Can VertexOne’s buy restore SaaS faith after the Fathom fallout?
Utilities Digital Solutions Americas

Can VertexOne’s buy restore SaaS faith after the Fathom fallout?

Wednesday, 13 May 2020

Using cloud-based platforms to optimise water

The fallout of US digital company Fathom raised questions over whether software-as-a-service (SaaS) is a sustainable business model for the water market.

At the end of last year the cloud-based software company announced it would cease operations, after failing to secure additional investment from its backers.

GWI reported that the news left “water utility clients scrambling” and asked whether it would affect sentiment around SaaS solutions for water in general.

In a research note, Bluefield Research said “Fathom’s fall undercuts strides in digital water” and that the “industry impacts are likely to extend well beyond the company’s estimated 28 municipal clients that have been left in the lurch”.

Therefore should VertexOne’s recent acquisition of WaterSmart Software be seen as a positive development for the SaaS market, or infact inevitable consolidation?

WaterSmart Software focuses on the use of behavioural customer engagement and analytics to drive conservation in the water utility industry.

With the acquisition, VertexOne said it now serves nearly 200 water, electric and gas utilities and 17 million end customers.

This, according to the company, makes it the largest provider of 100 per cent SaaS-based software solutions to the North American utility industry.

In August 2019, private equity firm DFW Capital acquired VertexOne, after recently closing on its $500 million Fund VI.

“WaterSmart was founded during a California drought on the premise that by using insightful data analytics, both water consumers and utilities can conserve water usage,” said Kevin Kern, CEO of WaterSmart.

“With the continued adoption of advanced metering technologies in the utility industry, the WaterSmart cloud-based platform is redefining how utilities and their customers work together to optimise the use of our precious water resources.”

Navigating the perils of growth

Dr David Lloyd Owen, managing director of consultancy Envisager, believes Fathom faced challenges managing its growth.

Speaking to Aquatech Online, he said: “I believe that Fathom was undermined by not having the capacity or depth of experience to manage growth, especially as the customer base broadened away from the ones they tried out the service with when they were both a utility and a smart water company.”

Commenting on the acquisition, he added that VertexOne has “got through the perils of growth” and has an “appreciably broader customer base and depth of experience than Fathom”.

Owen believes there is great potential for the combined experienced of both companies in California and Texas, which have been mandating and leading smart garden and green space irrigation systems as a demand management tool.

"Both utilities and service providers can be unwittingly ignorant about what customers in fact want."

He added: “Being a customer behaviour analysis specialist, WaterSmart ought to have a lot to offer. Both utilities and service providers can be unwittingly ignorant about what customers in fact want and how to both appreciate their needs better and help them to engage effectively in managing their water demand.

“The merger looks interesting, subject to the usual caveats about the need for two corporate cultures to be able to work together productively post-merger. That is never a given.”

Changing the way consumers think about water

According to Bluefield Research, 61 per cent of start-up companies offering digital solutions have been launched since 2000.

In October 2019, environmental fund manager Earthworm invested £2.4 million in SaaS company, Advizzo.

A behavioural science SaaS company providing utilities with data to change the way consumers think about their electricity and water use, Advizzo is now active in utilities in the UK, France, US, Australia and the Middle East.

Meanwhile, in its first quarter 2020 results Wisconsin-based Badger Meter recently reported that its municipal water sales increased six per cent over the prior year.

As well as ultrasonic meter technology, the company offers a software suite that establishes alerts for specific conditions and allows consumer engagement tools.

Kenneth Bockhorst, chairman, president and CEO of Badger Meter, said there are two trends emerging.

“First, the benefit of automated meter reading adoption, whether AMR (automatic meter reading) or AMI (advanced metering infrastructure), to remotely assess meter functionality, early leak detection and usage reads.

“Second, remote actuation of flow restriction technology, to either limit, or in the case of this pandemic, immediately return to service full water availability to end consumers. We expect both of these trends to provide long-term opportunities for Badger Meter.”

Synthesizing data from water utility networks

Elsewhere the Covid-19 crisis is catalysing technology specialists to concentrate on developing new software solutions.

Spanish company Idrica has developed a method with the Spanish National Research Council (CSIC) to analyse the spread of coronavirus through wastewater.

In addition, the company is using its broad proprietary data platform to synthesize automatic sampling results with data from utility networks and measure the spread of Covid-19 across city districts in real-time.

Meanwhile, a recent pan-European hackathon focusing on the coronavirus results in the development of an intelligence sewer surveillance prototype tool.

Indeed, it could be argued that the Covid-19 pandemic is giving governments and municipalities an added impetus to refine strategic water management frameworks for long-term water resource management.

This could include overdue improvements to aging infrastructure, the reduction of water losses and the introduction of smart metering to help drive water conservation.

Could this be a silver lining to the Covid-19 pandemic and fallout from the Fathom news?

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