Optimal beginnings

By Rebecca Macfie

Saturday 1st May 2004

Optimal Decision Technologies was set up by a bunch of self-confessed technocrats with expertise in using sophisticated mathematical algorithms to help airlines, emergency services and other large organisations schedule crew and resources in the most efficient possible way. Directors Jeff Meyer and Paul Day, both graduates of the University of Auckland's engineering sciences department, work full-time in the company, while fellow directors Professor David Ryan and senior lecturer Andrew Mason are faculty members of the engineering services department.

ODT (not to be confused with a Dunedin newspaper of the same name) has developed software that takes in screeds of mind-numbing data about crew, machines and capital, and spits out optimum shift rosters, staff and machine scheduling, and other planning solutions that can save organisations big money. Air New Zealand uses ODT's optimisation services, generating savings of over $15 million a year.

Operations research, the science behind what ODT does, had its origins in WWII, when it was developed for strategic and resource deployment purposes.

The story so far
Meyer and Day cut their teeth as consultants to Air New Zealand, using their expertise in optimisation for crew scheduling. Realising they had developed potentially valuable intellectual property in the course of their consulting work, they set up ODT in 1998 to develop commercial software that could be sold to other clients.

Since then, ODT has developed a system designed specifically for emergency services. Named Siren (Simulation for Improved Response for Emergency Networks), the software can simulate any number of possible scenarios to help the likes of ambulance and police services plan coherently to meet future demand. For instance, Siren may be able to show that eight ambulances in optimum locations would be able to deliver the same level of service as 10 ambulances in non-optimal locations - leading to obvious savings for the service provider. With ambulance services coming under intense funding pressure while facing 8-12% growth in demand every year, Meyer says there's a big market for services that squeeze the maximum capability out of scarce resources. Initially developed by Mason as a prototype for the St John Ambulance service in Auckland, Siren is now being used by Melbourne Ambulance Service.

Unlike many startups, ODT has been profitable since it set up, thanks in large measure to Meyer and Day continuing to work as consultants to Air New Zealand. However, as the demands and costs of new product development, sales and marketing have increased, the time available for consulting work has diminished - and with it, the cashflow. Meyer says the company is now moving into the cash burning stage, although it will be able to manage through to the end of this year without outside capital. They are currently laying the groundwork for capital raising by making themselves known to the venture capital community.

Meyer counts ODT's key milestones as winning the Melbourne contract for Siren (which was up and running in June last year), and its subsequent move into the Icehouse business incubator, bringing access to skills and support. The next critical milestones will be getting Siren into a second ambulance service in another part of the world - probably the UK - within the next six months, marketing it to police services, and raising between $2 million and $5 million in venture capital.

Onwards and upwards?
Well, it certainly looks promising. ODT's mentor, Greg Cross, thinks so too. He says the team has come a long way in the last six months in terms of showing it can set and meet commercial milestones, and proving there is a demand for the product. Among the things ODT has done right, he says, is realising that sales and marketing is just as important as the technology - hence the move to appoint a full-time business development executive. Cross says every startup is faced with a blizzard of competing demands, and deciding on the key tasks is critical. "Sometimes the best thing you can do is sit down and focus just on those things, and ignore the rest."

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