Keeping things humming smoothly

Start-up firm's innovation helps companies keep tabs

Small business

October 07, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Hussein Sallam equates his company's technology to the telephone's dial tone, and he hopes that some day Business Devices' DeviceSphere - which connects devices such as sensors and monitors to the software that companies use to track productivity and safety - will be as ubiquitous as the telephonic note that links callers with business associates and home PCs with bank mainframes.

The company, a tiny start-up being nourished in the county Economic Development Authority's NeoTech incubator, is running a pilot program with its first customer while trying to obtain $1 million for its first round of funding. Two weeks ago, Sallam's wife, Rita, who is the company's chief financial officer, pitched the company concept to a room full of North Carolina venture capitalists at the Springboard Southeast forum. On Thursday, the team will pitch again to local investors.

Hussein Sallam, who is president and chief executive officer, and Rita Sallam are hoping venture funding will help them take on their initial target market of bulk gas distributors. But the Sallams see their company's future in government contracts, the medical field, even retail.

"Our long-term goal is all supply chain automation," Hussein Sallam said.

"We could monitor the security of dams and bridges, or toxic or biological chemicals while they are en route. We could track railroad cars and what's inside," Rita Sallam said.

But the fledgling firm has a lot of growing to do before it is the dial tone in the supply chain, said Kosin Huang, senior analyst of business application and commerce with the Yankee Group in Boston. The firm needs to better identify its value and prove its technology, Huang said.

"Right now, they're kind of poorly positioned. You can't tell exactly what they do," Huang said. "They say they can [monitor] any device, but what does that mean?"

Branching out to other industries will also be important, Huang said. They chose a good initial market, but getting into other markets could prove tricky because of competition, she said.

Some companies make sensors and have the proprietary software to monitor them. And several other companies focus on integrating a device such as a sensor into a client's current computer systems by creating customized software.

To grow, Business Devices will have to face large competitors in both those areas, Huang said. Forming partnerships might be the way to break into other fields, she said.

"I don't think they have a direct competitor. They're going to have different kinds of competitors," she said. "If they can build partnerships, they can be the integration point."

DeviceSphere, the company's main technology, is designed to gather information from various monitoring sensors and seamlessly feed it into a company's business software. The aim is to squeeze out inefficiencies in the supply chain.

For example, carbon dioxide distributors, with no way of knowing how much gas is left in customers' tanks, keep customers on a regular delivery schedule that has the distributors refilling, on average, when the tank is only half empty. But even with the best planning, a small percentage of customers run out before their next refill and need an emergency shipment - a task that requires rerouting trucks and costs distributors extra money.

In using DeviceSphere, the distributors outfit tanks with sensors to monitor the gas level and the flow of gas, and DeviceSphere keeps track of real-time changes, such as when the tank gas level has dropped to about 25 percent and needs a fill, when there are problems with the tank, or when a customer has used an excessive amount of gas rapidly.

A distributor can keep track online, but DeviceSphere is designed to link directly into the distributor's routing software used to map delivery routes, and to the accounting software for billing. Like the dial tone, it is designed to make the necessary connections without the user ever seeing it.

Rita Sallam said the company is still working on pricing but expects to charge customers between $5 and $10 for each device, based on volume.

The company is about halfway through a 90-day trial program with Nexair LLC's beverage division. The gas company has equipped about 18 tanks with sensors, and is ready to add another dozen in a few weeks. Chuck Foray, general manager of the beverage division, said DeviceSphere has given his company between a 25 percent and 30 percent savings, and it has virtually eliminated emergency rerouting.

Once the trial is over, Foray envisions the company moving all 7,000 of its tanks onto DeviceSphere. He said he also plans to recommend the technology to a group of independent distributors that represent about 50,000 customers.

"So far, what we've seen has been absolutely wonderful," Foray said. "In the distribution business, time is money. You have fuel and man-hours and everything else. We think there'll be a real dollar savings, plus we'll be able to give our customers a higher level of service."

Foray said he thinks customers will pay to get more-detailed information about their consumption because the information could result in cost savings.

"The soda business is a highly profitable business to restaurants," he said. "The more efficiently they operate their systems, the more dollars they generate."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.