Copyright 1997 Danialle L. Weaver. All rights reserved. The following article appeared in the October 1997 issue of Business & Technology. For reprint rights, contact the author.

By Danialle Weaver

The restructuring of the nation's $200 billion a year electricity industry is fertile ground for Tampa's Utility Partners, which has positioned itself to help electric and gas utilities take full advantage of a more open, competitive energy market.

One of Florida's fastest-growing privately held companies, Utility Partners will wind up generating about $21 million in revenue this year, a 75 percent increase from 1996. The company's co-founders say they may seek more expansion capital later this year, but are in no hurry to go public. The company is profitable, although its owners declined to disclose numbers.

Since its formation five years ago, Utility Partners has targeted three market niches: mobile computing software for utility vehicle fleet management, software for local gas distribution companies, and general IS consulting for the electric and gas utility industry.

These three areas have become increasingly more important since the passage of federal legislation in 1993. The Energy Policy Act made the first changes to the industry's structure since the Great Depression. Eventually, most energy analysts predict, utilities will be stripped of their geographic monopolies on local electric, gas, water and wastewater services. The prospect of losing their long-term monopolies has prodded the utilities to begin thinking about how they can attract and retain customers in a more deregulated environment.

That's where Utility Partners comes in. The company's flagship product, Mobile UP, essentially lets the home office keep in constant touch with workers in the field. Running on a Sun or IBM workstation at the home office, the software allows utility companies to communicate with their field employees through mobile touch-screen terminals in each vehicle. The product also allows utilities to do something they were never able to do before: set--and keep--appointments for repair work with customers.

Co-founders Tim Reed and Jim Kennedy first came up with the product in the mid-1980s at a predecessor company, Teco Technologies. That company, an affiliate of Tampa Electric's parent company, TECO Energy, was sold to the AGS Computers Division of Nynex in 1989. The two men left Teco Technologies in 1992 and founded Utility Partners, where they resumed refining and improving the software.

In the past few years, the company has added one new product--software for local gas companies to use in selling transporting and managing the fiel--and one new service, general IS consulting.

The company currently has some 30 clients, primarily investor-owned utilities. They include Duke Power, UtiliCorp, PacifiCorp, Central Maine Power, Cinergy, Wisconsin Electric Power, Southwest Gas, Houston Lighting & Power and Northern States Power. Utility Partners is in the process of diversifying its products for other types of utilities, including city-owned utilities, rural co-operatives and other power sellers. The company also is working on products that would be suitable for other markets, including telecommunications companies, taxi services and courier delivery firms.

"We were one of the early adopters of their Field Order and Scheduling System [one of the modules in the Mobile UP suite]," says Ron Baker, information technologies chief for the Jacksonville Electric Authority. "It was obviously a very good decision, because they've been very professional."

Reed says a typical Utility Partners software application for 150 fleet vehicles costs between $400,000 and $500,000 in licensing fees. Services and implementation contracts runup to $700,000. IS consulting fees (excluding hardware) fall into a similar range: $400,000 to $500,000 in licensing fees, and around $700,000 to $800,000 in fees for service. The gas system software costs between $2 million and $4 million.

So it's no surprise that revenues for Utility Partners have grown from $2.5 million the first year to $12 million in 1996. Current projections show $29 million in revenue in 1998.

Yet there is ample room for growth. According to a January 1997 report by UBS Securities, the global market for "field dispatch," which includes utilities of all flavors, along with taxis, delivery services and couriers, could be as high as $2 billion in the near future. Inroads into the telecommunications market--virtulaly untouched today--could represent an additional $1.5 billion opportunity, while the delivery and transportation market could be worth another $20 million a year for the next several years.

Currently, Utility Partners only has one competitor in the mobile utility applications market: MDSI Mobile Data Solutions Inc., a Canadian company with $75 million in revenue last year. n addition to targeting the utility market, MDSI sells to air freight companies, such as DHL and Airborne Express, and to radio taxi dispatched fleets in London, Copenhagen and Singapore. MDSI recently made its first telecommunications market sale, landing an AT&T mobile data contract.

"They're our No. 1 competitor, and in some respects, we enjoy competing with them,: says Jim Dalbey, vice president of MDSI's international division. "They've got the best salesmen we've encountered, and it's difficult to compete with them in that respect."

Dalbey maintains that his company does business with 65 percent of the utilities in the U.S. and claims a 90 percent market share in the mobile data terminals market. Although Dalbey disputes the numbers, Reed says Utility Partners has won 80 percent of its competitions with MDSI in the past two years.

"The IS market is far more competitive, with players such as Oracle, Andersen Consulting, IBM and Price Waterhouse targeting utility companies.

Reed and Kennedy started the company with about $2 million. Reed is a 20-year industry veteran who has presided over information systems projects at Tampa Electric and Diebold, among others. Kennedy, who serves as senior vice president, operations, has more than 14 years experience managing application systems projects for gas and electric utilities and helping them re-engineer their businesses.

Utility Partners has 175 employees in Tampa and Las Vegas and is owned primarily by Reed and Kennedy, although Southwest Gas, who helped fund product development, remains a minority investor.

The company hopes to raise $10 million in a private placement later this year, hitting up other utility "strategic investors" who may need the product themselves, as well as venture capitalists, Reed says. That figure could change, however, "depending upon what we have to give up to Generate that," he adds. An IPO could occur as early as 1999.

"We're in a financial position such that we don't have to go public early," he says. "We think we can go when we're ready, and when we have sustainable revenues and a sustainable track record. If you do that, you get a much more favorable look from Wall Street, and as you go down the road, they're much more positive to you."

https://members.tripod.com/~danialle_weaver/UP1097.HTM 11/26/97

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