Profile: How I did it: Burnaby fleet tracking company gets back on track

How I did it: Burnaby fleet tracking company gets back on track

Switching from telematics hardware to software services was fundamental to fleet management company’s reversal of fortunes

Tue Feb 19, 2013 12:01am PST

Business in Vancouver’s “How I Did It” feature asks business leaders to explain in their own words how they achieved a business goal in the face of significant entrepreneurial challenges. In this week’s issue, Scott Edmonds, who took over as Webtech Wireless Inc.’s (TSX:WEW) CEO three years ago, talks about the challenges of transitioning from a money-losing telematics hardware company to a fleet management software company. The company recently sold its NextBus system for $20.7 million.

“Webtech was a mile wide and foot deep with [fleet management] applications. We were losing a lot of money. There was a lot of discussion at the senior level to make sure that the verticals that we chose to focus on were the right ones.

“We took a perennial money loser that was focused on selling hardware, and we’ve shifted it to focus on selling [software] solutions, and we’ve gone from losing significant amounts of money each quarter to reporting positive EBITDA quarter after quarter for seven quarters. Four years ago, close to 80% of our revenue came from hardware, and today it’s closer to 25% of our revenue.

“It wasn’t that [hardware] was money losing, but it was lower margin – it had no recurring revenue attached to it, and it’s a very competitive market. Slowly weaning ourselves off legacy businesses – while building up the new businesses – without enormous disruption was a challenge.

“We had to do some restructuring. You have to reassure people after that happens. We had a New York service office – we closed that down. We closed our U.K. sales office, and we’ve near-shored some processes from Toronto to Vancouver.

“We had acquired a business in 2009, Grey Island (Systems International). Grey Island had acquired NextBus in 2005. NextBus takes GPS information and runs it through a patented process to make a prediction when the next bus will arrive.

“NextBus was a neglected asset. It was at about $2 million in revenue with significant customer concentration at that time. When we sold it [for $20.7 million], it was at about $8.5 million.

“It was doing extremely well. But our core business is telematics, and the predictive arrival segment is not part of the telematics market. NextBus was a non-core asset. There wasn’t a lot of strategic alignment to our telematics business, nor was there a great deal of operational efficiency available. Selling to transit agencies doesn’t really help us. There is a limit to how much you can grow in that kind of market when you have a single point solution.

“For those reasons – and because cash is always nice – it was time to sell. A much bigger owner can benefit from its strengths and invest in the areas of exposure.

“As we’ve done fewer things, you get greater efficiencies. When I took over [in 2009], we did about $28 million in revenue, and we had 240 employees. We’re at just under 150 people now. If you take away NextBus, you can think of our revenue as being at about $30 million. That’s about $200,000 per employee."

Tags: Scott Edmonds, Burnaby, WebTech Wireless Inc., hardware, software



Things You Might Like »

Articles

Columns

Lists & Data


Comments »


NOTE: In order to comment, you must be a registered BIV.com user and be logged into your user account. If you do not have a BIV.com account, you may register here. If you have one of the following accounts: Google, Facebook, Twitter, Yahoo, OpenID, you are also able to comment, just click "Post as" button and then log into one of these services via Disqus.

blog comments powered by Disqus

Featured Video


Popular News



Upcoming Events