Navman co-founder reveals how a big tech bet in New Zealand is now generating 2,800% revenue growth and could be bigger than Navman

Navman co-founder reveals how a big tech bet in New Zealand is now generating 2,800% revenue growth and could be bigger than Navman

By Andrew Patterson

Road Users Charges (RUCs) are a fact of life for vehicle fleet operators, something that most private motorists don’t have to put up with or even worry about.

So just imagine the headache that creates for businesses with large trucking operations needing to keep track of multiple vehicle records in order to ensure they have paid, but not over paid, the necessary charges to the government’s roading administrator, the New Zealand Transport Agency (NZTA).

Around a billion dollars is collected annually in road user charges, of which an estimated 70% comes from heavy transport, making it a significant cost of doing business. What’s more, these payments are required to be made to NZTA in advance.

Getting it wrong can be very costly with expensive fines for non-compliance. A technology solution beckoned.

Auckland based tech company EROAD has completely revolutionised the whole process saving both time and money for users.

In 2009, they created the world’s first nation-wide GPS/cellular based road user charges management system for transport companies.

Using a fully integrated platform, the systems in-vehicle hardware automatically collects all the necessary data from each vehicle and the operator uses a web-based service and payment gateway to manage and pay the appropriate charges online.

Once completed, this information is immediately displayed electronically on the dashboard monitor screen in each vehicle eliminating the need for paper licences and enabling easy verification by enforcement officials.

Steven Newman, former chief executive and co-founder of Navman, one of this country’s most successful technology start-ups, joined EROAD in 2007 as CEO when it was still in its infancy.

He believes the opportunities for EROAD in the future are immense.

Opportunity in the cloud

“Instead of being a paper based system, it’s now all the cloud. We have a distance recorder which measures the actual distances travelled by the vehicle electronically," Newman said.

That sounds simple enough, but you need to be measuring those distances very accurately.

Many companies running manual systems end up over paying in order to ensure they remain compliant, which hurts profits.

“To make sure you’re not non-compliant, transport companies are often buying much larger licences than necessary which means a lot of capital is tied up in the pre-purchase of road user charges. These charges, for NZ operators, are generally in the top four of their biggest costs. If you get it wrong it can get extremely expensive," he said.

What a customer thinks

Vanessa Milham, Managing Director at AOne Movers in Auckland, which operates a fleet of nine vehicles, has become a convert.

“It makes compliance a doddle. Instead of relying on drivers to tell you accurately how many kilometres they’ve travelled that’s a task they simply don’t do anymore. To be honest, I don’t know how people run a transport business these days without it," Milham said.

"Another advantage for us is that BP, our fuel supplier, passes on all our fuel card data to EROAD which then combines that information with the distances travelled by each truck and we can get very accurate information which enables us to run our business more efficiently," she said.

Not only does it improve efficiency but the system creates other tangible benefits including being able to closely monitor driver’s travelling speeds which in turn can lead to lower insurance premiums

Enormous export potential

EROAD was founded by Brian Michie, an infrastructure economist in 2000. These days he’s responsible for growing for global business development and is currently working on establishing a permanent presencefor the company in the U.S. market.

The export potential is immense according to Steven Newman.

“If I compare this back to my days at Navman this opportunity eclipses any one of the opportunities that we had in that space. Global problems around congestion, infrastructure management, funding and emissions mean that internationally, road user charges are inevitable. Quite simply, the existing mechanisms for funding and managing roads are fundamentally broken," Newman said.

Currently the company collects around 15% of heavy transport RUCs electronically, but expects to get to around 25% in the near future.

“The business is cash flow positive and we’re spending about two thirds of revenue on further product development. Just this month we clocked up a new record of NZ$100 million having been collected in road user charges for NZTA.”

However, when it comes to those moments during the start-up phase that might have resulted in sleep loss, EROAD’s CEO is unequivocal.

