The Press, April 2007

Another Canterbury technology company looks set to become a worldwide success, with the recent merging of Lyttelton company Mooring Systems with Dutch company Cavotec Systems.

They are likely to follow in the footsteps of Jade Software, Tait, Eaton, Aucom Electronics and others as local companies leading the way in exporting technology. Their story is proof not only that we are good innovators, but getting these great ideas to a global market is much harder than it looks.

Founded by Peter Montgomery, a former third mate on the interisland ferry Arahura, Mooring Systems has a brilliant technology that replaced the age old approach of ropes with a vacuum system to secure ships to their berths. The benefits are significant - greater productivity from faster ship turnarounds, less labour for berthing craft and lower risk of injury. A fantastic innovation, but according to the Sunday Star Times one that only sold 16 times after 10 years of incredibly hard work by the company.

Enter 44 year old Dutch firm Cavotec Group, which provides a range of industrial products to several sectors including maritime. They have eight manufacturing 'centres of excellence' and 25 sales companies operating in 30 countries according to their website.

In a remarkable deal, Cavotec merged with Mooring Systems to form a company and listed it on the NZX stock exchange. Shareholders of Mooring Systems ended up with 20% of the larger group. "Cavotec and MSL can now begin working together as one team and accelerate the introduction of the automated mooring system to the market," said the merged company's Chairman and CEO Stefan Widegren at the time the deal was announced.

The Mooring Systems story is stark evidence that succeeding as a New Zealand technology company is not simply about the product. Their mooring technology is inspired but getting it to market was a hard slog. "It's a very big decision for a port operator or a shipping company to remove ropes and go to a vacuum system," Montgomery said in a recent interview with The Press.

Our technology community is littered with examples of great technology that languish without an established or working channel to market.

Jade Software got its start as a company that sold its mainframe LINC technology to a US multinational for a $1, and then a secured lucrative development contract to supply the product. By doing so they secured a world wide distribution channel, earned huge amounts of foreign exchange and helped build the local technology industry as we know it today.

With their next technology product, the JADE development environment, the market had changed a lot and securing a major international partner was much harder. Without a big partner Jade has had to work a lot harder and rely on revenue from the building of systems for sectors like health, ports and education.

New Zealand is dominated by small (on world standards) companies that often lack the reach, resource and capital to take their products to market. Typically we need to establish relationships with international players to succeed. A good example is technology star Navman, whose GPS navigation systems were given a worldwide distribution channel when bought by US company Brunswick.

Does this mean technology companies can't succeed without a giant international partner? Of course they can. There are lots of examples of companies who are doing well selling their products directly. SLI Systems is growing fast by marketing their software primarily to the US market, and Software of Excellence has managed to exploit the UK market well. But to do this companies need to be focussed and willing to invest significantly in developing their chosen markets.

What it does mean is that the task of getting a technology product to market is complicated and requires a huge effort. It is at least as complex as developing the product in the first place, if not more.

You need to know clearly what the market for your product is, understand who the players in that market are and how they make their money (sometimes called the 'value chain'), and then be able to approach and secure partnerships with them. It is involved, hard and relentless work that doesn't stop even when the distribution deal is signed.

One of the biggest mistakes technology companies make is to assume a distribution partner would be interested in their technology per se. They are motivated not by the brilliance of our technology but the ability to use it to protect their revenues, keep out competitors, retain customers etc. Understanding those drivers is the key to securing a distribution partner.

A big problem for Mooring Systems was operating as a small New Zealand company trying to sell an expensive technology, with a relatively long return on investment, to large international ports or shipping companies. The Cavotec deal not only gives them international reach but the credibility of a large and established European brand. Now those recalcitrant customers can feel a bit more relaxed about purchasing their clever mooring system.

Getting the distribution problem right is a huge opportunity for New Zealand technology firms. Focussing on a bit of our famed Kiwi ingenuity on this problem could produce many more Mooring Systems success stories.

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