Monday, October 18, 2010
  Ultra fast lessons from Singapore
From NZ Herald October 6, 2010

Ultrafast broadband is almost upon us. Or so we're told. Almost two years ago a change of government meant the Labour socialists' plan to stimulate the market to give us broadband was shelved.

Instead, the fiscally rigorous right would spend more than $1 billion in taxpayer dollars. Oh yes, which would be matched by selected private sector partners. Typical New Zealand Alice Through the Looking Glass politics.

If that piece of political and economic theory has you scratching your head, it flummoxed the industry.

The only thing it could count on was no substantial decisions from a new government for at least 18 months, so any spending was risky. There was a subsidy, but there was no way to construct a business case without seeing what the strings were.

Things finally started to move last month, with the Minister for Communications and Information Technology, Steven Joyce, announcing negotiations on binding agreements would start with three regional fibre providers.

They are NorthPower in Whangarei, Alpine Energy in Timaru, and the Central North Island Fibre Consortium covering Tauranga, Hamilton, Cambridge, Te Awamutu, Tokoroa, New Plymouth, Hawera and Whanganui. Note they are all lines companies, not telecommunications companies. Which would indicate Vector is a shoe-in for Auckland, justifying its saturation TV advertising campaign. But you can't count Telecom out yet. Subsidy or not, it has fibre, copper and customers it wants to keep.

With the promise of a fibre in the air, it was timely of Huawei to hold a conference on ultra-fast broadband in Auckland. The Chinese state-owned telecommunications equipment firm, which is providing the gear for 2degrees, wants to sell to whoever is building the infrastructure.

Despite the short notice, Huawei pulled together impressive speakers, including two people involved in rolling out Singapore's Next Generation National Broadband Network. Khoong Hock Yun is assistant chief executive for the infrastructure and services development group of Singapore's Infocomm Development Agency.

That's a statutory board under the Ministry of Information, Communication and the Arts responsible for acting as the Government's chief information officer, setting the nation's information technology strategy, encouraging use of technology in innovative ways. It's the regulator, promoter and developer.

Eighty per cent of Singaporean homes use broadband, with the target 90 per cent by 2015, when the next generation network is completed.

The aim is for what the Singaporeans call an "infocomm-savvy", globally competitive workforce and industry.

The next generation includes both fibre optic and wireless networks, with an open access model allowing multiple wholesale and retail providers to emerge.

The immediate aim is for download speeds of up to 100 Mbps and uplink 50 Mbps, with the expectation the system can eventually handle 1 Gbps downlinks.

A Singapore internet Exchange was opened in June. Above the passive infrastructure layer, OpenNet, are active infrastructure companies selling wholesale bandwidth services.

The first of these is Nucleus Connect, which is a separate subsidiary of internet service provider StarHub.

Its chief executive, David Storrie, told the conference the aim is to have a fibre network accessible to 95 per cent of households and businesses by June 2012. By the end of this year it expects to have 60 per cent coverage. Its pricing plans start at 25 Mbps, but Storrie says it makes as much sense commercially to start at 50 Mbps.

Singaporeans are talking about more video, including for things like online video-conferencing, remote health services, greater uptake of cloud computing and software as a service, new ways to teach and learn, interactive TV with new advertising models, the usual Jetsons scenarios.

Incentives have been built into Nucleus Connect's contract with the Government to encourage it to push higher capacity downstream, so retailers are offering the full 100 Mbps, rather than breaking it down into slower speeds for customers. If such innovation does come out of Singapore, New Zealand users may take a while to catch up.

Crown Fibre Holdings is talking about 30 Mbps downlinks for entry level consumers and 100 Mbps for small to medium business, but the minimum commitment rate is only 2.5 Mbps. It wants to have something in place for priority users - education and healthcare providers, government and business - by 2015.

Given the Singaporean example, there could be a case this country needs to take a more New Zealand Inc approach. Singapore is spending not just on infrastructure but on providing customers, promoting broadband use.

It is also using its power as a customer. In New Zealand, governments seem unwilling or unable to aggregate government demand, which could be the first step in creating an network that makes economic sense.
  Tech sector tipped to top dairy, despite dip
From NZ Herald, September 15

Fisher & Paykel Healthcare passed the $500 million. Photo / Supplied
Fisher & Paykel Healthcare passed the $500 million. Photo / Supplied

A 15 per cent drop in Fisher & Paykel Appliances' revenue pushed the total export revenues for New Zealand's top 100 technology companies below the $5 billion mark for the past year.