A massive R&D bet

“I think spending a lot of R&D money without any revenue coming in certainly makes you lose a lot of sleep and of course you’re on a promise from shareholders to deliver something great and we’ve done that. From a New Zealand perspective this is one of the bigger technology bets around. We had about 45 engineers and developers working on the project for two and half years before we went to market,”

EROAD's success was recognised in both the most innovative product and service categories at the 2010 New Zealand Hi-Tech Awards, but the company isn’t resting on its laurels.

“Our percentage growth in the last 24 months has been 2800 per cent," he said.

Currently the company has 32 staff, but is looking to grow by another 50% in the next year.

However, like many high growth technology companies, getting qualified staff is a big issue, something the company has overcome with an incentive of its own.

Employee ownership and staff retention

The staff themselves own 80% of the company.

“The only way to build a technology company quickly is the 100% retention of quality staff. The employee share purchase scheme that we put in place has been a key part in retaining and also attracting staff and definitely share holder ownership by employees is a very important part of our future,” Newman said.

"We are fighting for a scarce resource, but I think we have an exciting story to tell and an exciting future ahead of us and that helps us a lot.”


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...... or we could just dump the stupid road user charges .... as they are an impost upon many businesses .....and the cost eventually flows onto the customer ( average Joe & Joanna Kiwi ) anyway ...
Just to keep it simple , silly !

Or simply add excise directly to diesel, no compliance and no dodging....  NB what about domestic/private use diesels (cars/SUVs) would then also be duty free under we wouldnt want a loop hole / dodge there....

What about industries like Forestry? They mostly export and hence they would be using the roads for free despite the fact that large trucks destroy roads very quickly. RUC are essential in my opinion. I am a fan of user pays though...

Exactly Gummy Bear Hero - dump RUC. It is nothing but revenue gathering exercise that business has to withstand the cost of. 
And as for the comment below by Steven, an excise tax is a silly concept as many motors run on diesel that aren't on the road.

and offload the cost of maintaing the roads to?
Someone else.
Some of us are less selfish in our outlooks.

Its Ok he's a libertarian so a non-event in voting terms...cant even get 10% of destiny church....that should say it all.
Though actually I think user pays is or should be the future for roads...  most ppl wont have cars so excise duty isnt workable and paying via rates seems unfair and lets face it there wont be the petrol use en mass there is now...  I fully expect to have exited personal fossil fueled transprt inside 10 ten years and indeed many NZers as well.
The electronic gear above could be used to charge per km for the "rich" get to pay for the roads they want....something like $5 per km I suspect... 

Revenue gathering, yes a Govn gathers revenue and then spends it, on say roads. Businesses use roads, funny that. Someone, simple, somewhere has to pay for the roads, get over it.
Actually an excise tax is an alternative and its how its done in the UK and I think the EU.....I didnt say it was better btw though personally I'd rather pay that way.  How the UK handles off road use is by dyeing the off road fuel red.....and you get fined huge amounts if caught with red diesel on the road.

Steven we all use goods and services everyday that are freighted on roads. If we want these goods and services at our disposal then shouldn't we all pay equally.  Perhaps car owners and pedestrians aren't paying their fair share, after all car owners/pedestrians consume goods and services everyday. The roads are there for efficient tranportation and the benefit of the final consumer.
There is a huge cost in both time and money in keeping compliant with RUC that business has to wear that is unproductive.
Placing special taxes on certain industries to fund infrastructure needs addressing. Every time a Govt can't fund something they find a way to implement some form of payment to cover the cost. These funding regimes have paperwork and payments attached that the few are required to complete for the benefit of all. 
The trouble with this country is that most people are not aware of the compliance costs to business and small business in particular is badly affected by the compliance costs. Medium to large business by size is able to spread the compliance costs across the board.
Small business by comparison ends up with the owner operators fulfilling the obligations by way of their free labour and usually after-hours. So small business owners end up subsidising all consumers!  The real cost of delivering the goods and services to consumers is disguised by the free labour component involved in compliance.
It appears many farmers do not claim their RUC back for vehicles on gravel roads or on the farm as the paperwork involved for compliance is inefficient. So these non-claiming farmers are also subsidising the true cost of roading infrastructure in NZ.
The constant argument that has been applied is the one that trucks do all the road damage so therefore should be paying is completely rediculous and outdated. The final consumer is the one who has the benefit and so therefore should be the one who pays. The final consumer who enjoys imported goods also needs to realise that the country needs someone to be exporting goods so exporters are actually subsidising the final consumer again.

