Posts Tagged ‘Datagate America’

Business benefits of a laser-sharp focus

October 21, 2019

At some point, whether consciously or unconsciously, every business must decide on the range of products and/or services they will provide to their customers and what type(s) of customers they target.

If the accessible target market of a business is small, then the business will likely need to offer a wider range of products and/or services in order to generate sufficient revenue from its relatively small customer base. Conversely, if the target market is large, then the business can afford to specialize and focus it’s products and/or services to a narrower band. Thereby they remove a lot of complexity from their operations, while offering greater expert value to their target customers.

I have found this correlation between market size and business focus is especially valid in the software industry, while it also applies to many other business categories.

My company, Datagate Innovation started its life in New Zealand as a SaaS billing and reporting solution for businesses that sell usage-based services, such as telecommunications, electricity, water, Software as a Service etc. Given the relatively small size of the New Zealand market, our initial approach was to apply our sales and marketing efforts across all the various industries for which our software could be used. I call this having a “wide focus”, which seemed logical at the time, to win as many customers from our small New Zealand market population as we could. In hindsight, it was a great opportunity to test and evaluate the various different industry opportunities within a small and accessible population.

The downside to a wide focus is complexity, and complexity generally makes it harder to scale-up a business.

Datagate found that there was plenty of demand and opportunity for our product in each of the industries we engaged with, but we soon realized that each was pulling us in a slightly different direction. Each direction involved a different learning curve, more costs, different marketing, different pricing, different language and slightly different functionality and integrations in our product.

We wanted to scale-up our Datagate business as quickly as possible, but the complexity of supporting multiple customer categories made this difficult, with extra costs and less repeat-ability and re-use of existing resources, the wider we went.

The answer to our scaling-at-speed challenge, was to narrow our industry focus, while at the same time increasing our geographic focus. So to do that, we picked one target industry, while expanding our target market beyond New Zealand, to other larger economies such as North America, the United Kingdom and Australia. The industry we chose was telecommunications and more specifically, we focused in on the fast-growing segment of MSPs (Managed Service Providers or IT Services Companies) who are now selling telecom/voice solutions, due to the convergence of computers and phones.

The widening of Datagate’s geographic focus did introduce “some” extra complexity to the business, with the slightly different language, tax and compliance requirements of each country, but the complexity was far less than that of targeting different industries.

As our software product matures, we continue to add functionality that is more specific to telecom billing and integrations to other software products, such as ConnectWise, QuickBooks and Xero, that are commonly used by our MSP target market. This gives us a high level of efficiency, where everything we do in product development and marketing is mostly relevant to our whole target audience. This would not be the case if we had a wider focus and were targeting multiple industries.

We have found that customers (and investors) in the larger economies, such as North America, generally expect software solution companies like Datagate to be very specialized in what we do.

There is less need to go wider in a larger economy, especially when it can be more efficient, lucrative and easier to go deeper instead.

The as-a-Service partnership as a long-term journey

September 21, 2019

As an XaaS (Anything as a Service) provider, you engage your customers for at least the term of your contract, but your real goal is to keep them with you for much longer than that.

If your billing model is fully or partly usage-based, then not only are you motivated to keep your customers longer-term, but you are also motivated to ensure their successful and increased usage of your product or service, because more usage translates to more revenue for your business.

This is why I like the usage-based billing model. It motivates service providers to provide better long-term service to their customers, whilst it also gives more power to the customers, where they can take their business elsewhere, if they’re not getting the service levels or value for money they desire.

When my company Datagate signs up a new client for our billing solution, we view it as a commitment to a very long-term partnership. Our own charge model is based on a small percentage of what our clients bill, so our success is mathematically linked to their success.

We invest heavily in providing services and support for our clients and the ongoing improvement of our product. I see this as an investment in generating more business for our clients and us, rather than as just an overhead cost. The average Datagate client grows their business by 22% per year and so as long as we keep our churn rate to be minimal (as it is), then our revenue would grow by about 22% each year, even if we didn’t make any new sales.

My recommendation to any business that has a recurring revenue model, is to include at least some usage-based component to your billing, because it will drive better behavior in your client relationships and increased revenue growth opportunities for your business.

Good luck on your XaaS journeys!

Datagate on the roadshow with Robin Robins

August 30, 2019

This week I was in Los Angeles, where Datagate was a sponsor at Robin Robins’ Marketing Implementation Roadshow.

Robin is a well-known personality in the American MSP industry. Her events are very popular because she knows her target audience and she gives her clients great advice, blueprints and inspiration on how they can be extremely successful in their businesses. I’ve sat in on some of her sessions and I find her advice and material very motivating and inspirational.

Datagate’s main purpose for me being there was to connect directly with MSPs who are serious about growing their businesses, becoming more profitable and becoming the single point of supply to their customers for voice and data applications.

I connected with some great Los Angeles MSPs at this event and look forward to following up with them over the coming weeks. One thing I’ve noticed, is that the challenges and aspirations of MSPs are similar, no matter where you go. The common goal is to build good “sticky” customer relationships and strong recurring revenues – and Datagate is designed to help them achieve that.

