Software developed by New Zealand companies is an increasingly growing export industry, with the NZ Software Association claiming it now passes the wine industry as major exporter.
Indeed, when you look around, it’s evident Kiwi innovation is constantly finding ways to develop software that makes traditional tasks easier, more efficient and accessible. But as the following group of businesses demonstrate, developing new software is also about willingness to take risks, have confidence in their direction and keep up the long hours.
ECO-SOFT
Software developer Charles Burns has some advice for anyone launching new business, “Make sure you can handle stress.” Right now Burns is at the point of launching software program on the global market – and from the interest already shown in it, there is the potential to make millions.
It’s been long haul. Burns estimates he’s invested $250,000 into the development, and has yet to draw salary after two years’ work. He already has software development company which pays the bills. His new company is Eco-Soft. Together with his father, Noel Burns, who is respected scientist, they have developed lake monitoring program called LakeWatch. The software allows scientists to assess how healthy lake or reservoir is, and detects even small changes towards eutrophication or pollution.
The potential for international sales is enormous. Currently US government agencies spend around US$200 billion in the environmental sector, but they have nothing as sophisticated as the LakeWatch protocol.
Burns says that in researching the market for their program he discovered there is already an organisation called Lakewatch in the US. It consists of 340,000 volunteers who rigorously collect samples of lake water for assessment – and record the results. But because there is no simple analysis programme the results are meaningless.
“It makes them feel like they are doing something,” says Burns. His software will potentially take that data and analyse it and give final result – revealing how healthy that body of water is. Still, it has taken two years of work to achieve this program.
“In some ways ignorance is bliss. If we knew how much we would suffer, how much work it would be, and how hard it was, we might not have started.” Burns says at any one time there will be four or five people coming up to him wanting immediate decisions on everything from how they pay for their airfares to the latest conference, to what changes they should make to the software. That’s when being able to handle stress comes in handy.
It also helps to be generalist, according to Burns. “I designed the application, I have had to translate science into software, and then I have to do the marketing, the selling, presentations at conferences, putting out the advertising material and on and on.
“You find yourself doing everything, and you certainly have to understand your product thoroughly.”
Burns also points out that while there’s government funding to assist new ventures like his, it’s an endurance test to actually secure any money.
“There’s huge effort and time involved in applying for funding, basically it’s several months work for one person. We applied to one fund believing we were doing the right thing, and then came to the funding round and were told we were in the wrong fund and should be applying to yet another fund. That could have been explained early on, but the attitude was that you must put in your application and it would be looked at then. That set us back six months.”
The result though was 20-page business plan, that Burns says was good discipline and helped focus their market research. Eventually, they applied to Technology NZ and were granted $108,000.
Finally, they’re on the brink of launching the software. Burns took it to recent conference of North American lake managers in Miami, and says the response was overwhelming.
“I spent three days talking non-stop to 30 or 40 people about the program. They were all interested, although we hadn’t at that point quite completed all the details, and so couldn’t sell it. Realistically though, the next step will be seeing whether all those people can secure their own funding to buy the program.”
LakeWatch will really test the market when it goes on sale this month. Burns is currently negotiating with several investors for seed capital. And that enthuses him as much as launching the software.
“I’m excited about getting my life back, and cutting down on the insane hours. The reality is that we’ve still got long way to go, and I don’t expect the trip to be any easier, but yes, I’m optimistic and it’s still worth it.”
VENDING TECHNOLOGIES
Four years ago entrepreneurs Mervyn Doolan and John Hotchin set out to find business that would give them good cash flow and growth. The food and drink vending machine they created is about as sophisticated as the Tardis, and very profitable indeed.
Through marriage of new technology and existing machinery the two have created business that is forecasting net profit of $3 million-plus in the next year.
Vending Technologies listed on the Stock Exchange in November – its float was fully subscribed and the share price leapt 60 percent in just 10 days.
The company builds and operates computerised drink and food vending machines. Vending machines have been around for years, but it was Doolan and Hotchin’s bright idea that has taken the business to new and much more profitable level.
Each machine is linked to central server, which keeps track of how much cash is in the machine, what’s selling and which product lines are low, and also whether there are any faults in the machine. It’s two-way communication system, which effectively turns every machine into point of sale terminal. Machines as far away as Australia are all controlled by the Auckland centre.
Says Doolan, “There are no bad debts in the vending industry, and we knew if we could get control of the cash through the machines we could audit it and grow it. And that’s our competitive advantage, it’s not so much that we’ve got this technology as the fact that it’s tool that allows us to operate more economically and efficiently.”
Armed with information from the machines – which call in every night and download their information – Vending Technologies can forward plan purchasing, delete lines that are not selling well enough, and minimise the number of actual visits made to the machines to restock.
When Doolan and Hotchin were looking at the idea of vending machines as business they went to the States to see how they operated there – the heart of the fast food consumer society. What they found though, was that because vending machines are expensive to manufacture most were older machines not suited to software network. There was no actual software developed that would hook up machines and make each point of sale.
Doolan and Hotchin could see huge opportunity if they could develop such software. Back in New Zealand they hired software programmers who spent 18 months develop-ing what they wanted. Now they import machines, modify them for use with their soft-ware, as well as making their own here in an Auckland factory. They expect to have more than 2000 machines throughout Australasia by March and eventually tackle the global market.
It’s been fast ride for more than just the two founders of the company – in 1998 they took on two investors who each put in $125,000. With the public listing last November, that investment is now worth $1.2 million.
While the new technology is fundamental to the success of this business, Doolan says it’s not the whole story.
“We identified early on that good people contribute sign-ificantly to success. We went out and looked for good people, got to know the main players in the industry early on, and then headhunted the right people. We wanted
