Rise of the Machine (to Machine)

Foresight leads to local tech firm’s success in one of world’s fastest growing industries

BY KRIS BEVILL

Alex Warner was a typical North Dakota kid He grew up on a sizable farm and attended North Dakota State University, where he received a degree in agronomy. But then something happened. He “caught the tech bug,” and shifted his focus from farming toward the emerging world of computers and technology. He studied technology at St Cloud State University in Minnesota and cut his teeth at various Minneapolis-area technology companies before returning to Fargo with his wife to continue building a career in the technology industr y. He worked at a local firm until 2003 when he took a risk and launched his own company, Pedigree Technologies, from the basement of his twin home He had become ver y interested in a new application for technology called machine-to-machine technology and he had a hunch that the potential applications of it would be huge.

Talk to the Machine

Machine-to-machine technology, or M2M, is basically a process in which data is generated from a piece of equipment, transmitted over a network and interpreted by a user at the other end. M2M can be used to monitor the temperature of a freezer and alert a supervisor if the temperature dips below a certain level, for example, track a rental vehicle to determine its whereabouts or gauge how long a truck’s remaining fuel will last in the field The opportunities for its applications are truly unlimited and the industry is growing rapidly. A report issued last year from the Carbon War Room, “Machine to Machine Technologies: Unlocking the potential of a $1 trillion industry,” predicted that the M2M industry will maintain a 23 percent growth rate over the next decade, with huge application potential in the energy, transportation, built env ironment and agriculture sectors. According to the report, there will likely be 12 5 billion M2M devices globally by 2020, up from 1 3 billion devices in 2013

Warner couldn’t have predicted the industry he was becoming a part of would one day become a trillion-dollar opportunity but he spent most of his first year of business connecting with other people, many of whom were located in tech-centric areas like Silicon Valley or Boston, who also recognized the potential for machine-tomachine technology to at least become a significant force in the tech world In 2004, he added a few employees and developed prototypes for large regional companies including Crystal Sugar, before attracting the attention of the U S Navy, which encouraged the company to apply for a contract to capture data from unmanned aerial systems and other machines

The military work helped to solidify the company ’ s engineering and laid a solid foundation for a strong company, but the growth of Pedigree Technologies and the machine-to-machine industry in general did not really take off until 2009, spurred by the realization of major network providers including Verizon, Sprint and AT&T that M2M represented an entire new market for their companies “They kind of turned their ships and we started to partner heavy with them,” Warner says.

The company went commercial in 2009 and has since experienced tripledigit sales growth and expanded from about a dozen staff members to nearly 70, most of who work at the company ’ s Fargo headquarters It was named the secondfastest growing company in North Dakota last year and one of the fastest growing companies in the countr y, earning it a ranking on the Inc 500|5000 list for the past two years.

Warner says his company has been able to grow quickly in a rapidly expanding and competitive industry because it offers comprehensive technology to its customers and remains focused on helping them do business better. “Our business focus with

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our systems software is to use it to help companies streamline their operation and run a very efficient operation,” he says “If you know where people are, your equipment and what your inventory levels are, and you can get all of that information in one spot... you can coordinate your operations in real time We work very hard to make sure the customer is getting the value they need in order to get the operational responses and the efficiency gains they’re looking for ” And while many of its competitors are singularly focused on one application, monitoring only trucks or trailers, for example, Pedigree Technologies has developed a system capable of monitoring all aspects of a operation, or any number of aspects depending upon the customer’s needs

The oil and gas industry is Pedigree Technologies’ biggest customer, but it also serves many customers in the construction, agriculture and rental equipment sectors Warner says the company ’ s experience building technology for the military transferred well into the oil and gas sector because both have complex operations. Pedigree Technologies is heavily entrenched in shale plays throughout the U S and is exploring future opportunities at shale plays elsewhere in the world, serving many mid-size and large customers However, because the company ’ s technology is cloud-based, Warner says it is cost effective for small businesses as well

The unlimited potential of M2M has begun to pique the interest of many tech-savvy organizations, and Warner says his company often receives interesting inquiries for potential new applications In one instance, a nonprofit organization employed the company ’ s technology through a battery-operated device used to monitor clothing drop boxes When the device senses that the box is full, it sends an alert for the driver to retrieve the goods, saving time and money by eliminating the need for a driver to periodically check the status of the box.

Pedigree Technologies has also used its technology to monitor portable bathrooms, tracking their location and whether they need to be serviced

Warner says that while these types of applications represent potential new markets, the company takes a cautious approach when evaluating its participation “We have to be very careful because, like any good entrepreneur, you want to look at these good opportunities but focus in on our core competencies and servicing our customers in the markets we ’ re in is where the discipline is required in order to create a very good business,” he says.

“You can’t chase after ever y shiny object ”

Partnerships and Challenges

There are three components of M2M software, hardware and networks so partnerships among the providers of those components are integral to the implementation of the technology Companies like Pedigree Technologies provide the software and need to partner with hardware and network providers, including the major network providers as well as satellite providers, in order to make the system work Warner says his company also has emerging partnerships with re-sellers of technology. “Everyone has to be tightly integrated and working in concert in order to deliver the solution,” Warner says “Our technical partners are key and some of them are also business partners because we work on opportunities with them, which is a win-win.”

In one recent example, Pedigree Technologies partnered with a company which produces sensors that monitor the levels of product in tanker trailers. By applying Pedigree Technologies' system, users are able to capture the sensor ’ s data, as well as the location of the trailer, and transfer that information to electronic tickets “In that instance, we have a sensor company, we partnered with Verizon, [and] we partnered with a tanker OEM that will install it on their tanker trailers,” he says

One issue facing the M2M industr y is that the devices being deployed to capture data are generating mountains of data oftentimes too much data. “It’s an abnormal amount of data and will continue to be an abnormal amount of data,” Warner admits Data overload presents a real challenge for many companies, but Warner says his company has focused on straining out the unnecessar y data points to provide customers with only the information they want and need. “That’s the real trick,” he says “That’s where all our intellectual property is ”

As the M2M industry continues to rapidly expand to meet its potential over the next few years, Warner expects his company will continue to grow along with it from its headquarters in North Dakota. He has no plans to relocate, despite having to confront worker shortages, and expects to continue adding staff this year and into the future.

“We’re very positive,” he says. “The growth continues to be at a high percentage and I don’t see it stopping Do I want to tell you that in the next five years we ’ re going to be Google? My ego ’ s not that big But there’s definitely potential and we do not see the market slowing down We only see it getting bigger ” PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag com