Optimation puts $750,000 project on ice

Taxpayer-funded project on hold

What a difference a year makes. Last March, Wellington software developer Optimation was trumpeting its Equip utility-billing product, saying it represented a $30-to-$50 million business, in the medium term, most of which would be earned overseas.

Three months later, it received $1.8 million from the Foundation for Research, Science and Technology (FRST) for ongoing software development. The company also garnered the FRST Technology Commendation Award for 2006.

But in November, the Equip project was put on hold — after Optimation had drawn down nearly $750,000 of its business growth grant. And Alistair Owens, its utilities group manager, and 25% shareholder in holding company Mentum, has resigned and sold his shareholding to CEO Neil Butler. According to Butler, Owens has relocated to the UK, after three years with the company.

Global consolidation in the utility billing software market is behind the decision to put Equip on hold, says Butler. First Data has bought Peace Software, for example, and Oracle has acquired both Siebel (Equip is integrated with Siebel’s customer-relationship management software) and SPL, the biggest independent pure-play billing vendor.

“We took the decision not to build out a mass-market module and seek to compete head-on,” says Butler. “Rather, we chose to focus on our core strengths, such as commercial billing and smart metering.”

Equip is used locally by Genesis Energy and Meridian. “We had two very successful upgrades for our major customers last year,” Butler says. “There will be another release this year.”

In March last year, Owens was speaking of an initial overseas sale to the Maldives, made through Indian partner Satyam, as a first step to Satyam taking Equip to the broader Indian market and possibly into China. It was, he said, a $30-to-$50 million opportunity in the medium term.

Owens is a former CEO of TransAlta, which was subsequently bought by the Natural Gas Corporation. He moved on to develop Equip within his own company, AV Group, then took the product to Optimation. Equip had been developed in partnership with Satyam, but Optimation bought out the Indian company’s share in 2005. Then, a year ago, it entered into a long-term partnership with Satyam, bringing in Satyam capability where it best suited business needs. Satyam had 14 staff working at Optimation.

But there were persistent rumours late last year that the Equip project was in trouble. In December, Owens told Computerworld the project had “slowed down” and that, as a result, staff had been redeployed. He characterised this as a “natural dip” in the project. “We are just taking a pause and we have scaled back a wee bit,” he said. “There is nothing apocalyptic about it.”

But a statement from FRST has revealed that the project was put on hold in November.

The foundation and Optimation decided mutually to make that move, says FRST communications advisor Nancy de Bueger. “We were happy with the progress the project was making up to that point, as it had delivered the planned technical objectives, and the benefits of this work will be retained in some way, even if the project does not continue in its current form,” she wrote in an email to Computerworld.

“Because research and development is inherently risky, we recognise that, from time to time, because of events outside a company’s control, time-lines and milestones may need to be reviewed.”

Butler says Optimation has advised FRST that it will not be drawing down any more of the dollar-for-dollar grant.

When asked about the state of the company’s relationship with Satyam, Butler referred Computerworld to the Indian company for any comment.

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