4-page Partner Case Study
Posted: 1/21/2011
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Advanced Telemetry Startup Uses Cloud Computing to Change Business Model, Becomes Instantly Profitable

Advanced Telemetry began by manufacturing and marketing its flagship remote energy-monitoring software—and paying for the servers required for its customers’ data. The relationship between adding customers and paying for more rack space was a serious barrier to expanding market share. Advanced Telemetry then moved its IT infrastructure to Windows Azure, using Microsoft SQL Azure and Windows Azure. It also switched to a new business model whereby OEMs can license an instance of its telemetry software in Windows Azure, and then offer the product in new markets. This move reduced IT infrastructure expenses by 75 percent, introduced new revenue from customization, reduced marketing costs by 80 percent and turned the company into an agile, profitable operation that can respond quickly to customers in any market.


Situation
Tom Naylor, Founder and Chief Technology Officer of Advanced Telemetry, brought together a team of developers in San Diego, California, to explore innovations in telemetry—technology that enables remote measurement and reporting of information—for transferring data over the Internet. The company received venture capital funding to launch in 2007, and Advanced Telemetry went to market with its flagship product, the EcoView Energy Management System.

Targeted toward restaurants and convenience stores, the system includes an on-premises touch panel that communicates wirelessly with intelligent thermostats and power meters, and transmits energy consumption, temperature, and other environmental data over the Internet to the company’s web tier, middleware tier, and data storage servers. The middleware tier, which Advanced Telemetry built using Microsoft ASP.NET and Microsoft SQL Server 2005 data management software (since upgraded to Microsoft SQL Server 2008), is a complex and extensible set of business rules that can be applied to the data to determine appropriate responses and actions. For example, a customer could specify that if a temperature reaches a certain threshold, the air conditioners will activate at a specific setting.

The touch panel displays real-time and historical usage data and stores the customer’s unique business rules. Building managers can use the touch panel to set energy schedules and manage energy consumption within a building, or regional managers can monitor and control many buildings using the system’s web portal, called EcoView Web. Alternatively, customers can have Advanced Telemetry perform the remote monitoring service on their behalf.

Low cost and easy to install, EcoView brings the benefits of sophisticated energy management to medium and small buildings to dramatically reduce resource consumption. The product was well received when it launched, and business grew steadily. Between October 2009 and November 2010, Advanced Telemetry doubled its customer base. Today, it serves 1,000 customers with a total of 2,000 installed sites that transmit approximately 150,000 unique points of data every hour. This success, however, came with a price.

Breaking Ties to an IT Infrastructure
“Like most startups, we began with a single product and a local infrastructure, delivering an end-to-end solution under a brand name, EcoView,” says Naylor. “In this model, we were the manufacturer and did the marketing, channel development, and customer support for ourselves.”

It quickly became clear that this business model, which entailed managing a local infrastructure, was not a scalable or practical way for Advanced Telemetry to grow its business. The EcoView Energy Management System generates a tremendous amount of data, which it records to the middleware and data storage tiers. The bulk of the data is historical information that consists of unique data points recorded at each customer site, such as an energy demand change. The rest of the data is relational in nature, such as customer configurations and metadata. Even though the historical data is more suited to table storage, it ended up in the company’s SQL Server databases anyway because that was the only database solution Advanced Telemetry had.

“We were forced to cull the data from the SQL Server databases because they were getting so unwieldy, and we didn’t want to keep paying for more servers,” says Naylor. “We were only able to store about six months of information. Naturally, we didn’t like to lose information that could be useful for our customers in some way in the future.”

Advanced Telemetry came to see its reliance on a physical infrastructure as a major impediment towards profitability, growth, agility, and even customer service. The company moved its burgeoning amount of servers to a rack-mounted infrastructure hosted at a collocation vendor, but even then, it was still concerned about the unavoidable link between adding customers and paying for more rack space. Also, it was time consuming to set up a customer on the system, a process that could take weeks of effort. Some EcoView customers were unhappy about sharing their data servers with others, but Advanced Telemetry couldn’t afford to set up a single instance of its middleware and data storage for individual customers.

“It was too expensive and difficult for customers to have separate banks of servers that we would remotely support,” says Naylor. “Looking forward, all we could see was the increasing cost of maintaining an IT infrastructure eating into the profitability of our business. The overhead that we were carrying to drive sales and provide support was not going to get us around the corner as quickly as our investors wanted. We had to rethink our business model.”