I also enjoyed talking with the other vendor-sponsors, a few of which could become potential partners for Datagate. This type of interaction and what you learn from it, adds to the value of these events for a sponsor.

Anyhow… now it’s time to close off this chapter and head back up to Vancouver.

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.

Strategic partnerships as a high-growth strategy

June 26, 2019

One of the most common mistakes made by early-stage businesses, is going it alone and trying to do everything themselves.

Strategic partnerships can be a cost-effective and efficient way for a business to add channels to market, brand value, access & relevance to customers, localization and other strengths to their business proposition.

Partnerships will only work when both partners win from the partnership.

To identify potential partners, businesses should identify and understand what value the partner will add for them and in-turn, what value they will add for their partner. Sometimes it’s simply an exchange of margin and additional sales reach, other times it might be adding functionality to their product offering and opening new market opportunities together that the partners may not be able to address on their own.

Ideally, there should be a signed partnership agreement, to define the details of the agreement and hopefully prevent any misunderstandings later on.

To illustrate how strategic partnerships work, consider the example of my company Datagate.

Datagate is a SaaS billing solution for businesses who sell usage-based and subscription-based services, such as as telecom services, water, electricity, cloud services etc.

Datagate’s primary market is Managed Service Providers (MSPs) who sell telecom services. We recognized that a larger, more established software business called ConnectWise also targeted MSPs, has a compatible offering to Datagate that does many awesome things, but not what Datagate does (bill telecom services) and has regular conferences that we can sponsor and a partner program we can join.

We partnered with ConnectWise in 2017, signed up to their partner program, and built extensive integration functionality into the Datagate product to enable Datagate to share data and inter-operate with ConnectWise. Then we sponsored a booth at ConnectWise’s IT Nation conferences in 2017 and 2018 (we will be back in 2019) and this put us in front of thousands of potential MSP customers who use ConnectWise. There is no way we could have reached that size of specialized audience (who were genuinely interested in our product), without our ConnectWise partnership.

Datagate America’ s banner for ConnectWise IT Nation

The value to Datagate in this partnership is access to large volumes of relevant and interested sales prospects. The value to ConnectWise is that Datagate adds telecom billing functionality to their product offering, enabling sales for them that otherwise wouldn’t have happened. Datagate is also a regular sponsor and participant for their conferences.

Among Datagate’s many valuable partnerships, another is with Wolters Kluwer and their CCH SureTax offering. CCH SureTax is a powerful cloud-based tax calculation solution that calculates and adds all the various telecom taxes to telecom invoices generated by Datagate. This is challenging in the United States, because of all the tax jurisdictions (federal, states, counties and cities) that have taxes that must be applied to telecom invoices and remitted to the appropriate authorities.

The value to Datagate of the CCH SureTax partnership is that it enables us to service the US telecom billing market, safe in the knowledge that the complex telecom tax calculations are handled correctly. Through that partnership, we also gained partnerships with their tax & compliance partners who help us offer an easy and tax-compliant package to our respective customers. CCH SureTax and their partners gain access to more clients from Datagate’s sales and our ConnectWise partnership.

These are just some of the strategic partnerships that Datagate has formed to build its international sales. I believe that a strategic partnership strategy can be one of the best ways to scale a business and can it be applied to most industries.

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 compelling argument for smart water meters

June 19, 2018

Last week I attended the 2018 Annual Conference and Exposition of the American Water Works Association, otherwise known as ACE18.  This is America’s largest gathering of water industry professionals, held at the Mandalay Conference Center in Las Vegas, with over 12,000 participants and over 500 exhibitors.

Water is our most precious natural resource, so it was not surprising to find that a significant number of the exhibitors had products or services that were in some way designed to reduce water losses for water utilities.

I was amazed to learn that water utilities can typically record total losses of between 10% and 25% of their water.  That is, water that somehow goes missing in the network and doesn’t end up getting billed to an end-customer.  So water losses are very bad news for water utilities, not only for the lost water and lost revenue, but also for the regulatory and political problems associated with excess water wastage.

According to the helpful staff I spoke with at the Kamstrup booth, reported water losses are typically made up from a combination of real losses from leaks and false losses due to inaccurate water meters under-reporting the volume of water consumed.  The old mechanical water meters tend to get less accurate as they get older and under-report the amount of water consumed, much to the cost and frustration of the water utility.

This is where smart meters come in. Smart water meters, such as those manufactured by Kamstrup, are much more accurate than mechanical meters and unlike mechanical meters, they contain no moving parts and do not lose accuracy over time. These ultrasonic meters are sealed pressurized units that come with a battery lifetime of 16 years, transmitting their readings back to the utility via a number of different data collection methods, including AMR, AMI and IoT protocols.

I was quick to note (given my involvement with Datagate water billing) that more accurate water meters would lead to more water being billed and therefore more revenue getting back to the water utility.  Another obvious advantage of smart meters is the significant reduction in costs associated with the reading of water meters. What surprised me however, is that these smart water meters can also aid in the detection of water leaks, meaning the water utility gains additional value in the reduction of real water losses.

With such compelling returns on investment, it’s no wonder these smart water meters are in such high demand.

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.