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A decade of success

October 7, 2013

Eddy Thans, CEO of Prime Vision, talks about the company's 10 years in the postal industry

How has the market changed over the past decade?
Ten years ago, the whole postal market was completely different. Back then, mail volumes were still increasing, but in the last five to six years there has been a fall in volume. Now of course there is an increase in the parcel market; the volume in this area has almost doubled in growth each year and it will continue to grow in the coming years. However, the growth in parcels is incomparable to the drop in mail volumes. In Holland a couple of years ago we processed more than 20 million mail items per year and 300,000-400,000 parcels. The 10% decrease in mail has had far more of an impact on business than 10% growth in other areas. Looking at the whole market it is the big companies who are suffering the most because they are struggling to find big projects in the market. This is one of the reasons that the more medium-sized companies like Prime Vision are growing at the moment. We are growing against the tide of the market because the big players are retracting and giving us more space. We have always presented ourselves as the alternative to the big players – we are just as good as they are, but we are more flexible, less expensive and just as professional.

As the big companies retract it presents opportunities for us – postal operators are less afraid to approach smaller companies like Prime Vision. Ten years ago we could only do business via a big player as a partner. Nowadays, its quite common for postal operators to contact us directly and ask us to be the main supplier because they notice that those small players can do it just as well, but they are more flexible and cheaper. This is especially important when levels of investment are decreasing and companies need to find ways to invest in automation while spending less money. That’s one of the reasons why Prime Vision had tremendous growth in the last three to four years. We had double-digit growth, which is quite uncommon when you take a look at the market at the moment.

How do you plan to continue growing?
We are not aiming to become big – we want to continue to establish growth and between 10-20% per year would be good, and that’s still manageable. One of Prime Vision’s strengths at the moment is that we have people who are committed and as an organisation we are flexible. If you become too big, you will lose both, which means you will lose your USP in the market.

One of our philosophies is that if we grow into other areas, we probably would first split off some parts of the company. For example with Prime Data, which is one of our newest divisions and a new market area for us, we just started a new company that incorporates the present organisation but is kept separately so that it can build up its own culture, its own relationship with customers and its own level of flexibility. We plan to continue moving forward like this in the future because we want to stay flexible. There are three pillars that Prime Vision is building its success on: being professional; being flexible; and being fair. You should never lose those three elements because otherwise you’re throwing away your success factors.

What is Prime Data and how are you developing this?
Prime Data is a joint venture with TNO, a state owned research organisation in Holland. It is a completely different market area – traffic forecasting or traffic delays forecasting. What we saw is that TNO had the basic IP in its possession and it was trying to develop a business with it. We worked together because Prime Vision could add its knowledge about how to make professional software and ensure it will run 24/7, so we’re going to apply the knowledge we have from the postal market to the traffic market.

What we’re trying to do business wise is first of all focus on the traffic market, but then with our network in the postal market, we are trying to convince postal operators whether we could help them in optimising their routes for the trucks for the last mile. That’s a goal for the future.

Tell us more about your other new venture, Prime Competence.
We developed Prime Competence, our consultancy business, when we noticed last year that we often get requests from postal operators to answer their questions. We made it into a specific business rather than just offering for free at the point of sale because we put a lot more knowledge and experience into it, and it allows customers to get some information without having to buy our other products, giving them more freedom. We always say you should chose Prime Vision because you want to work with us, not because you have to work with us. We give independent advice to allow customers to choose the right product for them – and not necessarily a Prime Vision product; they are free to choose any supplier that suits their needs.

Prime Competence started on 1 January 2013 and Richard Hagen is in charge. It has really taken off now and we just had our fourth contract, which in the first six months is not too bad.

What are your main focuses for growth?
We are focusing on specific regions because more important than our product portfolio is the relationship we have with our customers. By having that as a philosophy, we have to be locally present or at least be at the customer site often, which means that at the moment we are strongly focusing on Europe.

We have also launched a new office in Australia so we are looking at this market and the areas surrounding it, such as New Zealand and Asia. And we have agents in the USA and in Taipei who are building up an already established network. But our focus is on Europe and the Australian market in the short-term because that is where we see the growth.

We have also been looking opportunities in other areas. For example, we went to Post-Expo Latin America 2013 in April to see whether there are opportunities in that market and we looking to have an agent in Taiwan to find opportunities in this region, but this is a long-term vision that will not come to fruition in the next few years.