Changing the Business Model
Naylor had always preferred the idea of an original equipment manufacturer (OEM) model, one that would showcase the company’s uniquely adaptable and

extensible middleware. “We wanted to leverage our core telemetry infrastructure for a number of applications,” he explains. “However, like a lot of startup companies, we needed immediate access to the market, so we developed EcoView. We just got stuck there. I wanted to back out of our direct market approach and deliver our product to new verticals through OEM licenses.”

The OEM model would absolve the company of the burden of directly marketing and supporting its product to customers, freeing up time and resources to build more features into its telemetry software. “We tried to build maximum extensibility into our middleware, but there’s always room for more flexible configurations to accommodate as many requests as we can from customers,” says Naylor. “It would have been nice to have more time to devote to that sort of development work.”

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* Moving to Windows Azure, we got enhanced performance, more scalable data storage, additional flexibility, and better redundancy—at 75 percent savings. *

Tom Naylor
Founder and Chief Technology Officer, Advanced Telemetry

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Also, the new business model would give the company an opportunity to enter untapped vertical markets that it simply didn’t have the resources to acquire on its own. “Our core technology is designed to accommodate any remote monitoring scenario,” says Naylor. “The OEM model, whereby licensees could take our product to market in new verticals using our core technology, was so compelling that we knew we had to make the change.”

But there was a significant, and by now all too familiar, stumbling block to moving ahead with this key business strategy: the company’s reliance on a physical IT infrastructure. Even if an OEM was interested in licensing Advanced Telemetry software, it was obvious that it would quickly come up against the same issues that plagued the startup from the beginning. “We had to move our infrastructure to a cloud-computing model where our application and data could reside on remotely hosted servers for which the OEMs would not be responsible,” says Naylor. “So along with a new business model, we were suddenly contemplating a new computing paradigm.”

Solution
Advanced Telemetry first considered storing its historical data on BigTable from Google, but that still left its middleware and web tiers residing on collocated servers. The company wanted a complete solution for running its Windows-based application and storing its data in the cloud. Naylor found what the company needed with Windows Azure from Microsoft. Moving its entire IT environment to Windows Azure would mean that Advanced Telemetry could take advantage of the following components offering integrated cloud computing services:
  • Windows Azure: Provides a Windows-based environment for running applications and storing data on servers in Microsoft data centers. Advanced Telemetry could use Windows Azure cloud compute services to run the company’s web presentation tier and remote monitoring and control middleware. And it could use Windows Azure Storage to store its customers’ nonrelational historical data.

  • Microsoft SQL Azure: Provides a relational database service in the cloud based on SQL Server 2008. Advanced Telemetry could use SQL Azure to store customers’ configurations and metadata. 

“With Windows Azure, I realized right away that this was more than a new computing environment, it was a key business enabler,” says Naylor. “It was easy to see that basing our operations on an Internet connection instead of racks of servers running in our facility would literally transform our business.” Advanced Telemetry also liked the fact that Windows Azure offers a computing environment already familiar to its developers who work with the Microsoft Visual Studio 2008 Professional development system.

In August 2009, Advanced Telemetry began migrating its web-based presentation layer to Windows Azure. The company also upgraded its web management portal for the middleware using Microsoft Silverlight 2.0, a cross-browser implementation of the Microsoft .NET Framework for building and delivering rich, interactive web applications.

Then Advanced Telemetry proceeded with the more complex middleware. In Windows Azure, each application can have multiple instances. Each instance is assigned a virtual machine (VM) that can run part or all of the application’s code. The company’s developers can divide the application’s code into web roles (where it’s necessary for the software to accept and process Intelligent Terminal Transfer Protocol requests using Internet Information Services, or IIS—a component of the Windows Server 2008 operating system) and worker roles (which do not use IIS). The developers simply tell Windows Azure how many instances of each role to run, and Windows Azure creates the VMs and provides built-in load balancing to equalize requests coming into the application’s web role instances. “This capability is important, because it allows us to do upgrades to various parts of the middleware without touching the other parts,” says Naylor.

Flexible Data Storage Options
Windows Azure solved the data storage problem at Advanced Telemetry because it offers two different kinds of cloud-based data storage: one for table data and one for relational data. The company migrated approximately 100 gigabytes of historical data to Windows Azure Storage, which offers a scalable table service for structured data that can be queried. “This is a very important architectural decision because it allows us to store and easily access massive amounts of historical data,” says Naylor.

*
* With Windows Azure, I realized right away that this was more than a new computing environment, it was a key business enabler. *

Tom Naylor
Founder and Chief Technology Officer, Advanced Telemetry

*
Next, the company migrated its relational data—customer configuration information and metadata that’s required by the application at run time—to SQL Azure. “We easily transitioned the database schema and all of the data to the cloud,” says Naylor. “We used SQL Server Management Studio and created some SQL scripts to handle the few minor differences between SQL Server on-premises and SQL Azure.”