The export potential is immense according to Steven Newman.
Excellent! But don't stop at the potential, make it happen.

I'm pretty sure that's already happening. But we'll check

When traveliing in unmettaled roads; claim the RUC back ; cus you can (allegedly).
Disclaimer, Disclaimer; sorry JK ;)

"off road", yes.....I assume that this means driving your tractor/SUV on your farm land.....Im not aware that un-metalled counts as "off road"?
Though if its on private land for long periods I'd just disconnect the speedo.....

This is the road to economic freedom - forget housing and single digit returns.  But do note how hard he works ...

Since we are on investments and their potential, you might also want to take a look at this.  Only 400 + shareholders - and yes I'm one. EROAD is great and all great ideas take time and money to bring to fruition. GYSN seems to be following a similar path.
Some DD

Cheers OMG I'll be sure to have a good look over the weekend.

sounds just right to be picked off by an overseas company like so many before

Navman was, possibly the exit strategy is a spin off, incermental development from SPEDA, NAVMAN and now this...many R&D coys like this in NZ. They need the right networks to take it any further...internationally... finance, marketing  and distribution channels.

The new road to riches, helping governments collect taxes. Gotta be a winner.

Wish I could give you ten ..A.J......we'll call them the New Centurians,...rendering unto Caesar.!!
Have no doubts Thomas.....check out my holes.

Maybe I am particularly thick, (I do have a bad cold right now), but can somebody explain why road user charges are so much better than fuel taxes?

I am particularly thick ( no cold to call upon as a lame excuse ) but the idea of giving fuel tax rebates on the one hand , then clawing it back with road user taxes on the other .......
...... that suggests to me that this little scheme may have been established by a politician , or two ...

Yes you are.

Swings and roundabouts....the problem to meet is off highway use, boats, or using the fuel for heating or generation....

Hmm... thanks steven. What are the odds that RUCs will be outlawed under a TPP on the basis that they are a subsidy for primary industry? Although I have come across differential duties in other countries, combined with dyes to avoid say, tractor fuel being used in cars.

Looks to be a good idea. But if the gov deceides to change things, such as wiping user charges and using a different way to bill for it, then this technology could become obsolete. I think it is a bit dangerous to pin an idea on government rules, when the rules can be changed at anytime. Does it have any other possible uses though?

Im assuming there is an overseas market? Also in London I think there are traffic conjestion charges, this system could handle that as well I suspect....also general road or bridge tolls....

All a bit of a twilight industry surely?

Yes in terms of scale...It costs me $100 to fill my tank now (-35cents this week! so much for amanda's 6cents)....fortunately thats 5~6 weeks worth of driving.  Others I know spend that and more per week to where is the snapping point for that commuter, $3 a litre? Look at the effects of that, all the expensive city parking at $14 a day.....bye bye.....garages? oh dear...repcos? oh lots? oh dear. The funny thing is my worry is, will I be able to get on my public transport to get to work....mostly though I will be able to telecommute it might be the only practical way in the future....saves 2 hours a day and public transport fares.....
However....I cant see how you wont make your money back within a few years.   So the "rich" will be driving SUVs on metalled roads paying dollars per km...I wonder how user pays will fel to them's will be pieces of historic flat roads for them.

You'll be glad to telecommute cause you will be able to spend more time here ;-)

Actually the ruc system is changing in August.

The cost ends up with the public in the long run..which vehicles are causing the most damage?...which roads cost the most?....who escapes paying a fair share?....are road repairs good value?...
Seems to me the RUC system is pretty good if 100% of the revenue is going on the roads etc and there is a real effort to use the revenue in an efficient manner.
I factor in the tax as an extra 40 cents a litre on I drive to save fuel....and let the idiots past
By the way...tourist bikers pay nout...they use the signs..the bridges...the tunnels.....and the roads.....????

I assume the electronic system could also be used to target those that do the most damage. For instance if an areas trees mature and we see say 2 or 3 years of logging trucks and then the roads noticably worsen then its reasonable to increase loggin trucks charges and decrease others......
I drive at 90~95....interestingly when I "enforced" that on myself about 4 years back I used to notice that many ppl passed me by, these days its actually feels more like Im the norm...I also notice the big fords and GMs doing 90 as common as well.

Ah so your one of those dead-sh*ts doing 90-95, pissing off everyone who is trying to do 100?

I am not...I keep a steady 70kph and let the mob pass me by..most seem to wave a thankyou as they do so..

To start with motorways have 2 lanes, and 2nd I pull over as and when, obviously as a redneck you have not come across common courtsey.....

If you can't drive at the posted limit in good conditions you shouldn't be driving.

Cant is different to dont want to....I could but I dont need to,  I'd rather save petrol, co2 and money, simple.

Robby217 - absolute nonsense. I bet you think the economic opportunities are unlimited too.
I am quite capable of driving at 100k, but for the last few years, have limited myself to 90 where possible (two lanes, no traffic behind).
The saving in fuel, wear and maintenance is quite amazing.

pdk, that is nonsense. Besides there are few areas in your region that have two lanes that aren't hilly, which would cause far more wear/tear than the difference between 100kph and 90kph.
I'm sure if you drove at 0 your wear and maintenance stats would be even better.

Like duh....."0" that is correct...hence Ive cut my car use by 50%+, offers the biggest savings of all....not to use it.
tis simple, its reasonable and lawful to drive at 90kmh.....and I make sure I keep out of ppls way.
What I have seen, is more and more ppl are joining me in the inner lane at 90kmh.....

road wear is all to do with weight carried.
Bikes don't wear roads.
Bridges?  Fair comment - a social good. Signs? Bikes wouldn't need them sans vehicles.
At the end of the day, transportation is the thing about to undertake the biggest change. Best described as 'reduction'.
And the 'business' being discussed, is merely an efficiency. They will all be pursued, but the goal-posts will recede faster than we can kick.
on yer bike, Wally         :)

Hehe...I was just asking the Q....anyway who said it was about wear and tear....that's cobblers.

Seeing your comment is stating the obvious, here is one more:
Bicycles also move bugger all stuff unless you have all day to do anything.

"bugger all stuff"...oh well I guess a hundred million Chinese peasants are bums up on a bike 24 hours a day....that's a heap of 'stuff' robby

Well if you can afford to hire a hundred million Chinese peasants by all means trade in your vehicle.

I never 'trade in' robby...I use them up..wear them old socks...only when they splutter and fert do I buy me another.
There are good reasons why the rebuilt chch should boost bikes in the inner city and boot out the cars....this is the one chance they will ever get....and they will stuff it up big time....
There are now more than 120 million E Bikes in use in China.....!

uh the chinese buy them themselves....I looked at one but it was a chinese crappy thing (didnt look well made) and $7.5kNZD v a 125cc yamaha at $3.25kNZD......potty...especially as they are cheap in china.

Yet another example of locals being ripped off by importers.  As of two years ago, when I was in Europe, you could buy for NZ$5K a decent electric bike, by a big brand name.  No low quality junk.
The motorbike is still cheaper though, at least to purchase.

Yeah I'd love to have one, but too expensive at present....but I think yamaha/suzuki/honda have plans this year or which point I will take a serious look, the imports from china are not impressive and obscene money.

