Econolite's new subsidiary Aegis ITS has been set up to address the increasingly complex and exacting needs of agencies in the ITS sector. Chief Operating Officer Doug Terry talks about the evolution to service solution provider. A few very notable and honourable exceptions notwithstanding, it is these days becoming increasingly rare to find a public agency which develops its own traffic management systems. Indeed, most now rely on specialist manufacturers and suppliers to fulfil their needs. This has the h
Doug Terry, CEO, Aegis ITS
With installation also tending to be outsourced and the lines of responsibility for maintenance and even some operational tasks becoming more blurred, the Econolite group has chosen to inject a little more focus into the market with the establishment of Aegis ITS.
A wholly owned but independent subsidiary, Aegis ITS is being positioned as a 'service solution provider', and something of a ground-breaking concept. It absorbs and expands upon the services which TeamEconolite, the parent group's maintenance business, previously offered and now encompasses turnkey systems including requirements development, system design, software development, field installation, system integration, operations and maintenance. It will, the company says, give customers results which better meet their needs by virtue of having a single provider to work with rather than having to endure a procurement process involving many parties and with the potential for conflict or incompatibility.
Doug Terry, Chief Operating Officer, discounts any observation that the new venture's arrival is a further erosion of transport jurisdictions' expertise.
"If anything, the systems used in ITS are becoming less and less specialised. There is a move towards more common standards which is very positive as it gives organisations greater options and protection going forward," he says. "Take the examples of IP delivery to the street corner, or the use of more commonly available database software rather than the custom and highly specialised offerings which used to be more usual in the transport management sector: you can see that much of what we now work with is more familiar to the IT department. And, indeed, we liaise with IT departments now more than ever."
All about the serviceIn defining Aegis ITS more closely, Terry emphasises the service aspect. Although TeamEconolite was a step in that direction, there were instances where Econolite had to take a step back and miss out on opportunities because of a lack of resources: "An example might be where an agency wanted to install some of our traffic management solutions but didn't have the communications infrastructure to support it. Historically, we weren't very well set up to respond to requests such as that and we'd have to let the opportunity go or refer the agency to other sources. Now, we're positioned as a one-stop-shop with the resources to deliver complete solutions."
In many respects it was customers' desire for customisation which drove Aegis ITS's creation. That would appear to be at odds with Terry's previous assertion that agencies are moving towards common solutions but, he says, it reflects a necessary realism.
"I'd encourage the use of commercial standards where we have them. But if a regional agency with a legacy database which was developed and implemented in the days before centre-to-centre standards asks us to tailor our off-the-shelf offerings to allow interoperability, we can now accommodate that need."
The same, but different
The choice of the name Aegis ITS reflects a conscious decision to make a distinction from the Econolite name. Although Terry is keen to impress unity with the parent group's core values, he says that there were compelling reasons to launch a new brand, including a need to avoid being perceived as too product-focused or something of a closed shop, a lesson learned from TeamEconolite feedback."We are being pragmatic. Aegis ITS is very definitely not a case of 'Econolite-only'. Generally we're brand-agnostic and expect to develop interfaces to non-Econolite devices but we're going to build on what we have rather than do work made for hire. Similarly, when it comes to maintenance we'll look after what's there; we're not concerned with which manufacturers' controllers or detectors we'll have to deal with."
That could be perceived as Econolite, an established equipment manufacturer, looking to dip a toe into the consultancy pond. There are distinctions to be made between Aegis ITS and 'traditional' consultancies, according to Terry.
There are, he notes, many variations of the 'traditional': "There are, for instance, the people who serve the Federal level, getting involved in research, testing and standards. There are also large and regional civil engineering concerns, often with an ITS interest, who serve their space very well. ""I don't see us competing with any of them, particularly on the research or design side. We're not looking to write the specs for a bid, for example; we're further downstream from that.
Neither are we looking to build a large cadre of design engineers. Although we do have some design capacity this will support our ability to supply turnkey solutions. Similarly, we wouldn't pursue a metro-wide signal timing project but we will be able to help our customers optimise their operations.
"I'd identify us as a one-stop-shop ITS solutions company, including the Econolite product offerings. Some might argue that in looking to cover so many bases we're a jack of all trades and a master of none but the truth is that having too many chiefs on a project is expensive. It also leads to finger-pointing. Having 'one bell to ring' is a positive thing and where public agencies can utilise a design and build procurement approach, such as in Florida, it allows a fast, flexible response to changing requirements and removes the opportunity for 'blame-storming'."
Timing
From Econolite's perspective, therefore, there is an opportunity to access a whole new target market and to better serve the existing client base - all with a view on the long term. Given the current state of the global economy, it could seem unwise to embark on a new venture at present."We took a hard look at this over a long period of time - it wasn't something we did on the spur of the moment," Terry continues. "It's something that has been evolving for some time, beginning well before the recession. As we prepared to launch this spring, we considered whether now was the right time to launch and, candidly, the timing probably isn't ideal, but we are confident that it's the right thing to do. We believe the ITS industry is healthy enough to support a new entrant of this kind.
"While some private-sector companies around the world have been hit hard by the current downturn, the situation is somewhat different when it comes to public sector project funding. There's a time-lag - it takes a long time for agencies to secure and spend project funds and they are often committed years in advance. I'm not saying that we won't see a bubble, and we have already seen some public-sector customers struggle with reduced operating funds, but I also think we can expect to see the bubble compressed somewhat. The combination of that time lag and government stimulus funding will, I think, go a long way to staving off the worst of the impacts."
The trend towards outsourcing services in the ITS sector, especially in the operations and maintenance area, is one which can only continue, Terry contends.
"I believe that we'll see outsourcing grow as public agencies continue to deal with budget and hiring limitations. We've seen many agencies face significant budget challenges and staffing reductions over the last year. At the same time, the demands on the transportation agencies, particularly in operations and maintenance, just aren't shrinking.
"Emphatically, we're not about supplanting public agency jobs. There are advantages for agencies of using both public and private-sector employees. Public employees are needed to support day-to-day operations and even to oversee outsourced functions. But for a large programme with clear start and finish dates it makes no sense to staff up on the public side.
"Budget realities have driven a need to be for us to be flexible in how we support our customers as they have had to make cuts. For example, agencies may have enough staff to support in-hours signals maintenance but they struggle to deal with things 24/7. It makes perfect sense for private-sector concerns to provide overflow capacity at off-peak times."
Initially, Aegis ITS will operate only in North America. Terry says that he "would love to go international" but he recognises the real differences between selling products overseas and attempting to do the same with services.
"I also know that when you have something in the start-up phase it's prudent to focus your resources closer to home," he adds. "But I wouldn't write off taking this abroad in the future."