But Technology Investment Network founder Greg Shanahan says the sector still has the potential to surpass dairy as the country's number one foreign exchange earner.

The sixth annual TIN100 report shows Fisher & Paykel Appliances remains our only billion-dollar company, despite its $208 million revenue haircut.

Computer services company Datacom enjoyed 10 per cent growth, maintaining its number two spot on the table at close to $700 million, and Fisher & Paykel Healthcare passed the $500 million mark to stay third.

Then comes a cluster of companies hovering at $200 million, including NDA Group, Tait Electronics and Temperzone.

In total the TIN100 companies had revenues of $6.7 billion, exports of $4.9 billion and employed 24,000 staff.

The next 100 tech-based companies had total revenues of $507 million and employed about 2900 staff.

Shanahan says the entry point for the TIN100 is now $12 million, up from $7.5 million last year. Building a world leading technology, becoming a market leader and taking it global is a long term process more suited to builders than speculators, he says.

That means most of the most successful New Zealand technology firms are private companies or ones that behave that way, who can take a long term view and reinvest profits.

On average TIN100 companies spend 6 per cent of revenue on research and development. The research and development (R&D) spend for companies in the next 100 is $1 for every $5 that comes in from sales.

Companies which have achieved leadership in their markets spend on average 9 per cent of revenue on R&D, having learned their top spot protects their margins and market momentum.

Market leaders include F&P Healthcare, health software company Orion, crystal oscillator Rakon, Weta Digital, Flotech subsidiary Greenlane Biogas - which has 30 per cent of the global market for plants which turn biogas into vehicle-quality fuel - fruit sorting specialist Compac, and Douglas Pharmaceuticals, which leads with both its acne drug Oratane and its expertise in hard-to-manufacture drugs.


New Zealand's top 100 tech firms:
* $6.7b... Total 2010 revenues
* 24,000... Employees
* $4.9b... Value of exports, down 1 per cent

* Fisher & Paykel Appliances... $1.16b revenue
* Datacom (computer services)... $667m
* Fisher & Paykel Healthcare... $503m
* NDA Group (stainless steel vessels)... $200m
* Tait Electronics... $200m (est.)
* Temperzone (air conditioners)... $163m
* Gallagher Group (electric fences)... $160m (est.)
* Douglas Pharmaceuticals... $145m
* Rakon... $144m
* Moffat (baking equipment)... $140m (est.)
  Shaking and moving in IT world
From NZ Herald, September 15, 2010

Seismic upheavals in a technological sense are part of the DNA of Christchurch's Jade Software, and the geological shake-around is now just part of the company's rich history.

"The backup power came on and we didn't miss a beat," says Jade's chief innovation officer, John Ascroft, about the earthquake.

That's important for many of the New Zealanders paid through Jade's payroll system, or whose business applications run on its data centres in Christchurch and Auckland.

Jade started almost 30 years ago when programmers Gil Simpson and Peter Hoskins wrote a language called LINC to simplify development of programs for a Burroughs mainframe computer.

It was so good Burroughs (now Unisys) started selling it to other customers, and the developers set up a development centre in Christchurch.

Fast forward to 1996, and Simpson recognised mainframe computers were on their way out. He developed Jade as a software development and deployment platform which would, he said, allow mainframe computing on the PC.

Simpson is gone as a director, but the company continues to innovate.

It has had big successes, but it almost went broke a few years ago and its history contains a wealth of lessons good and bad for other technology companies to learn from.

I sat down recently with Ascroft and managing director Craig Richardson, who joined the company less than a year ago, to find out what the future holds.

While Jade comes up with great technology, it's hard to sell pure technology out of New Zealand.

Over the years Jade has tried several ways to do it, usually involving developing an application to solve a particular customer's problem then trying to make a product out of it.

That carries the risk of having to devote more and more resources into understanding the needs of a particular industry or sector without having big enough customers willing to pay for the development.

That can be managed by spinning off separate applications companies, or entering partnerships, but it all takes effort.

Richardson says when he came into the business there were at least 12 verticals demanding resources. "The intent is to narrow that down."

