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Griffin on Tech: A software sector stalwart steps back

Peter Griffin, Editor. 22 July 2022, 1:16 pm

When I started covering the New Zealand tech sector over 20 years ago, it was an industry trying to deal with the fallout of the Dotcom bubble bursting.

The NZX was littered with penny dreadful tech companies (Advantage Group, E-cademy, IT Capital) that had raised millions with big promises of revolutionising industries with software delivered via the internet but failed to live up to the hype.

This was before the software as a service (SaaS) boom that New Zealand entrepreneurs proved to be particularly adept at harnessing, particularly with business-to-business software applications.

Back then, the industry’s key figures included the likes of Peter Maire (Navman), Brian Peace (Peace Software), Selwyn Pellett (Endace) and Ian McCrae (Orion Healthcare). McCrae could always be counted on to call a spade a shovel and to give his thoughts on what the government needed to do to unlock the potential of the knowledge economy.

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A proud Tesla owner, McCrae called out the coal imports used to cover shortfalls in our renewable energy production

McCrae was originally a scientist, founded his health software company in 199. He will step down as chief executive next month after 30 years of leading Orion, one of the most important New Zealand software companies that most Kiwis have probably never heard of.

It follows McCrae earlier this year undergoing successful surgery to remove a brain tumour and several years of intense work to return Orion to profitability after a disastrous run as a publicly listed company. Going public on the NZX in 2014 with its share price debuting at $6.50 should have been a crowning moment for McCrae and Orion, a software company with solid credentials bringing in fresh investors and capital to fuel its international expansion.

But Orion’s timing was off. The Obamacare health reforms in the US were supposed to lead to a boom in healthcare spending and Orion geared up to make the most of the opportunity to sell its clinical software systems into the vast US market. But the big deals proved difficult to land and quarterly earning targets were missed.

As the Herald’s Chris Keall explained this week: “Things went south as the unexpectedly high cost of moving Orion's systems to the cloud coincided with the healthcare spending winter of the Trump years.

“Orion suffered heavy losses and a cash crunch in the two years before it delisted from the NZX in 2019 as McCrae offered to mop up shares for between $1.18 and $1.26 - or around a sixth of their peak - after a series of grim meetings with investors.”

McCrae restructured Orion and began the hard climb back to profitability. The company recently landed a major deal to build the world’s largest health data exchange in Saudi Arabia.

The last time I caught up with McCrae was late last year and he was furious at the Government’s handling of the procurement process for the National Immunisation Service technology platform. The Government earmarked $38 million for its development. McCrae estimated Orion could do it for a fraction of the cost. Orion clearly had the capabilities to help out on an urgent project in the national interest. But he felt the company was cut out of the loop.

"At Orion Health, we saw first-hand that the Ministry of Health ignored their procurement processes and used false information in their business case to substantiate their rationale for flouting procurement processes," he wrote at the time.

McCrae even complained to the Auditor General who nevertheless declined to investigate. Opinionated, flawed, passionate, pragmatic and a true software innovator, McCrae leaves a great legacy for Orion and the New Zealand tech sector, which he has contributed greatly to over the years. 

Of course, such a larger-than-life entrepreneur isn't sailing into the sunset just yet. He'll keep his hand in product development at Orion as an executive director. His son-in-law Brad Porter, currently an international sales executive at Fisher & Paykel Healthcare, will take Orion forward as chief executive. 


Comments

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Noel Reid 25 July 2022, 5:27 pm

It looks like Govt Agencies' propensity to "buy foreign" for IT solutions, regardless of cost or local capability, is about to be repeated on a massive scale if 3Waters goes ahead.

I wonder whether Ian (now that he's stepping back) has any suggestions about how we overcome this VERY long-standing problem?


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