AE KALINA CYCLE – Commercial MARKET
AE Kalina Cycle (AEKC) specialises in the production, installation and maintenance of electricity from waste heat. This is an alternate energy solution for factories in the Australian commercial market. AEKC was established in 2000 just outside Wollongong, New South Wales and although a lot of the region is prone to flooding, this idyllic south coast city remains company headquarters today. Company founders, Peter Williams and John Damon, met while studying Business Information Systems and Engineering at Swinburne University of Technology, however a love of surfing took them to southern NSW where they could ride waves the whole year around. Together they developed the technology (AEKC) for alternate energy through use of waste heat produced in bottling factories, petrochemical plants and cement factories. They have extended this technology to using thermal springs as another source of waste heat. The technology uses inverters (to feed electricity back into the main for these factories and plants. A monitoring system continuously tracks performance and efficiency.
Kalina Cycle is a patented technology that requires two patented hardware and software devices (the inverter and the monitor) that are installed alongside the factory electricity meter boxes when customers first buy the technology. AEKC’s unique inverter converts waste water mixed with ammonia into required AC electricity currents at levels of efficiency that cannot be matched by any of the usual energy utility companies. By monitoring usage AEKC can present customers with reports that they can use to optimise their consumption and make cost savings. They can also feed any electricity they create back into the local grid. A connector interfaces with the meter box to feed data, via the Internet, back to AEKC’s data centre. Commercial customers can access reports on any networked device including PC’s, smartphones and tablets. The system reports commercial electricity generation to the electricity supplier that is critical for accurate rebates to be paid from the supplier to the customer. AEKC’s high performing inversion and monitoring solution has made it Australia’s most successful company in its field with a reputation that it needs to be protected.
2. MOBILE SUBBIES AND AN EXPANDING MARKET.
While Peter and John are still the company’s chiefs, by 2005 they had employed six engineers to build and test prototype systems before updating and assembling the final product. Also in 2005, AEKC was incorporated to limit the financial liability of its founders and manage the legal responsibilities of the company, e.g. as this company earns more than 3 million per annum it is bound by the NPP and Australian Privacy legislation. Changes have been swift, components such as the casing, sensors and electronic parts for the final product were initially sourced in Australia, but in 2006 AEKC shifted manufacturing and basic assembly of the system to Guangdong, China. While domestically licensed sub‐ contractors can complete distribution and installation of the technology to customers. AEKC head office continues to manage AEKC’s monitoring and reporting systems centrally, at the AEKC data centre, on behalf of its licensed ‘subbies’ and in addition to charging the ‘subbies’ for their license and products, it also charges a service fee to customers for the reporting system. Peter and John decided early on that they did not wish to develop the installation side of the business but recognised the value in retaining the technological advantage and income stream generated by the AEKC intelligence system. They now focus on research, development and innovation required to grow their network, while AEKC’s pool of trusted contractors are instrumental in growing the business by bringing in new customers. Increasingly the ‘subbies’ are accessing AEKC head office from the field on a range of BYOD mobile technologies.
All AEKC products are built to diligently comply with relevant Australian standards. AEKCs continuous product innovation requires time and energy to meet the requirements of communicating, testing and monitoring quality control for accreditation across standards for alternate energy and it has become proficient in meeting the rigorous demands of reporting by incorporating document management that allows for the reuse of document templates into its enterprise solutions. Competition in the alternate energy space is fierce and, while so far AEKCs has kept ahead of the game, its long term competitive advantage rests on maintaining documents in AEKCs custom made enterprise system, enterAEKC; protecting patented designs; and ensuring a stable uninterrupted revenue stream. To this day, John Damon keeps the original designs for AEKC’s technology in prideof‐ place, in a wooden filing cabinet at his home office.
Between 2007 and 2015 the company has added a full suite of products for installation into apartment buildings based on a new generation wireless technologies. Increasingly, they are working with major construction companies who are installing their systems into apartment complexes as they are built, requiring AEKC to work with, manage and store architectural designs and plans that are often highly confidential. The experience Peter and John gained in the early years has provided them with a good knowledge base about smart, environmental friendly alternate energy monitoring systems and although nowadays the two founders spend very little time on system infrastructure the demands they can make on behalf of prestige clients can still override the opinions of their Board, design engineers and business managers. They see their network of licensed sub‐contractors as the core to a revenue model that allows them to develop new product offerings in a domestic market. Their CFO, however, would prefer a more aggressive market stance of lowering costs to sell to an international market. So far, AEKC has avoided this strategy.