There are three core strands.

The payroll business is strong on both sides of the Tasman. It's a steady earner without being showy.

Three years ago Jade bought a Wellington company, Methodware, which had a product for managing governance risk and compliance which had 2000 customers in North America and Europe. Jade has been rebuilding Methodware in .NET, adding features and building up services around it.

The third strand is the core Jade software, the object-oriented database and associated tools that give developers a different way of solving complex business problems than can be done on relational databases such as Oracle or SQL Server.

Richardson says he has tried to work out where Jade works best, or can find a natural fit.

He has come up with logistics, investigations and intelligence, financial services and a new generation development tool, JOOB, for the Microsoft .NET environment.

Jade's logistics packages manage marine terminals and rail systems.

It's now deploying software into ports in Iraq and Italy, and a package it developed to keep freight deliveries around Britain from clashing with passenger services is now being rolled out through Europe because of Deutsche Bahn AG's acquisition of English Welsh & Scottish Railway.

A case management tool called Investigator, built for the Australian federal police, is now used by police, customs, government agencies and companies in almost 30 countries. Last month it won Technology New Zealand funding so it could be developed further.

"The other part of the business is in high volume, low latency enterprise businesses that are under pain where we think we can a solve problems."

That's where JOOB comes in.

Ascroft says JOOB is out now in beta, and should be released towards the end of the year.

He says financial services and telecommunications companies are seen as logical fits for JOOB, with large databases and complex problems that need rapid solutions.

It means Jade can be selling its technology on an as-required basis.

He says JOOB sparked a lot of interest from developers when it was demonstrated at last week's Microsoft Tech Ed conference in Auckland.

Ascroft says JOOB should allow Jade to attack the global product space, offering a high-value tool set that can be useful to millions of Microsoft developers.
  Tech companies ticking along nicely
From NZ Herald September 22. 2010

Fisher & Paykel Appliances is New Zealand's number one technology company, with revenue of $1.16 billion. Photo / Richard Robinson
Fisher & Paykel Appliances is New Zealand's number one technology company, with revenue of $1.16 billion. Photo / Richard Robinson

If you can, be number one somewhere.

That's a bit of advice gleaned from this year's Technology Investment Network guide to New Zealand's top 100 technology companies.

The TIN100 report is becoming an annual highlight, as compiler Greg Shanahan drills down into what makes our tech companies tick, and asks how they can tick better.

This year he's expanded the list, so companies which fall below the threshold for inclusion (which this year is $12 million in revenue) go into the TIN100+ list.

Shanahan says it surprises some people New Zealand even has 100 technology companies, but he's digging out more each year, as he pushes the vision that brains rather than butter and dried milk are our future.

Total revenue for the TIN100 in 2010 was $6.7 billion, of which exports accounted for $4.9 billion.

Shanahan's former employer Fisher & Paykel Appliances ($1.16b) and F&P Healthcare ($503m) held the first and third spots, with IT services firm Datacom second with $667m.

Many of the larger companies are manufacturers rather than software or service providers, and the volatility of the New Zealand dollar has posed challenges.

A decade ago, with the dollar hovering around US40 cents, companies like the F&Ps and Navman were able to pick up traction with well-priced technology earning generous margins.

Those margins have shrunk. Exporters can only do so much to hedge their currency risk, and from there it's about cost control and looking for higher value.

That's where being number one helps. Being first to market, or clear best in market, means you can make rather than take the price.

Without the sort of marketing budgets many better-funded competitors have access to, that's likely to mean winning at the research and development stage.

Fisher & Paykel Healthcare is number one in the global market for respiratory humidification devices.

Success wasn't overnight. It was in the late 1960s that the company picked up work done by the Department of Scientific and Industrial Research on ways to warm and humidify the air used in hospital ventilators.

The business took off in the early 1990s, and the company has extended the technology into solutions for obstructive sleep apnea, which now make up half its sales.

F&P Healthcare's success has encouraged other firms in the sector, with nine in the TIN100 and 13 in the second 100 providing healthcare software or devices, making it more than a $1 billion sector.

On the software side, Orion Health has become the country's largest software vendor by becoming a global leader in clinical workflow software and online patient records.

Douglas Pharmaceuticals' earnings come largely from manufacturing generic drugs, but it has also built expertise in hard to manufacture drugs, including Oratane, which is now the market leader in Europe for acne treatment.