Use your noggin steven..make one. How hard can it be. One modern 12v motor with rubber belt driving the rear wheel...centre bar rebuilt to hold 32 size B rechargable batteries...and a wee control unit....vroom

Probably want 4 x 12v to give 48volt, need 3kw for the motor....beyond that there are a lot of is essential to improve the range.....weight, need li-ion batteries...etc....
"centre bar" its interesting looking at some of the high power electric bikes that still have a false petrol tank.......I dont see why we cant actually start with a new design/layout from scratch...
"32 size B rechargable batteries" you can already buy a makita site bike that uses 2 x 3ah batteries (36v?)......trouble is those batteries are $700....
The ryobi ones are cheaper, and there are some third party ones about but still.

Electric bikes are kind of an interest of mine, as are regular bikes.
48V is ideal but most run on 24V or 36V.  A hub motor can be good for over 1kW, but most are rated at 250W or so which is enough to zip along at 30kph on an upright bike.  Re-generation is still problematic and you can still do well (and keep it simple) without it.  Lead acid batteries work fine and are cheap.  Batteries are the expensive and difficult part of the whole setup if you want lithium ion as there are serious shipping restrictions on this type of battery.  Some bikes have the frame shaped to hide the batteries - quite clever.  Using battery packs from drills etc. while initially a great idea sadly works out way too expensive.  You need to buy bare cells if you go lithium ion, and the limiting factor is the rate which you can drain them - so you end up needing quite large ones.  Figure on a few hundred dollars for a lithium ion battery pack for a bicycle at present costs.

48mph....2 wheel powered....way neat stuff...
1kw hubs, yes hence I wondered about a trike 2 or 3kw.....or a quad, 2 or 4kw....
Drill packs, yeah makita were offering a bike at a low price (
<$500?) until you consider you needed 2 batteries and two chargers, minimum bye bye $700+.....just silly...though there are some 3rd party chinese replacements at 1/3rd the cost....but you are right they are not practical....

Fairly sure the hubs are not weather tight (air cooled?)....I would assume that a farm bike is going to be going through water and other messy things...and at low speeds, high loads....than normal for a street bike....which might see a water splash, occasionally.....

I assume deep discharge lead acid batteries....
While looking at that, I came across,
Golf cart: 2-7 years
Those same batteries are rated at less than 5 years if cycled to 50%. For example, most golf cart batteries are rated for about 550 cycles to 50% discharge - which equates to about 2 years. Battery life is directly related to how deep the battery is cycled each time. If a battery is discharged to 50% every day, it will last about twice as long as if it is cycled to 80% DOD. If cycled only 10% DOD, it will last about 5 times as long as one cycled to 50%.
I wonder how much a second hand golf cart would be....its the right size?.....suspension would need modding I assume....more clearance....
or maybe,
a hunting cart....
cool stuff....

No gears....cant see the need, you have the torque very low down and over a huge rpm bandwidth.....not aware that any ev bike has changable gearing...?
The problem for us is we have expectations that are way in excess of a developing world person.....for them an electric scooter is a huge step up....we see it as a huge step down......funny that....
However I think there will be a sea of is too cheap, once it gets expensive and we have to start making choices then that will cause a change....I's love a 3kw electric scooter, 15mins to work, cheap to run, independnat of petrol availability.....brilliant.....IMHO.
The mechanical engineering I'd not baulk at, (welding, machining, is "easy" etc) my problem is the electrics/electronics, sadly not my strong suit...
Though Im thinking on getting one of these to have a play with, $35NZD...if nothing else it would be a cheap NAS....(network storage)
I wonder if such a  unit could be the bike's brains.....

