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Monthly archives: March 2018

Posted: 23 March 2018
Kiwi companies selling Software as a Service (SaaS) are reeling in global revenue and customers.

Whether tap-and-go donations at church with Pushpay, in business with Xero's accounting software, at the museum with Dexibit's cultural data software, or during halftime with DropIt's reverse auction service – Kiwi companies selling Software as a Service (SaaS) are reeling in global revenue and customers.

58 Kiwi SaaS companies joined 10,000 global players at the recent 2018 SaaStr Annual conference in San Francisco - the largest non-vendor confab in the world. Their common aim: making life easier with innovative subscription based software. Paul Norrie, Digital Business Advisor at Callaghan Innovation, shares some of the key insights.

With San Francisco being a fertile ground for growing SaaS companies, our Kiwi entrepreneurs returned from 2018 SaaStr inspired and hungry for rapid expansion – but focused on accelerating in an intelligent way.

The 2018 SaaStr event was the trigger point that enabled us to bring the community of Kiwi SaaS founders and leaders together. Having so many Kiwi businesses together at a global event makes those in the know notice. Plus for each Kiwi delegate the energy from the cohort and the shared learnings, friendships and experiences will be of ongoing value over time.

SaaS companies achieve phenomenal growth 

SaaS companies are known for their ability to achieve speed, scale and volume. One company we spoke to in San Francisco went from $1-$50 million revenue in 3 years, another in 3 years now has 70 staff. That level of growth is phenomenal.

It’s not surprising given 7 out of the top 10 of Deloitte's North American 2017 Fast 500 were software companies, with 43% identifying themselves as SaaS companies. American software companies are relentless in their growth efforts.

Here in New Zealand, SaaS companies feature heavily in the Technology Investment Network 200. As a group, these companies experienced high revenue growth in 2017 of nearly $163m and many featured on TIN's high growth awards lists last year.

NZ is an attractive place for R&D

It became very clear on our trip that New Zealand is a really attractive place for companies to base their R&D activities - in this case software development.

In San Francisco you’d be looking at a cost of about $140K-plus for a graduate. In New Zealand it would be a fraction of the price, plus we have a government committed to supporting these high growth businesses via Callaghan Innovation and NZTE.

While in NZ we struggle to find leaders with startup experience, finding dedicated research and development talent isn’t a problem. In the US there is a faster churn rate where experts and employees don’t stay long because there is a huge appetite for hiring.

In the Bay Area of San Francisco you’d have a 13-month churn rate. Basically you’ve barely hired your expert and they’ve taken up another opportunity elsewhere.

Capital and risk appetites

In the US you have a $US75 billion capital market and it’s much different here. Even with the NZ capital we do have, there is a way to go to build a productive risk appetite.

It’s why many of our startups either list overseas, receive foreign investment, or are acquired by big multinationals - local investors aren’t signing up. We’re definitely seeing healthy international investment interest in some of our Kiwi startups and R&D projects.

It has a lot to do with the way Kiwis define and engage with risk. We are getting better, but we’ve got a lot of work to do to shift our traditional mindset. As Doblin’s Larry Keeley told us recently, the ultimate paradox is that the boldest and seemingly riskier ideas are actually the easiest to succeed.

NZ SaaS companies rate connections as essential

Storypark is using research and human-centred design in their service platform to help document and support children’s learning.

“It’s important being able to meet other CEOs and founders of companies and be able to talk about everything from how they structure their business, to how they reach their customers, to how they develop their product,” says Storypark’s Jamie MacDonald.

Feature IT's SaaS solution helps businesses make sense of the magnitude of data they are accumulating from a range of sources every day. Clients can mix and match their different functional software and cloud computing applications for smoother collective insights.

“It's about SaaS being an ecosystem of a lot of solutions that need to work together. That's the exciting part, for NZ to be a part of that,” says Penny Anderson of Feature.

Unison, traditionally a power lines company, is also in the SaaS business.

“People share the challenges and how they overcome them. That's definitely useful because if we are entering this new industry, we have to enter it with our eyes wide open and understand the different challenges,” says Unison’s Thahirah Jalal.