3. IS/IT INFRASTRUCTURE.
AEKC is sourcing components from around the world. Most of the underlying electronic components are standardised and ordered from large online catalogues (containing product descriptions, detailed specifications ‐ tolerances, test data details and so on) and shipped to Guangdong for assembly. Setting up the supply chain for manufacturing and assembly in China hasn't been easy and most orders are still managed by email. When a special component design is required (such as wifi components for Wi‐Fi stations in an apartment complex) technical specifications are couriered to a few selected suppliers so that they can tender for the work and send samples to AEKC. The samples are tested for quality and tolerance before AEKCs Chief Engineer, Alwyn Burn, selects each supplier. Once a supplier is selected, purchase orders are emailed through, along with instructions for delivery to the Guangdong assembler.
All operational records associated with the exchange are maintained in enterAEKC. While this business process seems to work, maintaining the information trail, of important documents, sub‐contractors, contracts, suppliers, customers, orders, invoices and receipts is placing a significant administrative burden on the system. A Wollongong‐based software company built AEKC’s enterprise system, enterAEKC, almost 15 years ago, but the company no longer exists. Keeping up with changing business demands has required AEKC’s IT department to develop “patches, extensions and workarounds” just to keep enterAEKC running. Rapid development means detailed documentation about the system was put to one side and changes made to the system have been dependent on a dedicated Database Administrator and programmer to keep it operating. enterAEKC is becoming a problem for the business, the Accounts reconciliation officer responsible for banking, Tracy Bell, exports and converts data daily, in CSV format, so that she can reconcile accounts and complete banking from ledgers on her own desktop. While she has been asked not to do this work from her laptop, her busy schedule sometimes demands this. Complicating matters, it is not possible to share customer transaction records between enterAEKC and the data centre in real‐time, instead this customer information is processed in a nightly batch process. While AEKC has established a secure extranet and VPN for its sub‐contractors, agents and suppliers that allows them to communicate billing and procurement records, IT is constantly having to undertake additional work and activate new scripts for processing the information received through the ‘partner portal’ just so it can be included in the enterprise system. The problems with enterAEKC have been flagged with the Board of Directors, however they are somewhat ignorant about enterprise systems and see the problem principally as an “IT issue.” They “just want it fixed”, Without an IS/IT manager reporting directly to the Board they remain unaware of any broader implications, issues or opportunities in this space. Recently, their attention has been focussed on the company’s new state‐of ‐the‐art data centre.
4. NEW PRODUCTS AND SERVICES.
At the beginning of this year, AEKC decommissioned its original customer data management servers and opened a new AEKC Data Warehouse on the outskirts of Wollongong that will serve as a platform for new products and services.
aeKC Data Warehouse:
The data warehouse has taken over data management for the aeKC customer monitoring and reporting system and is being prepared to support and drive multiple aspects of the company’s future directions. The amount of data that is exchanged and shared about customer energy generation and use via aeKC has grown exponentially over the last 15 years and maintenance of the reporting system for customers have remained a core activity of the business. For customers, the data warehouse promises faster real‐time processing of their accounts and user friendly reports about energy consumption with a dynamic reporting interface that allows them to undertake analysis and forecasting of use on multiple devices and through their social media accounts, including Facebook and Twitter. In addition to extending the operating capacity of aeKC (itself a major revenue stream for AEKC), the resource presents a significant opportunity for ‘big data analysis’ that will support business intelligence and, at this stage; it is an opportunity that cannot be matched by AEKCs competitors. AEKC is exploring licensing options for the resale of its data to government, alternate energy suppliers and other interested businesses both domestically and internationally. However much of this will depend on the centres capacity to interact securely with customers over Wi‐Fi and mobile networks. To support this the centre has implemented a continuous uninterruptible power supply and its own continuous backup facility. It is linked to the outside with high‐speed broadband connections.