Another drug manufacturer, AFT Pharmaceuticals, enjoyed 20 per cent growth last year from its Maxigesic paracetamol and ibuprofen combo.

New Zealand's long involvement in marine navigation can be seen in today's companies, with Rakon the global leader in frequency control devices for GPS, with over 50 per cent market share.

The currency arbitrage that helped secure the opportunity to create three Lord of the Rings movies is gone, but the innovation generated along the way means Wellywood still beats Hollywood on some fronts.

This year the TIN100 separated Weta Digital from the rest of the companies associated with Sir Peter Jackson, with an estimated $100 million in revenue.

The key to becoming and staying number one is research and development. TIN100 companies invested about $360 million in R&D last year, or an average 5 per cent of revenue.

On the web:
  Gen Y lead call centre changes
From NZ Herald September 29, 2010
The ideal call centre worker is a Generation Y woman who can handle the phone, emails and up to 10 web chats at the same time.

"Those Gen Y skills in social media are proving assets in the workplace," says Dr Catriona Wallace from research firm, who was in Auckland last week to deliver her annual benchmarking report on the New Zealand contact centre industry to a conference.

Call centres have become a ubiquitous part of modern life and commerce, accounting for more than 80 per cent of the contacts which organisations who have or use them will have with customers.

It's probably going to be the entry-level job for many young people, although only about one in five is likely to go on to another role in the same organisation.

Wallace says that's because it is a high-stress job with high staff turnover - 28 per cent here last year, 40 per cent across the Tasman - and few firms have processes to identify people who might have other talents and move them to other roles when they inevitably get jaded with dealing with 75 calls a day.

"A lot of companies can't hang on to staff."

Wallace picked call centres as the thesis for her doctorate in sociology 15 years ago because she was looking for a place to study organisational behaviour in a high-technology environment.

Call centres fitted the bill, with workers spending more than 80 per cent of their day using technology.

There are just less than 30,000 call centre seats in New Zealand, with a workforce of between 40,000 and 50,000. The average base salary for a full-time agent is $40,685, 4 per cent up on last year. Supervisors average $55,838, a 2 per cent increase, and managers $88,879, up 7 per cent.

Wallace says call centres are increasingly becoming multi-channel contact centres, using voice, email, social media and SMS messaging.

Some 48 per cent of call centres have fully or partly implemented multi-channel integration and another 31 per cent intend to do so over the next two years.

"That is transforming the job agents do. Employers will select more tech-savvy Gen Y staff and it will become a more interesting job."

Smart organisations are also looking at ways they can use social media to create online communities around their products or brands.

Wallace looks at performance measures such as the rate calls are abandoned (on average 5 per cent), the rate problems are resolved on the first call (77 per cent), the average speed of answer (21sec) and the average handling time (nearly 5min).

The average cost per inbound call last year was $8.08.

Wallace says organisations have seen call centres as part of their operational costs, which meant constant pressure for cost savings.

But one in five customer interactions last year included an opportunity to generate revenue and this is likely to increase.

Technology is driving the evolution of call centres and Wallace says New Zealand tends to be ahead of Australia in this respect.

More than half of contact centres have implemented knowledge or content-management systems and 31 per cent have e-learning in place.

A quarter can handle SMS messages. Only 7 per cent can currently do web chat or monitor social media but 12 per cent intend to invest in web chat over the next year.

About 14 per cent have put in speech-recognition tools and 2 per cent have ventured in to the world of biometric identity recognition and speech analytics.

Wallace says such cognitive load analytics can improve the way a centre works, such as by monitoring the tone of voice and word choice of the customer and automatically bringing in a supervisor on to the call if things get sticky.

Where New Zealand is behind Australia is in the percentage of call centre staff who work remotely - 20 compared with 12 per cent - but the potential is there to catch up once broadband is rolled out more widely.

The issue of offshoring is one which hangs over the industry but Wallace isn't concerned about the prospects of jobs going to India or the Philippines.

"There's a service shift," she says.

High-value work will probably stay local.

Voice inquiries are going to the Philippines and the technical/back office calls are going to India - with customer satisfaction surveys confirming that is the best place for them.
An online possie for Adam Gifford, a New Zealand journalist specialising in information technology, Maori news and the arts.

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