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Datamatic Seeks Beachhead in Meter Data Collection

September 2004 Energy & Utilities

Datamatic seeks a beachhead in Commercial and Industrial (C&I) interval meter data collection and processing with CommSTAR, a product focused on matching industry trends. Will this one-product market be receptive to their entry?

We investigate the CommSTAR solution (www.datamatic.com) and the resulting prospects for successful market entry in this highly specialized market.

Background

In the 1980’s, the first generation meter data collection and processing application was launched with tremendous success. At that time, each meter manufacturer had a proprietary application for the collection of commercial and industrial (C&I) meter data. This created an IT nightmare for those utilities that wanted to utilize multiple manufacturers’ meters. When the first generation meter data collection application was introduced as an independent solution, it allowed for meter independence in collection and processing C&I meter data through a single multi-vendor application. Many utilities quickly adapted it as a means to increase productivity and reduce barriers to switching in selecting a C&I meter.

Much has changed in the 20 years since the introduction of the independent meter data collection application yet no competitor has chosen to enter this field until recently. While maintaining manufacturer independence in the collection of C&I meter data remains a key value point, other issues have risen in priority. Technological and functional trends may have created a demand for a new approach. Datamatic is seizing this opportunity and opening the market to competition.

Technological Shifts

When it was launched, meter data collection was a standalone application that communicated with C&I meters through modem/dial-up and data-download protocols. Since then, communication technology has evolved. Technology improvements in databases and data communications have an impact on this application and support the development of an opportunity for the introduction of a competing solution.

Access to meter data through custom export programs was considered an acceptable solution in the 80’s. Billing and load research applications worked fine with meter data fed to them on a periodic basis. However, the overall business trend over the past 20 years towards real-time operations coupled with the adoption by utilities of demand-response programs necessitate data access to meter reads on-demand. Industry standard ODBC compliant databases allow applications to pull data from the database at anytime. When constructing their solution, Datamatic built CommSTAR on SQL Server or Oracle database in contrast to the historic solution which requires an additional module for ODBC interfaces.

Also, communication with C&I meters was primarily conducted through downloading handheld meter reads or modem/dial-up connections in the past. Data communication with meters has shifted towards TCP/IP and data packet protocols. Again, Datamatic built CommSTAR to include TCP/IP communication protocols as part their base application in contrast to the historic solution which requires the purchase of an additional module.

Functional Shifts

Coupled with the shifts in technology, other applications have chipped away at the function of the meter data collection and processing application. The result is a repositioning of the system from performing multiple business functions towards a point solution that provides a common interface for meter data communication and data integrity validation.

For instance, totalization was, at onetime, a key component to meter data collection applications for billing purposes. However, billing applications and meter data management systems have evolved to include the ability to aggregate loads across service points in computing bill factor components. Likewise, load forecasting can be separated from the meter data collection engine into its own application which relies upon specialized statistical techniques. Even regional data validation rules, such as those associated with ERCOT or California, can be encapsulated into other applications to provide the accurate estimation of profile data.

In summary, while the historic meter data collection application continues to provide these functions, either in their base product or through additional modules, Datamatic took a streamline approach when developing CommSTAR.

Price/Performance Competition

CommSTAR is on rough parity with the historic solution in supporting full meter manufacture independence, but it clearly has chosen to incorporate a different set of features in its base product. To help them reach the right position on the price/performance frontier, Datamatic elected to price CommSTAR aggressively against the historic market solution. What is more interesting is their pricing mechanism.

CommSTAR’s pricing mechanism relies on the number of service points alone while the historic market solution has a pricing mechanism that depends upon the number of service points, concurrent users, and selection of additional modules. By including features in the base product that technology and functional trends demand but leaving out those that are provided by other applications, Datamatic is hoping that it has placed its product in the right position on the price/performance frontier.

But Is It Enough?

Will these ingredients enable Datamatic to enter the market, much less displace the market leader?

Going against Datamatic is the established install base of the historic competitor and the tendency of utility customers to be averse to change. In an effort to accommodate these competitive factors, Datamatic’s strategy is to position the CommSTAR product as a “data collection engine” rather than an all encompassing data mining/management system. Shawn Fields, Director of Market Development at Datamatic, says their ability to provide a multi-vendor data collection application will now offer utilities a choice when considering their future C&I data collection strategies.

The market receptivity to investigating CommSTAR may be dismissed as a curiosity factor, but it probably shouldn’t. As markets mature, different customers seek different solutions and product variety usually proliferates. The small size of the market for multi-vendor meter data communication applications has probably discouraged many entrepreneurs from entry. After 20 years of penetration, the market might be large enough to support two competitors and customers might just be receptive to a new approach. Entrepreneurs can upset even the most established markets when focused on responding to customer needs.



About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

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