Over the last 5 years AEKC has committed a significant amount of research to the development of domestic battery storage of alternate energy that has resulted in the 2016 release of powerAEKC. powerAEKC combines lithium battery technology (for heat generated household electricity) with an intelligence system that allows customers to control their supply mix and minimise their reliance on suppliers by using the alternate energy they have stored. With similar lithium power solutions now rushing to market, AEKC has been quick to realise that its advantage resides with its benchmark intelligence system and it has developed powerAEKC to allow customers to act on real time information in new ways (e.g. home usage patterns, stored power level, consumer trends and energy prices) and optimise their cost. While powerAEKC is currently on trial with a small number of customers, the Board has flagged this system as the inevitable replacement for the original AEKC inverter and monitoring platform and, as such, the security of this new alternate energy and customer information platform is integral to the company’s future.
The Data Centre is just one of several new initiatives AEKC is now exploring while facing a failing enterprise system. The company’s Human Resource manager, Debbie Reynolds, has commenced looking at cloud technology and Software as a Service (SaaS) to support the HR function. She has initiated discussions with Workday, a US based SaaS provider that has been recommended to her by a colleague in the HR profession. Ultimately, her intention is to seek funding from the CFO for the purchase of a SaaS based Human Resource Management solution. While her initial planning has raised concerns about Workday’s servers being located offshore in the USA, she considers the functionality the service will provide as more important than concerns about storing HR data offshore. She really cannot see that it matters where the data is stored. Debbie has found an ally in the Customer Service Manager for AEKC, Mark Seeker. When Mark became aware of the HR manager’s intention to adopt SaaS for HR, he, too, started to think about getting approval from the CFO to adopt Salesforce.com’s Customer Relationship Management (CRM) system. A recent partnership between
Salesforce.com and Workday is beginning to make this SasS solution look like an attractive way of integrating several core business functions (HR and Customer Service). Mark has been frustrated by the development of the new AEKC Data Centre which has proceeded without any policy established to define the relationship between its operations and the Customer Service team’s role in managing customer relations throughout the customer relationship lifecycle.
Despite some of the internal issues between the departments, the management of AEKC shares the same vision when it comes to the importance of its information and the company has recently adopted a good enterprise data backup strategy. All corporate data (which is vast at AEKC, as it comprises operational data from multiple countries, transactional data from partners including manufacturers, suppliers, distributors, installers; customers under license with the installers and subscribers to the AEKC reporting systems; project data; design specifications, logistics and supply chain data) is done on a monthly basis. A small specialist company, located in Nowra (a small town near Wollongong) provides the data backup service. The company is owned by a close and trusted friend of Paul and although it is a relatively new company, so far it has made good on its promise to provide an "excellent and reliable service to secure all corporate data and information" and "provide cost effective solutions to corporate data backup and restoration". The company has immaculate offices and presents an impressive looking backup facility as per the information provided in their web page, and (per its website) it has a significant bandwidth leased from an ISP that ensures all backup processes can be performed offsite.
5. OF IMMINENT CONCERN.
Business prospects seem healthy for AEKC, yet it is easy to see that the corporate culture of this south coast company is not what its two surf‐loving founders first imagined. Several incidents in the past few months are compounding the already existing tensions and operational issues that surround the overburdened and aging enterprise system. Recently, employees who have been with the company for its first 15 years, including its Chief Engineer have left and a lot of corporate know‐how has departed with them. Nobody is sure why Alwyn Burn chose the suppliers that he did, but a recent review suggests that it may not have been based solely on the competitive tender process. Other departing employees seem jaded following the pressures of the past few years. Between 2013‐2016, there has been a substantial rise in the number of viruses detected in email attachments scanned by the IT department and IT recently identified a targeted phishing attack designed to convince finance personnel to release account details to an unknown party. After careful examination of the emails it’s clear that this was the result of a scam designed to access corporate account details, but by whom? Paul is concerned that corporate espionage or company fraud may be just as real a threat at AEKC as the malicious activity of organised criminal hackers outside of the company. Even the weather is affecting the mood. Rain on the NSW south coast over the past 2 months has been interminable and surf conditions have been appalling. There are concerns that the Shoalhaven River may eventually peak at levels higher than the last recorded 100‐year flood.
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