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A low-key local R&D player looks to expand

Peter Griffin, Contributor. 08 September 2020, 10:33 am

Foreign owners can be fickle managers when it comes to our high-tech companies.

There are numerous stories of international buy-outs of our most promising companies that came with pledges to keep R&D operations in New Zealand while taking Kiwi-made innovations to the world.

More often than not the R&D operations have instead drifted towards the US or Europe-based headquarters of the new owners. That's not the case with Verizon Connect, the Christchurch-based maker of cloud-based GPS fleet tracking software that employs 3,500 people in 15 countries.

The company, an offshoot of the massive US telecoms operator Verizon, said yesterday that it now employed over 300 people employed in its R&D operation in New Zealand and will move beyond product development to start offering its fleet-management services locally as well. 

"We are very proud of our strong roots in New Zealand and our reputation, both inside and outside our business as leading as a global research and development hub," said Greg Newham, Verizon Connect's Director for Australia and New Zealand.

"But we now feel that it's more important than ever for fleet businesses to reduce unnecessary costs, such as fuel wastage and high labour costs."

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Foreign investment from day one

Verizon Connect's longevity in New Zealand perhaps stems from the fact that it has had foreign investors from day one. Local capital was hard to come by in 2001, when the company was founded as Telogis by entrepreneurs Howard Jelinek, Ralph Mason and Newth Morris, who set up the company to develop trunk radio hardware and software.

Then came the rise of the software as a service model and commoditised GPS tracking hardware systems. It allowed Telogis to offer location-based software that let owners of commercial fleets tighten up the efficiency of their vehicle scheduling and movements and to keep tabs on driver performance.

Verizon Connect bought the company in 2016 and while the founders left shortly after the acquisition was settled, Verizon has adhered to Ralph Mason's plan to double R&D staff - there were 150 of them employed at Telogis in 2014.

Drawing on research by Berg Insight, Verizon Connect, is confident the fleet management market in Australia and New Zealand will stay in growth territory despite the impact of the pandemic. 

"The number of fleet management systems in active use is forecasted to grow at a compound annual growth rate (CAGR) of 16.0 per cent from 0.5 million units in 2015 to 1.1 million by 2020," Berg notes.

2 million vehicles connected

The growth is being driven by tighter health and safety regulations, road user charges and greater use of electronic work diaries. Verizon Connect claims that it's fleet management software can reduce vehicle idling by 13 per cent, decrease 'harsh driving events' by 15 per cent and allow drivers to perform 2.5 more stops per vehicle, per week.

Verizon Connect's customer base is largely offshore, though it is looking to change that by offering three months of service free on its fleet management platform and field management solution, called Reveal Field and Reveal Field Plus. 

Reveal Field lets dispatchers communicate job information to vehicles throughout the day, while Reveal Field Plus lets businesses collect feedback on their services through ratings and reviews and keep customers informed through enhanced last-mile notifications.

Verizon Connect tracks over 2 million vehicles globally, 60,000 vehicles of them in Australia. The fleet management technology business locally is a competitive one. But Verizon Connect is a significant player already so has the potential to see its fleet tracking increasing used on the roads where they have been developed. 

The R&D operation generated $39.7 million and $3.7 million of income in 2019, according to Companies Office filings, making in one of the country's larger, if lesser-known development operations.


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