CASE STUDY: Riding the Technology Wave – Success and secrecy

At time when monitoring the flow of data surging through some of the world’s biggest communication hubs has never been more important, New Zealand company Endace is at the forefront of the technological wave. Originally research project at Waikato University, the company was created in 2001 on the back of its Data Acquisition and Generation (DAG) cards and has since grown to become world leader in network traffic monitoring technology.
It now has growing customer base of blue chip corporates, top-tier telcos, friendly government agencies and financial institutions. They use Endace products and knowledge to analyse 100 percent of the traffic that passes through their networks, ensuring confidence in service performance, information security and regulatory compliance, without any slowdown in the system. Endace has recently signed major deal with global news and information giant Reuters to provide solution that will monitor and track down network problems and bottlenecks for its customers. But with these networks forming part of some of the most sensitive commercial information and government intelligence gathering systems in the world, CEO Mike Riley says many of its customers will not publicly reveal their links to Endace.
“These customers are really after the best of the best, so that’s what we have to offer. One side effect of that is that they will not promote the fact they are using our technology due to commercial and intelligence sensitivities, and we end up making multimillion-dollar deals we just can’t talk about.
“So it’s great when we do get the opportunity to promote our association with company, as has happened with the Reuters deal. We have got lot of attention in London from that deal, and it’s been nice to be able to talk about it.”
Despite the necessary secrecy, Endace has still built solid reputation, winning several key awards, including last year’s Deloitte Emerging Enterprise Award at the Top 200 Awards and the NZTE ICT Exporter of the Year title. In 2005 it became the first New Zealand company to list on the London Stock Exchange’s Alternative Investment Market. Riley says this has helped raise the international profile, although it has also proven challenge for small, growing company which aims to be flexible and nimble, while growing at its own pace.
That growth has not been problem for Endace recently. The company has enjoyed five consecutive years of income and profit growth, but its business has really taken off in the past 18 months, thanks to the launch of its NinjaProbe and NinjaBox range of appliances and platforms, and move towards offering complete solution, rather than just the DAG card product.
“That has been our focus and the basis for everything over the past year and half,” says Riley. “Rather than just selling the DAG cards and leaving it at that, we now provide the entire service, and that has helped the whole company climb up the value chain.
“When we were just selling the cards, it was sometimes hard to push on to sale, but offering whole product means you really are selling complete solution. Once you start doing that, you find you are talking to more senior people in the company and explaining the benefits of monitoring directly to them. It really makes us feel like world-class solution provider instead of simply speciality technology company.
“It’s actually quite remarkable how quickly we’ve got to the point where we can go in to see our customers, walk in and say we have the ability to offer service which will capture every packet on the wire, and they know we can deliver what we promise. It has taken less than year to build up that level of trust.”
The company’s reputation has been growing steadily since it began selling the DAG cards in 2001. Riley says the cards, which have been put through their paces in laboratories and research environments, are still the backbone of the company, even with the increased service. “The image of the company has really changed over the past year and put us into different league, but it’s the ability of those cards to catch every single packet that passes through network that is still the foundation behind everything we do.”
That ability to capture 100 percent of the data flowing through network, regardless of size, interface type or network loading, has seen the company deal with more than 1000 customers in 30 countries over the past seven years. Between 200 and 300 active customers have used Endace’s products and services in the past 24 months.
Despite the current global financial uncertainty, Endace is well positioned for future growth. Riley says that while it is certainly an interesting time to be dealing with the financial services market, computer networks are not getting any slower, and the increasing use of electronic trading transactions has even led to new arms race amongst institutions.
“Networks are getting faster and faster, and our customers need to know how fast their trading platforms are working, which is where we come in. Even if things are looking like they could be heading for meltdown, the faster their systems are operating, the more money they are going to make – that’s what they’re all about. It doesn’t matter what sort of mess they might be in, they are always going to be spending money on their IT systems, because they know the more efficient they can be, the more money they will eventually save.
“It also comes in useful at time when regulators are increasingly interested in company’s activities. Using our systems, they can prove they are trading as fast as they possibly can, and show they are providing their best service for their customers. Showing this to regulators is increasingly important, and companies know they have to start measuring everything to prove they are providing that service.”
Endace’s growth over the past year has seen the number of people employed by the company swell by 50 percent to almost 100, of which 65 are employed in New Zealand, with the remainder working in sales roles in Europe, Asia and the United States. Employee numbers are expected to keep rising, with the company anticipating more than 30 openings over the next few months.
Riley says the company has fairly typical corporate structure, with 10 managers, three global sales heads, and heads of product management and marketing. He adds that most of those involved in the running of the company have between 15 and 20 years of experience working in high-tech, high-growth companies such as Endace, with several building up their skills in such companies around the world, before bringing them back home to use in New Zealand.
He says finding good engineers was not problem, despite definite shortage in New Zealand. “Recruiting overseas engineers and convincing them to come to New Zealand has been big task, but we’ve never really had much trouble getting them to make the move. We’re now an Immigration New Zealand Accredited Employer with pre-approval for immigration, which also makes it bit easier.”
Originally from the UK, Riley has worked as senior manager in number of high-growth, high-tech companies, including Newbridge Networks Corporation, Premisys Communications and Ubiquity Software Corporation. Like many of the company’s employees, Riley was attracted by Endace’s growth potential. “It’s the combination of high-tech and high growth that makes working here so exciting, and I know I’m not the only one here to feel that way. It’s completely different environment to working at one of the giant tech companies. It’s also nice to focus on keeping things moving forward, instead of having to deal with all the office politics that tend to saturate places like that.”
He says New Zealand is poised to become major global provider of technological solutions. The creation of high-tech corridor is familiar to Riley, who has already seen something similar in Wales, where Sir Terry Matthews created one almost from scratch, thanks to commitment to keep Newbridge loc