database, Cognition360 is the largest repository of industry-wide ConnectWise data in existence. This enables Cognition360 to show MSPs how they are performing compared to current and accurate industry benchmarks, for all their key metrics. Importantly, this gives them the ability to home in on the areas of their business which can be improved.

Of particular interest to Connectwise MSPs who use Datagate for telecom billing, is that Cognition360 will soon have the ability to recognize Datagate telecom invoices and report on these specifically.

I recommend that all MSPs who use ConnectWise Manage, should have a close look at Cognition360.

The new normal: Now is a good time to review and upgrade your IT & communications systems

March 24, 2020

It is certain that the Covid-19 pandemic is driving immediate and potentially long-term, changes to the way the world does business.

As always, it’s those businesses that adapt and change to the new situation and the new future that will survive and prosper best. This is an ideal climate for small businesses to become large businesses and for large businesses to to potentially fail if they don’t adapt quickly enough.

If you haven’t done it already, now is the time to move off old systems that require on-premise hardware (on premise servers, computers, PABXs etc) and move onto Cloud-based systems, that you can access from anywhere you have Internet access. Remote working is the “new normal”.

Remote working is the “New Normal”

Your phone system should be a “Unified Communications” system that you can access via an app on your smartphone, tablet or laptop computer. That way you can advertise a single phone number that can always reach you, and you are always in touch with your business and your staff.

Standardize on a collaboration platform, such as Microsoft Teams or Slack, which will enable you to have meetings with your staff, share documents and communicate more easily. Microsoft Teams can also be connected to a phone system, which is a powerful combination for integrating your outside calls with your internal processes.

Move from desktop Office apps to Office 365 or Google’s “G Suite”. This will ensure you have access to your work platform from a range of devices, instead of just one.

There are plenty of Cloud-based accounting packages to suit your business, including QuickBooks Online, Xero, MYOB, Microsoft Dynamics and others.

Popular Cloud CRM systems include SalesForce, Microsoft Dynamics CRM and others.

Now is the time to review your systems and upgrade where needed, to ensure your business can work from anywhere. Contact your Managed Service Provider. This is the new normal.

Integrations key to business software success.

July 25, 2019

These days it seems like most, if not all technology products are getting smaller and more powerful, smaller and faster, smaller and less expensive, smaller and smarter, smaller and better connected.

In business software we’re seeing the same trend, away from the large monolithic systems of old, towards smaller, more targeted “apps” with a specific purpose. These apps connect to other apps and work together to form a larger overall “integrated solution”.

I first noticed this “smaller and connected” trend a few years ago when I worked in the ERP industry. We started seeing smaller accounting systems being used by larger and larger businesses. How could this happen? The answer was and is that the smaller accounting system is plugged into add-on solutions that enable the combined solution to cater to the specific requirements of the industry or user.

In the case of my company’s Datagate Billing Solution, we’ve decided on a product strategy where we focus on the rating and billing piece of the solution for telecom and other utility resellers, and leave the accounting, CRM, and business management functions to other popular solutions dedicated to those purposes. This means each software company focuses on what it’s good at and the integrations between the software packages enable them all to work as a single “integrated” solution.

Being integrated with other popular software products also increases our appeal to prospective customers who already use those products. This in turn leads to partnerships with those software vendors, as per the topic of my previous blog article.

Vancouver as an ANZ beachhead to North America

May 10, 2019
Vancouver’s other airport

When high-growth businesses from Australia and New Zealand (ANZ) look to expand their presence into North America, they have a range of cities to choose from. Sometimes they don’t even need to choose a single location, when staff can work remotely from different locations. When they do need to choose a beachhead location, most will choose a west coast city within easy reach of ANZ. This will ideally have a major airport close by that has good access to the rest of North America and of course New Zealand or Australia.

