Optimation deal opens possible $50m door

And the possibilities extend further, mainly to China

An initial overseas sale to the Maldives is, on the face of it, a relatively small deal but for Optimation it is the first step to what may be a $50 million opportunity over the next few years.

Indian business partner Satyam, the third largest player in the global offshoring market, expects to take Optimation’s Equip utility billing product to the broader Indian market on the back of the $500,000 Maldives contract.

And the possibilities extend further, mainly to China. That’s because Equip is integrated with Siebel customer service management. Oracle recently bought Siebel and will act as a marketing front end for Equip.

Optimation director Alistair Owens says Equip and Siebel together make up a world-leading product. “They’re very deep into customer management and we’re very deep into billing. Our competitors, such as SAP, are all monolithic, so their research and development is spread a lot more thinly.”

Owens has a long history in the electricity industry. He was formerly CFO of Capital Power in Wellington, then became CEO when TransAlta bought the company. TransAlta was subsequently bought by the Natural Gas Corporation, and he moved on to develop Equip in his own company, AV Group. Owens took a substantial shareholding a few years ago in Optimation, which has a dedicated in-house team developing Equip.

“Equip is component based and interfaces to the best other products through a service oriented architecture,” he says. It’s probably the most exciting open systems product in New Zealand at the moment, he says.

“We see this as a $30 million to $50 million business in the medium term, most of it from offshore.”

That said, there is a lot of activity also in the New Zealand market. Owens says much of the technology in the sector is very old and needs to be refreshed. With the focus worldwide increasingly moving to smart metering, Equip is well placed to service that need. None of the legacy products can do that, Owens says.

Optimation developed Equip in partnership with Satyam but last year bought out the Indian company’s share.

Owens says Asia is potentially a multi-billion-dollar market. “We’ll partner with a number of players, both in systems integration and with complementary products, such as Oracle and Microsoft. Asia will really open up in 2007-08. Power companies in India and China have concentrated on delivery. Now, they’re getting serious about billing and things that manage power delivery.”