I'll admit Im long out of practice on machining (lathe etc), but that just means I'd be slow, I still have all my mics etc stored in wd40'd paper and bagged.......welding, well mostly arc welding for the chassis would be OK.....TIG or MIG are a bit fancy, but I actually have a TIG set...
I would assume getting the cows in would be via a quad?  most farmers seem to use them....I would have also thought making a EV from that as a starting point would be better than a bike....if I was going to make a small ev that would be my starting design point ie a trike or quad chassis......bikes are different beasts. An electric ev on a farm would mean no petrol and low maintenance, good attributes for a use "far" from town.....of course unless you can generate your own power.....ho many aspects interlink/lock.  Also EVs batteries dont like the cold, or summer heat....a farm quad would be pretty exposed to the elements I would assume.
Im not aware of any electric bikes that have gears....they all seem to be single speed...
The R-Pi interested me as a way to cheaply monitor and control my  house (also a NAS /video streamer device)....I was thinking of it on a bike as a way to collect data to assess its effectiveness.
1/4 cost, I can believe that....Ive priced a 125cc moped v a 2.5/3kw one and its $3250 v $7500....and the petrol one was a suzuki one v a no name chinese of pathy quality and seriously needs to get better.....a premium for an equal quality product well OK, for something that looks like cheap junk, not OK.

IMO forget the Raspberry Pi.  There are hub kits available now for bicycles which include the controller, charger, and everything you need.  Buy a kit and learn how it works, then build a better one if you feel the desire. ... Yeah there is a 300 or 350W (?) limit above which you need to register it but how they police that I don't know.  It WILL become an issue however as these things become more popular.  Also in some countries you are not allowed electric only, but are required to have electric assist.  I think some places also dictate that the assist drops to zero above a certain speed.

Really...they can barely afford rent and food...why?

Cos they just put 80ltrs of gas in the old v8 Holden and brought a doz JD rtd's and a pack of rolleys.
Costing $240 but in doing so, kindly giving in total around $130 to the taxman

Well at least the $130 will be sent back through the system to fund the next lot of failures on their trip to buy petrol beer fags and lotto tickets!
Where are you Annette King when so many failures need you....these are your bread and butter voters Annette....? They can barely afford the rent and the food.....why didn't you and Helen solve this had 9 years to do so Annette!

She's planning how to make their lives easier....make her a face book friend and just watch!   (NB prepare puke bag before hand)....while I can aplaud their concern for their fellows, really its like over-feeding a beloved pet....its bad for it.....
It comes back to lack of vision and consquences IMHO.......HC and Co had the warnings (from RB etc) and time to fix the property bubble, they ignored that, it would have cost votes and Govn income...cant have that can we....
Note though Wolly that National or Brash would have been no better...
"so many failures"  but how many ppl are really not failures in one shape or form?  how many ppl have the good luck to sail though life and others get defeated at every turn?
Maybe we expect too much from humans and indeed others but cant look at our own inadequacy?  maybe we have made life so complex that a decent % cannot now cope what so ever? Eg Occasionally I meet ppl on public transport and I think OMG....who in their right mind would employ them....maybe its better for most of us that they get some $ and are left out of our way.........forcing them into the system could actually cause more damage and cost....

"Barely afford" well "we" drive a car each, $20k? bought on HP I bet (so the real cost is what? +5k?) and 2 or 3 car families seem the norm.....Chinese, a scooter each, $2k......ten times cheaper........fuel....20 times cheaper?  bought with cash probably.....
Also and the big thing how much personal debt does a chinese carry? bet its fact I wouldnt be surprised if most chinese are cash rich.  They also dont have lots of toys.....a typical chinese wants a fridge for god's sake.....we'd like one the size of a bus and a chilled water dispenser just has to be built in which we pay for and wont use much.....(when I went to buy one it was almost impossible not to get a water dispenser fitted model)......that was a $500~600 add on btw.....value add? yeah right....
The interesting thing is a lot of chinese can still get to work if (when) there is a fuel shortage, NZers? westerm world? no we are screwed....everyone needs $100 a week in least if my office is typical....and then the HP on 2 tonnes of car........

But don’t forget the electric scooters they have over there too. Even cheaper to run. Also they extended family’s all living together. So children are looked after by the grandparents, while the parents work. No expensive daycare and also no govt funded pensions required!
Must be more sustainable than what happens over here.