5 key lessons for Kiwi SaaS companies

  1. Connect and share to accelerate. Peer engagement is crucial for resilience, problem solving, and market knowledge.
  2. Be focused. Choose a narrow vertical/market that your product fits (product-market fit) and align your R&D pathway specifically.
  3. Know the well-established stages of growth. Arrange activities accordingly.
  4. Scale smartly. Nail your solution, lock in customers, and then scale.
  5. Make use of NZ’s competitive advantage in software development and R&D.

What is Software as a Service?

SaaS companies sell software services, but through a subscription. Google Docs, Netflix, Microsoft Office, Spotify and Audible are all examples you might use as a consumer. Organisations use SaaS applications for anything from accounting to inventory tracking.

The software is hosted elsewhere (‘the cloud’) but you can access the services almost anywhere over an internet connection. In the past you would have to physically have a CD or floppy disc and businesses would have to engineer their systems specifically for each service.

Digital services moving en masse to subscription

  • Radio, live sports games, maps, fitness workouts, personal assistants, medical tracking, news, TV and movies are largely predicted to shift to subscription-based models - much like Netflix.
  • Deloitte Global predicts 580 million digital subscriptions globally in 2018 with about 350 million subscribers, increasing 20% year-on-year. It says this year about 50% of adults in developed markets will have 2 digital subscriptions, increasing to 4 subscriptions in 2020.
  • Cisco's Global Cloud Index forecasts 95% of all data center traffic will come from the cloud and 59% of all cloud workflows will be delivered as SaaS by the end of this year.

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Posted: 12 March 2018
‘Victoria’ is shaking things up at door and window hardware manufacturer Assa Abloy.

Victoria is a cobot – a UR5 collaborative robot able to work on 32 different product variants on the lock body line at the company’s Albany facility.

She has been a game-changer, so much so that Assa Abloy is about to commission two more cobots on a different assembly line, manufacturing engineering manager Marc Simkin says.

The sleek new employee paid for herself within a year, and has created a whole new role for the person who used to do her job. He is now the robot minder, directing her to where she’s needed and placing a much greater focus on quality.

“Our experience has been absolutely fantastic,” Simkin says.

Cobots are robots that work alongside their human colleagues without the need for safety guarding. They are easier to install than traditional robots and typically have a shorter payback period.

Compared with their American, European and Asian counterparts New Zealand manufacturers have been slow to adopt cobots. The technology is a key part of the digital revolution that is changing the face of manufacturing, and the Kiwi sector risks becoming uncompetitive if it doesn’t get on board, Callaghan Innovation’s business innovation adviser for manufacturing, Nathan Stantiall, says.

Cobots aren’t for everyone, which is why Callaghan Innovation, the Government’s business innovation agency, offers a free one-month trial of its own UR5 plus research support.

Universal Robot
Universal Robot UR5

The borrow-a-bot scheme is how Assa Abloy came to know and love Victoria. It held the “robot wars”, pitting three different technologies against each other – a UR5 made by the Danish-based Universal Robots (UR); a cobot from Swiss industrial equipment maker ABB; and the cobot Callaghan Innovation had at the time, dubbed ‘Baxter’.

Sadly for Baxter, a first generation cobot developed by US-based Rethink Robotics, the UR5 won. But without the trial Assa Abloy would have taken much longer to evaluate its options, Simkin says.

“At that stage we had no idea what we were going to do with the technology,” Simkin says. “The whole point was a process of discovery and understanding of what is out there.”

Christchurch-based Design Energy distributes UR products in New Zealand. The great advantage of cobots is that they’re easy to use and extremely flexible, managing director Mike Shatford says.

“Companies can deploy them themselves, maintain them, programme them,” he says. “Because they’re so simple, that can be put back into the end user’s hands.”

UR5 touchscreen tablet controls
UR5 touchscreen tablet controls

Smaller firms with mixed production runs may not think they are ripe for automation, but the technology can be deployed to perform a variety of different tasks even within a single day, Shatford says.