Extensible Middleware
Finally, Advanced Telemetry turned to Windows Azure Service Bus to add even greater flexibility to its already extensible middleware tier. With Service Bus, the company’s developers can take a piece of data coming into the system, say a temperature change that’s registered in a customer’s convenience store, and apply new business rules to it—without altering the core functionality of the middleware.

“We had already configured a series of evaluations and actions for a temperature change within our core middleware functionality, but now we can extend the number of actions that can happen to that

piece of information very easily by attaching new worker roles to the Service Bus,” explains Naylor. “We are using the Publish/Subscribe configuration, wherein a piece of data is put on the Service Bus and one or more subscribers can receive it simultaneously, thus invoking new operations to extend the functionality of the middleware without affecting preexisting services. That’s a very difficult architectural feat to accomplish without a bus architecture. What’s unique with Service Bus is that it’s a bus architecture on the Internet. Consequently, it frees you from any geographical constraints between the publisher and the subscriber.”

Advanced Telemetry finished migrating its software and data to Windows Azure in April 2010.

Benefits
When Advanced Telemetry migrated its application to Windows Azure, including SQL Azure, it was a move that ushered in a new era of profitability for the company. Advanced Telemetry expects the new computing paradigm to function as a powerful sales tool to attract new OEM licensees so it can replace an unprofitable business model with one that promises ample opportunities for expanding into new vertical markets at significantly reduced overhead. Adopting the OEM business model will also generate a new revenue stream for the company based on additional customization work that it could perform for the OEMs to tailor the telemetry software for these new markets. In addition, Advanced Telemetry can take advantage of the security-enhanced connectivity services built into Windows Azure to respond more quickly to customers’ needs and increase its competitive advantage.

Opens New Markets with OEM Business Model
The most significant business benefit for Advanced Telemetry of moving to Windows Azure is that the company was able to pursue the OEM business model necessary for finding additional vertical markets. Moving its core telemetry software and data to Windows Azure gives Advanced Telemetry an extremely attractive story for potential OEM customers. Today, it can offer OEMs an agile computing and data storage paradigm that requires no hardware or support costs, and comes with predictable, consumption-based pricing that takes the guesswork out of resource allocation and budgeting.

Advanced Telemetry has already signed a Fortune 100 OEM licensee in the building energy management market and is talking with another company that plans on using the solution for electrical car energy management. “All it took was signing our first OEM license deal, and we will be instantly profitable for the first time in our existence,” says Naylor. “This is a much better model that allows us to focus on our core technology and tailor it to the unique needs of the OEMs. So far, there’s every indication that potential OEM licensees are as excited about Windows Azure as we are. All our existing customers maintain a direct relationship with us but we are working on various incentives to move them to an OEM partner.”

Under the new model, Advanced Telemetry will provide an annual license for the company’s web management portal and middleware software. It’s up to the OEM to manage the relationship with Microsoft for the Windows Azure instance of its software; however, Advanced Telemetry provides support and online management of that instance. “Using Windows Azure, we can spin up a new instance of all the worker and web roles that the OEM needs, and it pays the Windows Azure subscription fees to Microsoft. There’s no IT infrastructure to worry about; we have a whole new instance of our middleware and presentation tier with someone else paying for it and carrying the burden of the sales and support staff to drive the market in their channel.”

During 2011, Advanced Telemetry will be aggressively building its business using the Windows Azure story to answer potential OEM licensees’ questions about security, reliability, and redundancy. “We evaluated the security and privacy controls in Windows Azure and they more than meet our requirements. Now all we need to do is point our OEM licensees to the Windows Azure documentation on the Microsoft website and they can tell that story to their own customers,” says Naylor.

Reduces Operational Costs
With Windows Azure, Advanced Telemetry can finally rid itself of the burden of its physical infrastructure to significantly reduce overhead expenses for hardware, server support, and collocation fees. “The cost of doing business today is about 25 percent of what we were spending for rack space a few months ago,” says Naylor. “Moving to Windows Azure, we got enhanced performance, more scalable data storage, additional flexibility, and better redundancy—at 75 percent savings.”

Extra savings are expected in reduced support costs, because the company requires few IT staff, who work directly with the Windows Azure instance in the cloud to build new functionality into the application. Working directly in the cloud is a streamlined way to develop and then apply upgrades to the core functionality, and then distribute changes to all customers at once. Naylor expects this blanket distribution to significantly reduce support costs because there will no longer be a requirement to support various older versions of the application.

