Switched on CEO: Mark Franklin, Vector

Vector began as Auckland’s electricity lines company but its acquisition of United Networks and more recently NGC transformed the company into one of New Zealand’s most significant energy infrastructure businesses. We caught up with CEO Mark Franklin who gave us his insights on how technology is helping Vector to manage its assets and staff, and serve its customers on a large scale...

By Michael Foreman

Vector’s Australia-born CEO Mark Franklin has spent “25 years on and off” in the utilities industry since he graduated from Sydney University with a BSc in Electrical Engineering. He held a number of senior management roles at Australian energy companies including a stint as CEO of Orion Energy.

After he had engineered a merger with Sydney Electricity to form Energy Australia while he was still in his mid-30s, he decided it was time for a career change.“I thought this would be a really good time to learn some stuff, so I spent seven or eight years in the IT sector,” he says.

“I knew that technology was going to be one of the biggest influences on the success of a business.” Franklin joined IBM to run a newly-acquired business unit that specialised in infrastructure companies and he eventually became the general manager of IBM’s general services division for Australia New Zealand.

Integrating platforms
Franklin says his time at IBM, which included the technology ‘boom and bust’ period, was “a great learning experience” but he says he was often disappointed by the lack of interest in IT shown by many CEOs.

“I came across so many CEOs who would say things like, ‘Mark, I don’t think you understand, for us IT is a secondary issue.’”

While Franklin says CEOs don’t need to be “technocrats” he says this attitude is “just not good enough anymore.”

“I know that you can't really engage at a CEO or exec level unless you have some idea of platforms and integration. Over the next five years we are going to go through more change than we ever have, particularly when people can get their heads around what broadband should be, and has to be in this country. Technology underpins everything we do, whether it’s process or application or even integration between companies. It’s just that some people don’t know that yet.”

After leaving IBM Franklin took over two ailing IT companies and turned them around. “Guys had started them, taken them up to $25 or $50 million and then didn’t know what to do with them next.

They needed rescuing and some governance, so I took over as CEO or chairman, turned them around and sold them.

”At this point he was approached to run Vector, and he joined the company as CEO in 2003, just after it had taken over United Networks (UNL).

“This whole IT thing is really important when you are going through a merger as well. I’ve got to admit I find it difficult to program a VCR or a DVD player. I give it to my kids. But I came to know pretty quickly as a CEO was that if you do IT well, then the company does well. It just gives the whole company a platform.

Franklin says UNL was itself the product of four or five earlier acquisitions and it took a lot of work to integrate the two company’s technology platforms. “When I arrived, both Vector and UNL had committed to technology in different ways. Vector was doing a lot with asset management, SCADA systems and mobile solutions while UNL was doing a whole lot of other things. The biggest issue we had in IT terms was keeping the platform stable and committing to single platforms throughout the company.”

Smart metering
“What’s still happening is that we are working through the acquisition of NGC, which is a gas pipeline company with processing and distribution facilities and metering through the whole country. The opportunities that come with that, being connected to all those companies and home and having lots of meters around the place, are huge. The future of the world really is about understanding energy usage on a real time basis with customers being able to react to price or demand signals so there’s a huge opportunity for us and the country in general to commit to a lot more smarter use of metering. That comes with a lot of back office and integration with all your other technology. I guess if you asked my CIO he would say he never gets enough money but my role as a CEO is to make sure that we are allocating as much as we can to that.”

Franklin says the combined company is investing heavily in technology to manage its infrastructure.

“We got a lot of assets - we are connected to 670,000 homes or businesses in Auckland and Wellington. That brings a lot of opportunities and responsibilities as well.”

For several years now Vector has been progressively introducing mobile technology for its field staff. It began replacing the radios used by its emergency response staff with mobiles and PDAs but Franklin says all maintenance and repair staff are now equipped with GPS-enabled mobile computers.

“We’ve got a very strong scalar mapping system, a whole GIS [Geographical Information System] capability and all of our guys in the field have GPS mobile capability with updates in real time. They know where they are in the field, they know where our assets are and where our customers are.”

Franklin says he is often amazed by what small commitments of technology can do for a company.

Vector uses a combination of off the shelf programs such as the SAP ERP system and specially developed software including a revenue management system based on Microsoft SQL Server which was implemented by HP.

“Some of it is just applications that our guys have built. We have got some amazing programs which look over our assets and can give us a density analysis which tells us where faults are occurring, and what time of day or what time of year they are occurring. It helps us target maintenance and capital expenditure.”

Telco capability
Vector owns a telecommunications subsidiary, Vector Communications, which operates an Auckland-Wellington fibre-optic link, but Franklin says its main role is to serve Vector’s internal needs.

“We have got some pretty solid backbone fibre around Auckland and Wellington and we do connect a number of ISPs – for example we have got a pretty strong partnership with Vodafone and we do a long backhaul for their mobile network.”

While Vector is experimenting with technologies like powerline internet provision, Franklin says he has no desire for Vector to become a telco or ISP.

“When I came here there were two communications companies which were born out of the dot com boom, Vector had one and then UNL came in. What we’ve done since then is put them together to make a more profitable telecommunications business unit.”

“When you run $3 billion or $4 billion worth of assets you need a really strong telecommunications capability to control, to run signals, to do lots of things. It’s run through Vector Communications but it contracts back through the electricity and gas businesses because we need an amazing amount of telco capability just to run our assets. That’s one of the reasons why we are committed to that Vector Comms thing.”

“Utilities have always thought they are really good at being a telco. Always, but lots of people lost lots of money. We will probably always be looking at how best to use our existing assets because we are an infrastructure company, we’ve got lots of capability, lots of attributes that we can share across business units.”

Vector is testing VoIP telephony in two floors in part of its Auckland headquarters campus and Franklin says IP phones will probably be rolled out to the wider company in the future. With the acquisition of NGC, Franklin also expects there will be a big requirement for Radio Frequency Identification (RFID) technology.

“We’ve got big LPG cylinders and we need to know information like where they are or how full they are. So we are always looking for the next thing to allow us to track and manage our assets.”

Vector makes a lot of use of presentation technology such as electronic whiteboards and its boardroom is fully equipped for videoconferencing.

Proactive intranet
Franklin says he would like to improve several systems both at the executive level and throughout the company. “I’d love to have a really good executive management system, one where you just press a button and it’s all there. But I haven’t really seen a great one - it’s not quite there yet.”

Franklin would also like to implement a knowledge management system and an intranet that is “a genuinely proactive portal.”

“When I come in and log on in the morning I want to see what is going to really interest me,” he says.

Franklin is an enthusiastic user of technology at home and his family owns no less than five laptops, partly because two of his children are required by their school to use them. Franklin is also installing network cabling which will allow data, audio or video to be channeled anywhere in the house.

Franklin says he is disappointed by the slow pace of telecommunications development both here and in Australia.

“We’re not a long way behind Australia in terms of our telecommunications infrastructure, my view is that we are in the same level, but honestly if you go around the world, we don’t know what we don’t know in this country. We don’t know that broadband is 10, 20 megs upload, download, synchronous. That’s what broadband is and it’s about being able to do stuff that we don’t even know that we can do yet.”

Asked whether there was any truth in reports naming him as a possible future CEO of Telecom, Franklin insists that he will remain at Vector for a while yet.

“We’ve got a real lot of work to do here. We’ve just been through a couple of really large acquisitions and we are now one of the largest companies on the New Zealand stock exchange. Vector’s vision is to drive infrastructure in this country. We struggle with the regulatory environment but right now the government is using all the right language.”