What new projects have you been working on?
We launched our services in Australia almost two years ago and since that time have seen tremendous growth – this year we will probably top the €1m turnover, which I am very pleased about.

We have also won a project in Austria for a web-coding platform. Our video coding platform as a product is really taking off. It is very sophisticated, there are lots of different attributes to that and it changes the way you video code as well as what you video code. Operators are now connecting centres together on a national level and they are going with web-based solutions.

This is related also to a big programme we did with our partners, Post NL Shore, for the whole of the UK and The Netherlands. We’ve now got coding platforms with 1,500 coders online, and video coding material from the UK and The Netherlands. The project involved looking at efficiencies rather than just coding them by machines or coding in the sorting centres, but actually centralising the coding operations and in some cases, outsourcing and offshoring it.

From where we’ve started with our core technology, video coding is one of the important solutions within our portfolio now. It is lucrative as the core automated recognition technology and is very interesting to the market right now.

Why do you think video coding has become so important?
I think it is related to reliability and new services available. The feasibility of being able to offshore or to connect senders together has moved on tremendously fast. Some of the aspects of video coding, for example offshoring key-in solutions for document processing, has been a solution for many years for general business but not really applied to the postal world.

Therefore we’re taking a proven technology and using the Prime Vision platform, we’re connecting it to the real world, the process world, the world that is firing 60,000 letters an hour down a sorting machine. You couldn’t trust taking that operation out of your sorting centre before because if it didn’t work, the mail didn’t go. The difference now is that there’s a level of trust and confidence that you can do that. We’ve learnt so much about the whole IT layer and the back office systems, and we can take that experience and confidence to other players who are just starting to connect sorting centres together or centralising or sharing their video coding resources. We can bring a lot of confidence because we can say we have done it.

How has your technology changed with the e-commerce boom?
In the past, we were much more focused on image processing technology only and with the growth in e-commerce and the increase in the amount of parcels, we now have look at it from a more broader perspective – how can you process as many parcels on your machine as possible? To do this you need more than just image processing techniques, so we provide different types of video coding solutions. We have also developed lots of back office systems, so if you have EDI data – a pre-announcement of a parcel that is coming to the postal operator – we build those EDI systems as well.

The whole role of Prime Vision has changed in the past three to five years, from more than just a core technology provider to a total solution provider. The Australian branch now offers tailor made solutions for full systems integration. We deliver something that is not available on the market yet and we trial it with our own design and our own partner network to develop something specific for the customer while keeping the cost low.

You could say that the whole growth in the parcel market and the e-commerce market has led to the complete shift of our portfolio. In the past, 80% of all our work was related to OCR image processing, related to those projects. Nowadays this is still very important but it is now 20-25% of our portfolio. Another 20-25% is based on our support activities and 50% is a combination of machines, big software systems, etc. It’s much broader compared to how it was in the times when mail was still peaking and the big players were dominating the market.

What are the main challenges at the moment in the market?
The biggest challenge at the moment is that there are not a lot of really big projects in the market. Therefore you have to deal with a lot of smaller projects, but a smaller project for a company of Prime Vision’s size is still very interesting. We’re talking about projects worth €500,000 or less which are quite interesting for us and we focus very strongly on those ones. You hardly see the projects of €10m anymore and that has a big impact of course on the market, but it doesn’t really affect our company.

One of the basic philosophies of Prime Vision is that it if you are a customer and you want a change for say €5,000, we will be just as responsive as if you would like a change of €500,000 because the small projects are relevant for the customer. It could be something that’s a hassle or a small improvement so its maybe small money for us, but can have a huge impact for the customer. That’s one of the things they like about our attitude is that we’re not just nice to you because you have a lot of money.

What’s the focus going forward?
We are hoping to improve on the 2012 results, which was the best ever in the history of Prime Vision. So the goal is to exceed that from a financial point of view.

The main focus from the strategic point of view is growing the Australia business and becoming a well-known player. We want to increase our turnover in the support and maintenance activities – we hope to double the turnover in this area in the next three to five years.

In the meantime, we are going to keep doing the good work that we are doing at the moment. It’s not a risk because we’re not doing badly, but you should be careful – you should enjoy your successes, but you should also always strive for more. That’s the biggest challenge for all of us, to keep trying to do better and to make a difference.

For the next three year the focus is on more projects where we really can cooperate with the customer and make those high-tech, complex projects successful.

Words by Helen Norman

October 7, 2013


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