My SaaS billing software company, Datagate (which was established in New Zealand), looked at all the following location criteria for setting up a new presence in North America, to complement our existing sales office in Jacksonville, Florida and extend our reach from our base in Auckland, New Zealand;

  • Good time-zone overlap with New Zealand (we still have a many of our customers, partners and key staff located in Auckland, New Zealand).
  • Good time-zone overlap with the North American continent (our major focus and we have customers, partners and prospects spread throughout the wider USA).
  • Some workday time overlap with Australia and the UK (where we also have important customers and prospects).
  • Easy access to a major airport, whereby we can take a single flight to most major cities in North America, UK, Europe, Australia and of course New Zealand (multi-leg flights with stopovers are far more time-consuming and energy-draining)
  • Ease of getting established (incorporating a company, setting up bank accounts, renting premises, telephone systems, utilities etc).
  • Good public transport.
  • The costs of running a business are not overly high.
  • A great place to live, where we can easily attract talented, high-grade employees.

We ended up choosing Vancouver, Canada, ahead of other west coast cities that also met our time-zone and accessibility criteria. We liked that we could set up here relatively quickly and everyone we engaged with was positive, friendly and very helpful.

For me personally, the speed of getting established in Vancouver was boosted by my dual citizenship of Canada and New Zealand, but regardless of this, Vancouver still stacked up well as a place to live and work in North America.

Canada Place

The shift to Vancouver from Auckland, New Zealand has been a positive experience for my wife Lee and I. Vancouver is a beautiful, vibrant, multi-cultural city, surrounded by water, snow-capped mountains and the great outdoors. We live near our office in the downtown city area, where everything we need is within walking distance, including a train to the airport. People here are friendly, helpful and welcoming of newcomers.

From a business perspective, we’ve found it easier to communicate with our North American customers, prospects and partners for longer periods of the day than we could from New Zealand, plus it’s been very convenient to have closer access to the conferences and trade shows that we regularly attend.

Coordination and collaboration with our US sales office in Jacksonville, Florida has also improved greatly. American customers no-longer say our time-zone is “on the dark side of the moon”.

It was fast and easy to register a British Columbia company and open an account with the Royal Bank of Canada (RBC), who can handle both Canadian and American banking. American business is easy from here and most Canadian establishments are experienced at supporting businesses that operate in the USA.

We’ve had great assistance in getting set up here from New Zealand Trade & Enterprise (NZTE), Nick Fleming the New Zealand Trade Commissioner, Callaghan Innovation and our local Canadian immigration consultants Sas & Ing.

Lee on the Vancouver waterfront

My advice to high-growth businesses from New Zealand and Australia, who want to set up in North America is… make sure you check out Vancouver!

Telecommunications billing, tax and compliance in the USA

September 23, 2018

Managed Service Providers (MSPs) the world over are taking the business telecommunications market by storm.

Computers and phones have converged, voice services are now just an application on your computer or smartphone, so it’s only logical that businesses prefer the simplicity of sourcing their telecommunications solutions from their trusted MSPs.  It’s great recurring margin for the MSPs and better service for their customers, with a single point of supply and support for their ICT services.

In most countries, it’s easy for MSPs to sell and bill telecommunications; they just plug their PBX or upstream telco provider into a SaaS telephony billing system (like Datagate) – and plug that into their accounting system – and away they go!

In the USA however, there is more complexity to it for MSPs who want to sell telecommunications.  Every state, county and city jurisdiction has the ability to add taxes and surcharges to the telecommunications bill, depending on where the calls are made from. In addition to that, there are various registrations and other compliance requirements, some of which are also dependent of where their telecommunications customers are located.  In short, American MSPs need good expert help and advice, along with a billing system that can handle all the taxes to ensure they stay out of trouble and meet all of their compliance obligations.

At Datagate, we’ve made it easy for MSPs to bill telecommunications anywhere in America and still be able to sleep at night.  We’ve teamed up with the top authorities on tax, Wolters Kluwer to include CCH SureTax with every American implementation of our Datagate billing solution. We chose CCH SureTax, because when it comes to tax calculations, you have to get it right, no matter what the complexities.

L to R: Greg and Mark from Datagate, Ben, Evan and Mark from Wolters Kluwer

In addition to Wolters Kluwer, we partnered with two of the best telecommunications tax & compliance consultancies in America; GSA and Telecom Professionals Inc. These two specialist consultancies have the experience, skills and expertise to ensure that MSPs using Datagate and CCH SureTax get their taxes calculated optimally & correctly and are fully compliant in the jurisdictions within which they operate.  They can even help MSPs get out of trouble if they have been selling telecommunications in the past without being compliant.

