'Vision' keeps Peace out of Enron fallout

It's a good job Brian Peace appears to like both Pepsi and Coke. 'Enron has a goal to be the Coca Cola of the energy industry,' said Peace halfway through 2000.

It’s a good job Brian Peace appears to like both Pepsi and Coke.

“Enron has a goal to be the Coca Cola of the energy industry,” said Peace halfway through 2000. The Auckland-based energy software company had been working closely with the failed US energy giant — it was Peace’s first US customer — and Enron had, some 18 months before, made a “very serious” bid for Peace.

Luckily for Peace Software, its chief executive and staff had “a vision about what value we can bring to the market”.

The US market, he enthused, was like 50 countries in one: a $US350 billion industry comprising 4500 utilities, while other countries were fast deregulating their electricity markets. Enron was right in the thick of it, and so, in a much smaller role, was Peace.

The pair partnered for projects in four US states. “We are working with them on their new markets for commercial and industrial customers. They plan to be in 15 states as the states progressively deregulate.”

Enron, one of the top 20 largest firms on the planet, collapsed late last year leaving a legacy of financial and political scandals across several Western countries.

By the end of last year Peace was downplaying any impact from Enron’s fate, saying it has “no direct exposure to the collapse of Enron” because Enron had recently reorganised and exited the billing market, though it still maintained a Peace licence. The company even saw “potential opportunities”, given that Enron’s customers needed to be serviced by other suppliers, according to marketing executive Denese Van Dyne.

Now Brian Peace describes the relationship as “historical”, as prior to its collapse Enron had reorganised and exited the billing market, though it still maintained a Peace licence.

And earlier this month Peace Software’s US financial backers were adding more distance between the two. The collapse of US power giant Enron will have “no effect” on Peace software, or the utility billing market, said board members and venture capitalists Jerry Murdock and Jake Tarr.

Tarr, managing director of Kinetic Venures, which owns 8% of Peace stock, says the collapse of Enron will not harm the company, though it will have an impact on IT investments.

“There were a few bad actors in the senior management that brought the company [Enron] down. It underlines the importance of having quality information [for boards and customers]. CEOs of utilities are going to be much more sensitive to the importance of investing in information technology,” Tarr says.

Peace says that in 2001 the company enjoyed revenue growth of 150% to $75 million, in an enterprise software market it says had shrunk 20% in the past year. Staff numbers had increased from 250 to over 400.

Tarr says such growth “way north of 50%” would continue. Last year, he says, saw Peace “break from the pack and establishing themselves as a market leader.”

This included, with partner IBM, a deal to supply billing systems to Excel Energy in the US, which has three million customers.

Murdock, co-founder and managing director of US-based Insight Venture Partners, believes the “phenomenal” growth of Peace will create “dozens” of millionaires, through staff having stock options, and make the company a magnet for young talent from around the world.

Murdock, whose business owns a quarter of the company, says within five years Peace will be one of the world’s top 100 enterprise software companies, with yearly earnings of $US100m ($230m).

Murdock says his firm has $2 billion to invest in enterprise software firms over the next three years and he was keen to meet New Zealand firms. Currently, Peace is his only Kiwi investment, though his firm owns a large share of Quest Software of Australia.

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