I Was working on an average cost assumption....both my ones are worth <$3k I would think.....but I appear to be the rag and bone man of the street....

There was plenty of demand for a cycle friendly rebuild in the feedback I saw at the rebuild Christchurch convention.  The subsequent proposed city plan that was sent out to residents also included streets designed to be cycle friendly.  It looked good to me.
Sadly, I see it now.  All the good ideas will be deemed too difficult, radical or expensive.  The only change we'll likely see is the reduced speed limit to 30kph in central city streets.

There you go all you socialists..the verdict is succeeded in creating a feral class of useless gobs to feed..each one entitled to one vote...a vote you bought promising to hand out other peoples money to....and now the system is so stuffed with benefits and political pork that without a torrent of credit and parasitic BS streaming through an advertising dollar chasing poodle media...the whole stinking corruption would collapse in on itself...what a shame it aint collapsing in on you lot and I mean all of you...Key and mob included.
All hail to the mighty socialist sickness for the French have opted to go whole hog in a rush to catch the piigs...harrrrrrrrrrrhahahahaaaahaaaa.

....... I just gave you my " thumbs up " Wolly , then realised that you wouldn't want the vote from a feral underclass useless gob-shite such as moi .....sorry !
If Treasury forecasts are correct , and the economy grows , then Wild Bill ( who believes in Grimm fairy tales ) will have the extra money to suck from the system , to distribute through a larger bureaucratic machine , to a increased number of folks with an increased " entitlement " mentality ........
...... what could possibly go wrong with that  ?

Well nothing I spose if you want to stay in power to tweak and fiddle some more until the knighthood arrives. What's the bet Shearer slices more pork..wins in 014..and pays back the nats with knighthoods for Tweak and Fiddle.

FYI from a reader via email: Interesting.
The underlying problem in NZ is low productivity  -  its not the lack
of resources or inputs like skills etc, its how we put those inputs
together  -  multi-factor productivity.

NZIER did an interesting comparative study last year which highlighted this.

We also have good research that links better management practices with
better  firm performance
Practice Makes Profit: Business Practices and Firm Success

HR Practices and Firm Performance: What Matters and Who Does It?

Management Matters in New Zealand: How Does Manufacturing Measure Up?

Massey University SME Centre has done a lot of research that shows
that most SME managers learn 'on-the-job', reacting to issues and
situations, and they learn from their peers and other businesses.

MYOB research showed that something like 40% of SMEs were using their
bank account to manage their cash-flow, which is not great for keeping
an eye on what is outstanding and what's coming up.  Their research is
also showing that those firms with an on-line presence are performing
much better.

The issue is -  how do we get better management system into a lot of SMEs in NZ?

More intense competition? OECD calls it the NZ Paradox, even with best
practices policies, we are still an underperforming.

Provide better information to owner/managers?   MAssey research show
that even when business owner/managers know the benefits of things
succession planning or busienss continuity planning, very few SME
owner/managers do it.

Transaction cost? -  there are lots of on-line free or low-cost
business management tools   -  see

I think there are some good examples in NZ of peak business
organisations getting better management systems into their suppliers
or sectors.  For example;
-   Fonterra and, giving farmers and Fonterra real
time management information;
-   MYOB has just launched a free service for a couple years to get
firms on-line and improving their  presence on-line (so MYOB have more
successful clients in future)
- online accounting service provides managers real time
management systems
- provides easy to use online HR performance
management systems (I think Sonar6 has just been sold to an American

I think we need a concerted effort, lead by peak business
organisations,  to achieve ongoing improvement in NZ SMEs management
systems.   This, I think, will improve the productivity of NZ firms,
industries, and ultimately the NZ economy.

Only a small minority of NZ firms will be high growth, exporting
firms, but we need the rest to be efficient as they contribute to the
overall productivity of the economy, and they will be supporting
innovative, high growth, exporting companies, who need efficient firms
around them.