American telecommunications tax and compliance doesn’t have to be a roadblock if you’re got the right partners with the right expertise on your team.  We’ve packaged that all together for our American customers of Datagate.

The Appeal of Usage-based Billing

May 30, 2018

One of the strongest drivers of customer satisfaction is a customer’s perception of value for money.  Value for money is judged by how much a customer pays in return for what value they receive as a product or service.

Environmental and Ambient Data

Applying this logic to service billing models, we can deduce the following patterns;

Fixed Recurring Charges

With fixed recurring charges, the customer will perceive good value for money when their service usage is high in relation to the fixed service charge, but will perceive bad value for money when their service usage is low in relation to the fixed service charge.

In this model, the service supplier wins if service usage is low and the customer’s value for money perception is low, the service supplier loses if the service usage is high.

It can also be said that the supplier wins when the customer loses and the supplier loses when the customer wins.

The pricing of fixed recurring charges tends to be limited by what the customers with low service usage will be prepared to pay, within their perception of value for money.

Usage-Based Charges

With usage-based charges, customers should perceive a consistent level of value for money, regardless of the amount of service usage.  The overall cost of the service will be proportional to the level of service usage. In theory, the value for money perception should be similar regardless of whether customers are high or low service users.

The pricing of usage-based services should therefore not be restricted by a value perception of a subset of customers, but rather the value perception of all customers.

With a usage-based charging model, the supplier and customer can both win at the same time.

Overall Revenue can be Higher for Usage-based Billing

My experience through working with Datagate’s clients, is that when a service supplier replaces a fixed price model with a usage-based pricing model, they can generally increase their overall revenue significantly.

This was demonstrated most recently in a case study for Texas-based Ranch Hill Water Supply Corporation, who achieved a 26% revenue increase after implementing a usage-based charging model, using Kamstrup measurement systems, Datagate billing and Xero accounting software.

 

Success with Usage-based Billing

April 3, 2018

bank-banking-blue-50987

With the rapid growth of the “as-a-service” business model and the abundance of new services enabled by the Internet and mobile apps, it’s fair to say that there has been a major mindset shift in the monetization of new businesses towards subscription and usage-based billing.

It’s easy to forget that other, more mature businesses categories, such as telecommunications, water, gas, electricity, news media and others, have been using subscription and usage-based billing for decades and have built up a substantial amount of experience, knowledge and I.P. in the subject – not to mention substantial recurring revenue streams!

My business, Datagate Innovation has learnt a lot from the telecommunications industry in particular, where it’s common practice to bill fixed monthly charges for fixed connections, usage charges for calls, texts and data, whilst also offering bundles of usage of various services for a fixed charge. We think this I.P. is invaluable, not only in billing for telecommunications and utility re-sellers, but also for the new and emerging business categories, such as Internet-of-Things, Software-as-a-Service and Artificial Intelligence, among others,

Datagate Innovation’s purpose in life is to help re-sellers maximize and grow their recurring revenue with fixed and usage-based billing, whilst minimize their billing costs through the use of our Cloud-based Datagate rating and billing platform.

The majority of Datagate’s clients are Managed Service Providers (MSPs) who re-sell telecommunications services and IT services to their business customers, but we are starting to get traction in other industry categories, such as electricity and water, who also work on a usage-billing basis.

This month Datagate published a case study for Ranch Hills Water Supply Corporation (RHWSC), who are based in Texas and are using Datagate to bill their water customers on a usage basis.  By shifting their billing to Datagate and a usage-basis, they increased revenue by around 26%, while cutting their billing time by around two thirds. Datagate was configured to receive water usage data from RHWC’s Kamstrup Ready Manager system and post the resulting bills to RHWSC’s Xero accounting system, after emailing them directly to the end customers.

The big opportunity we see for all service resellers today is the convergence of different types of usage-based services that can all be sold through a single reseller.  We are already seeing our clients combine IT and telephony, as well as telephony and electricity.  As long as it’s usage-based and we can get access to the usage data, then Datagate can bill it, on a single invoice.

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!