And because of the new model, whereby the OEMs assume the cost of marketing the telemetry software to their own customers, Advanced Telemetry expects to reduce its business development and marketing expenses by 80 percent.

Gains New Revenue Stream
Advanced Telemetry always wanted to capitalize on the extensibility of its core remote monitoring and control telemetry software. Now, with the OEM model, the company can use the platform’s flexibility to generate a new revenue stream, customizing the software to adapt to licensees’ different vertical markets. The OEMs have an option to develop customized end-user applications against the application programming interface provided by the middleware, but Naylor is confident that most will opt to pay Advanced Telemetry to do this work.

“The framework has dozens of extensibility points that support enhanced services, and we can leverage these to generate additional revenue as we customize the core software to adapt to new markets,” says Naylor. “To accommodate new use case scenarios, it’s easy for us to build a new web application on top of the middleware and customize screens that show up on the touch panel device.”

Improves Customer Service
With Windows Azure, Advanced Telemetry developers can provide responsive service to its OEMs to help them offer more features for their end customers—without altering its core telemetry software. For example, if an OEMs customer wants to add different business logic that causes new actions to occur when a temperature change is registered in the middleware, Advanced Telemetry developers can add a new worker role on the Windows Azure Service Bus to extend the usefulness of that incoming data for that one customer without impacting any of the existing functionality for other customers. Using this capability helps to provide private, secure islands of customized functionality for individual customers. Similarly, it can offer new features for all OEMs in a single vertical market, in a way that doesn’t affect OEMs in a different market.

Using SQL Azure for storing the OEMs customers’ relational data in the cloud, Advanced Telemetry has a scalable data solution. With Windows Azure Storage and SQL Azure, the company no longer has to cull data every six months.

Advanced Telemetry is using Windows Azure to boost customer service by offering OEMs and their customers the possibility of owning their own instance of the software. “Windows Azure enables me to provide that kind of service that would be extraordinarily difficult if I had to deploy servers and set up remote support,” Naylor concludes. “And where the OEM has a vertical application, like the electric vehicle charging scenario, we can segment customers by application, as well, and give them their own instance of middleware so they have that security that their data is not comingling with anyone else’s. Even if Advanced Telemetry were to disappear, our customers would still have their own instance of the middleware and web application running in the cloud. It’s just one more example of how this remarkable platform has changed the future for our business.”

Windows Azure
Windows Azure provides developers the functionality to build applications that span from consumer to enterprise scenarios. The key components of Windows Azure are:

  • Windows Azure. Windows Azure is a development, service hosting, and service management environment. It provides developers with on-demand compute, storage, bandwidth, content delivery, middleware, and marketplace capabilities to build, host, and scale web applications through Microsoft data centers.
  • Microsoft SQL Azure. Microsoft SQL Azure is a self-managed, multitenant relational cloud database service built on Microsoft SQL Server technologies. It provides built-in high availability, fault tolerance, and scale-out database capabilities, as well as cloud-based data synchronization and reporting, to build custom enterprise and web applications and extend the reach of data assets.
To learn more, visit:
www.windowsazure.com


For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
www.microsoft.com

For more information about Advanced Telemetry products and services, call (877) 511-9090 or visit the website at:
www.advancedtelemetry.com

Solution Overview




Partner Profile

Based in San Diego, California, Advanced Telemetry offers an extensible, remote, energy-monitoring-and-control software framework suitable for a number of use case scenarios. It employs 22 people.


Business Situation

The company wanted to expand into new vertical markets, but doing so would require an ever-increasing investment in server infrastructure, eroding any increase in profits.


Solution

Advanced Telemetry migrated its telemetry application to Windows Azure and licensed instances of the software to other equipment manufacturers to market in new vertical industries.


Benefits

  • Opens new markets
  • Reduces operational costs
  • Gains new revenue stream
  • Improves customer service


Software and Services
  • Microsoft Azure
  • Microsoft Visual Studio 2008 Professional Edition
  • Microsoft SQL Server 2005
  • Microsoft SQL Server 2008
  • Microsoft Silverlight 2
  • Microsoft Azure Platform
  • Microsoft Azure AppFabric
  • Microsoft SQL Azure
  • Microsoft ASP.NET
  • Microsoft Internet Information Services 7.5

Vertical Industries
Architecture, Engineering & Construction

Country/Region
United States

Business Need
  • Cloud & Server Platform
  • Cost Containment

IT Issue
Cloud Services

Languages
English

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