The lower implementation costs mean the payback period is typically around six to 12 months, and putting cobots into the mix also stimulates consistency in the production process, he says.

“We’ve seen multiple cases where throughput gains far outweigh savings on labour,” he says.

Embracing automation will be increasingly important as New Zealand seeks to lift its low productivity growth levels, Callaghan Innovation’s Nathan Stantiall says.

“It’s not about replacing the workforce. It’s about throughput gains, upskilling your workforce to do more fulfilling and productive roles, and improvements in safety,” he says.

Trialling a robot would be most beneficial to businesses that are new to robotics and have implemented lean manufacturing principles, he says. Combining use of cobots with Callaghan Innovation’s Better by Lean training programme may be a good strategy for some firms.

“We urge manufacturers to come and talk to us about giving cobots a go,” Stantiall says.

If your company is interested in a cobot trial please contact Callaghan Innovation

See also Manufacturing Robots

This article was first published in the March issue of the EMA Business Plus magazine.

Posted: 02 March 2018
The Measurement Standards Laboratory (MSL) collaborates with industry giants to better define the appearance of luxury products.

Picture two cars in a showroom – one is coated in a dull, rough paint, while the other is glossy, with a hint of metallic sheen. Which one would you choose?

You’re not alone – it has been repeatedly shown that for ‘luxury’ products like cosmetics or automotive paint, appearance has a significant impact on consumer choice. Appearance is also important at the quality control level, because it can often flag issues with the reliability of production techniques to manufacturers. 

Global colour and paint market infographic

 

But accurately defining the characteristics that give an object its unique appearance is not without its challenges. Size and shape may be easy to measure, but what about visual attributes such as colour, gloss, texture, translucency or sparkle? Believe it or not, many industries rely on characterisation and quality control carried out ‘by eye’, making it highly subjective. With manufacturers of special-effect pigments producing ever-more sophisticated compounds, there is a clear need for measurement standards in this space.

That’s where the Measurement Standards Laboratory (MSL) comes in. Through a Joint Research Project – xDReflect – that involved seven other National Measurement Institutes (NMIs) and twenty industry collaborators, they developed traceable tools and methods to optically characterise a range of novel surfaces. The xDReflect team mostly explored glossy materials and goniochromatic (often referred to as iridescent) paint, which changes colour when illuminated or observed from different directions. To characterise these surfaces, they had to measure light scattering, and for that, they used MSL’s new, primary goniospectrophotometer.

Goniospectrophotometers are instruments that can directly measure an object’s bidirectional reflectance distribution function (BRDF) – a factor that precisely defines how a surface scatters light at different wavelengths, making it a key contributor to a surface’s appearance. Within the project MSL developed a new detector in collaboration with the Czech Metrology Institute that has a very wide dynamic range. This allows it to accurately characterise dark surfaces, which are typically challenging because they scatter so little visible light.

MSL's Goniospectrophotometer
MSL's Goniospectrophotometer



One result of the research project is that the MSL system – built here in NZ – is now one of a small number of traceable goniospectrophotometers in the world. In addition, the project team developed a common language for the measurement of light scattering, which will be integrated into documentary standards for gloss and BRDF in a follow-on project called BiRD. Further work will establish definitions for sparkle and graininess.

These tools will provide industry with ways to objectively, and traceably, characterise materials with novel optical properties. And with collaborators that included Toyota, BASF, Maymó cosmetics and Saint-Gobain, we can expect many more products that use science to stand out from the crowd.  

Can we help you?

The Measurement Standards Laboratory (MSL) is New Zealand's national metrology institute. Our highly skilled scientists can work with you to solve your measurement problem and improve your products and processes. We’ve helped clients in the food and beverage, consumer goods, energy, medicine, agriculture and aviation industries, supporting New Zealand’s ongoing international trade.

We understand that every R&D problem is unique, so why not contact us to discuss your specific needs? The first hour of advice is free, and new R&D customers may be eligible for a discount (up to 50%) for consultancy services.

For more information, visit https://www.measurement.govt.nz or contact MSL on info@measurement.govt.nz