Counting on returns from software upgrades

MOST drivers would be familiar with the rubber strips placed across Western Australia’s roads and highways to count passing vehicles, but few would know the company behind the majority of these devices is Coogee-based MetroCount.

Mike Kenny started the business 20 years ago, spruiking his wares to Main Roads Western Australia after adapting technology he first used as an agricultural device.

Originally designed to steer tractors through cornfields, Mr Kenny adapted his technology into an ultrasonic sewer data logger, before he applied its uses as a road vehicle counter.

“Instead of counting the depth in millimetres of the sewer, it was the number of axles. I already had the software, so I morphed the product into a traffic counter,” Mr Kenny told WA Business News.

He took the product to Main Roads, which requested that, in addition to counting vehicles, the software classify vehicles; so Mr Kenny went to work.

Pressured by a 12-week turnaround, he developed an alternative to the time-consuming task of going on site to collect the analysed data.

“We thought, let’s just put a lot of memory in it and sort it out on the PC back in the office,” Mr Kenny said.

“We arrived at it by asking how we could fast-track the

development.”

Mr Kenny said the need to find a solution in order to win the contract actually worked in the company’s favour.

“It turned out to be the best way of developing the product. We are miles ahead of all these other companies that do the analysis inside the boxes,” he said.

“We knew there wasn’t a lot of gear in this market globally, there were only 10 players and now there are really only five, we would be the most contemporary.”

Within five years MetroCount has become the local market’s major player, with the English company that first dominated the market now holding just 1 per cent.

“In a sense we have driven the coal back to Newcastle,” Mr Kenny said.

Developing the hardware and software that enabled analysis of the collected data, and selling the products primarily to government departments, ensured business success.

“Software is a great industry because you have huge margins and no cost, effectively. But because software is very competitive, hardware is good. But then hardware is very competitive by itself,” he said.

“I stumbled across the government sector. Basically, all our products are bought by councils, local government or Main Roads, and departments of transport around the world.

“So having a combination of software and hardware with a product you sell to government, you have a direct way of marketing. I was able to ‘rifle-shoot’ the market.”

MetroCount now has 30,000 units in Australia and units in 90 countries around the world, with two sales offices in the US and UK.

Mr Kenny said while operating the main functions of the business including the accounting, manufacturing, research and development and IT from Australia worked well, he still experienced all the problems of being a micro-multinational.

Different parts of the MetroCount kits come from all over the world depending on where the best quality product can be sourced, while the manufacturing of the final product is done in WA.

Mr Kenny said by manufacturing the product in Perth, he was protecting the business by ensuring quality products were produced.

“We export to 90 countries, we can’t afford to have these things back for repairs,” he said.

“My big theme, and what I see that we are doing wrong in Australia, is the intellectual input into our exports is negligible. That is the way you insulate yourself from commodity price changes, freight cost.”

For now, Mr Kenny is focusing on value adding to his software in order to create a stream of income from his existing customer base.

“The problem is at the moment, with the normal counters, we will sell them for a couple thousand dollars and 10 years later they are still working really well. You have got to make it reliable, because that is how you get a good reputation,” he said.

“They have to be robust, droppable, but there is no built-in obsolescence. They are getting newer and newer software that gives more and more reports, from the same thing they bought 10 years ago.

“We are hoping to do some value adding to the data, analysis on the permanent sites so we can have a network, maybe even a portal for traffic data globally and get people to subscribe.”