Competing in a Global Marketplace: Co-founders give an insight to launching in the Nordics, Germany and USA.
Hanley Energy last year moved into the Nordic market to augment their existing presences in Germany and the USA. As co-founders Clive Gilmore and Dennis Nordon explain, it has taken persistence and courage to get the company this far. Interview by John Stanley from Enterprise Ireland’s export journal The Market.
Dennis Nordon, MD of North Dublin-based Hanley Energy is under no illusions. “Our company’s success is based on our ability to re-invent ourselves through R&D,” he says firmly.
For the last few years the company’s focus has been on the provision of critical power supplies for tier 1 data centres – the engines behind the internet. “These centres are a relatively new phenomenon and the requirements of their operators, in terms of speed of building and the information they require, is changing almost on a daily basis,” he says.
The internet’s appetite for additional capacity is seemingly insatiable, too, stimulated by growth in the demand for memory sapping high quality video streaming as well as people’s increasingly ubiquitous multiple platforms, including laptops, smart phones and tablets.
The company’s roots go back to 2008 when Nordon set up an enterprise to meet the needs of this then emerging business opportunity. He was joined in this by joint owner and CEO Clive Gilmore. Nordon and Gilmore both have deep experience in medium and low voltage switchgear and control gear. They worked together as part of the team building the Channel Tunnel in the early 90s and later on other projects in Spain and Italy.
Hanley Energy’s initial focus was on opportunities they saw in meeting the power supply needs of small data centres. When they established the business Ireland was firmly in the grip of the recession. “We could see that apart from the food industry, data centres were the only area in growth mode at that time – and the food sector was starved of cash,” Nordon recalls. “But we absolutely believed wholeheartedly in what we were doing and could see what was happening in the growing area of energy management.”
As the business grew so, too, did their ambitions. Today Hanley Energy specialises in two core areas: the provision of energy management and provision of critical power supply, with a strong focus on data centres.
“In one sense,” says Nordon, “our business is very simple. We keep the power going when there’s any interruption in the utility supply.” But Hanley Energy actually does far more than provide switching between generator and utility power. Its in-house developed Event & Power Management System has millisecond resolution. This provides a detailed chronology of the events triggering any disruption to power supply, a “granularity” that saves huge amounts of time for engineers under pressure to identify and fix faults quickly.
In the critical power space it also provides energy management equipment and services to measure power usage in real time. This gives businesses information that is relevant to them. One large food company, for example, knows exactly what power it consumes in the processing of a single pig while another knows what’s needed to make a case of crisps. Nordon points out that if it is implemented in a structured way, energy management can achieve sustained energy reductions of up to 20%, with zero impact on operations.
Following the fibre
But Hanley Energy’s big play is still firmly in the data centre business and its geographic expansion reflects this. “It’s no secret, we’re following the fibre,” says Nordon. This includes being active in two of Europe’s fastest growing locations for data centres, Dublin and Frankfurt, as well as Sweden and the United States.
Hanley Energy’s first overseas venture was to the US. “In March 2012 Clive and I went to America to look at opportunities,” Nordon says. “We found ourselves in Silicon Valley and it was breathtaking in its technological scale. We immediately decided that this was where we had to be.”
Initially they looked at opening in an incubation unit in the Bay Area city of Palo Alto before deciding on a unit in California’s self-proclaimed Surf City, Huntington Beach. They received support for this initiative under EI’s Business Accelerator Programme.
Paradoxically, the first major US contract came from New Jersey, on the East Coast. “We quickly saw that this was a good ecosystem for us to be in,” Nordon says. He and Gilmore have also discovered just how taxing it is to travel regularly between Ireland and California, on both the body and the wallet. As a result they are in the process of moving their US business to Dulles in Virginia, close to Dulles airport. “Virginia is very much open for business,” Nordon says. “And although it’s widely seen as an expensive location, it’s actually cheaper than New Jersey and very welcoming to inward investment.”
The company will also begin manufacturing its own energy use monitoring product there. This is something it has developed at its advanced R&D centre at its headquarters in North Dublin. This equipment has the advantage that it can be used in conjunction with already installed equipment regardless of who it is made by and it also provides a “granularity” generally not found in competing systems.
Nordon sees the US as a “staggeringly huge” market currently in a rapid growth phase for its particular expertise. “We’re looking at a window of three to five years at least before it begins to plateau,” he says. Currently worth around $2 million a year and growing, Nordon describes the US business as “not huge yet, but already meaningful to us.”
The next venture into a new market was Germany in 2013. “One of our customers had an aspiration to open a data centre there,” says Gilmore, “and we were asked to work on that.” The Irish company soon decided to seek other opportunities. “Establishing a local presence on the ground was something we were strongly advised to do in that marketplace. We’ve again been supported by Enterprise Ireland in this and we’re now actively pursuing business opportunities there,” he says.
Gilmore describes Germany as being “in some ways a nightmare, in some ways a dream.” The nightmare is the enormous amount of detailed paperwork and regulation that has to be undertaken to get up and running. “But once you’ve dotted all the I’s crossed all the T’s it really is a very easy place to do business,” he says. Currently worth about €1 million annually, the business is growing here, too.
The decision to move into the Nordic market came soon after the Germany market entry and the two countries are being run “pretty much in parallel,” Gilmore explains. “It was a big exploration for us. There has been a lot of talk in the industry that this is likely to be the next location of choice for the largest data centres.”
There is logic for this. Data centre operators are attracted by temperate climates because the cost of cooling their heat generating equipment is intrinsically lower. The Nordic region is additionally attractive because much of its electricity is low cost, generated by long-established hydroelectric schemes, and in abundant supply. With changes in Sweden’s tax structures, too, there is a strong sense in the data centre sector that it is only a matter of time before Sweden takes off.
In the meantime, however, Hanley Energy has found itself a valuable niche there providing containerised and modularised UPS equipment for smaller centres. “We’ve already had some success and we’re on the cusp of a large deal there which would give us three to five years’ worth of business on a global scale,” Nordon says. “It is a great country in which to do business,” Gilmore adds, “but it’s very costly, too.”
Hanley Energy is looking at the UK as its next possible overseas venture, probably in 2016. It did consider think about going there a few years ago but decided against it. But now the company is much larger, it has its own products and enjoys the competitive advantages that come with scale.
Nordon is quick to acknowledge the help of EI in entering overseas markets. “They have good networks of people and they were really helpful. In fact, to their absolute credit, EI have an amazing network globally and we seem to have struck gold with the Development Advisers we’ve been given,” Nordon says.