MotorWeb in Brief
"If I'd had greater business acumen I would have walked away, but I naively went into the lion's den and kept presenting my business plan and ideas to anyone who would listen."
Pat Costigan, founder MotorWeb
How audacious is this: ask the government to give away its information, package it into electronic databases and then sell it as a commercial service.
This, at a time when sensitivity over privacy legislation was rife, the web was in its infancy and the concept of e-government hadn't even been thought of.
For Pat Costigan, the founder of Auckland company MotorWeb, none of that mattered. From an idea that first came to him in 1992, he has gone on to build what could qualify as New Zealand's original Web 2.0 business. And provide a lesson in how – and how not – to create a genuine Kiwi online success.
MotorWeb uses the Internet to fulfil a straight forward-sounding goal: to simplify legal compliance and improve consumer protection in the motor industry. For instance it runs a vehicle ownership and history check for prospective car buyers, including whether there is any money owing on the vehicle they have their heart set on. It also makes it easy for resellers to view the car's ownership history.
But when Costigan first set out to provide an electronic means of doing these things, he had to invent everything as he went along, including the notion of a commercial operator making use of government-held information.
It was the kind of challenge a long association with The Inventors Trust gave him the perfect credentials for. However, it ended up being far from plain sailing.
To begin with, Costigan had to keep the idea alive through the early 1990s, when high computer hardware and telecommunications costs made his business plan unviable. When the "new economy" came along later that decade in the form of the internet and affordable personal computers, he could see his time had come.
At that point he had to take on the government.
"I was innocent and naive enough to think it was doable," Costigan says. "If I'd had greater business acumen I would have walked away, but I naively went into the lion's den and kept presenting my business plan and ideas to anyone who would listen."
In the lion's den were officials from the government's commercial affairs and land transport agencies whom Costigan acknowledges were being asked to consider something they'd not encountered before.
"I went to the government and said, now, all I need to make this wonderful thing happen is to have an interface to plug into and I'll take data out and combine it with other data and then I'll modify it and write it back to you.
"But nobody had ever asked for that before and it was highly scary."
After numerous presentations covering his business plan and data security and privacy issues, he eventually got the support of a couple of officials, and was given the go-ahead.
Costigan had worked out a system architecture, as implied by the company name, that delivered services via the web. Customers — primarily car dealers, repairers and financiers — would need only a standard browser and internet access to use the system.
That might sound old-hat today but was ground-breaking when he formulated it in 1995.
According to the nomenclature of the day, MotorWeb was an application service provider, or ASP, when it went live in 1997. In today's terms, Costigan says, the business model is software as a service, or SaaS.
Naming conventions aside, the company learned some important lessons during this early phase. First was avoiding over-investing in hardware, and second was not getting trapped into using proprietary software.
Costigan says the second lesson was learned the hard way, when their IT provider decided to stop supporting the application development environment MotorWeb was using, even pulling the plug on the servers which hosted support forums relied upon by developers. The company abruptly weaned itself off this architecture, spending six months redeveloping its systems.
"From that day I swore off proprietary software and have used open source ever since," Costigan.
Its present hardware is state-of-the-art IBM 3550 servers and 3650 storage systems.
Other roadblocks have appeared and been surmounted in the decade or so of MotorWeb's existence. Finances were tight in the years following the dot-com meltdown, teaching Costigan the importance of making sure investors were committed to the cause.
Offsetting that rough patch was the commitment of staff, whose financial stakes in the business spurred them to stay with it and put in long hours over several years.
Now they are getting the payoff they've worked for. Revenue has been growing 100 per cent a year since 2001, and the company claims 80 per cent of the market it operates in.
MotorWeb is doing about two million transactions a year, 1.5 percent of which are with members of the public, who pay $30 a time for a vehicle report. Total revenue is in the $5 million to $10 million range.
Customer accolades and several awards have further rewarded MotorWeb.
In 2003 it won the Computerworld e-Business of the Year award. The following year it was highly commended in the Westpac Hi Tech Awards as a high-growth company, and in 2005 and 2006 it made the Deloitte/Unlimited list of the 50 fastest growing companies in the country.
Overseas interest is also being shown in the company's intellectual property, Costigan says. Watch this space. "We were basically pioneers in New Zealand, we believe, in e-government."
That was at a time when most companies were feeling their way with business-to-consumer web models.
"Our key innovation was our business model, which was to do e-government transactions for our customers on their desktop."
And, Costigan says, there are plenty of ideas still waiting to be implemented in his original business plan.
Conclusion - Key Business Insights
The outstanding success of MotorWeb highlights the opportunities that abound when new technologies emerge. Through a combination of luck, tenacity and timing, MotorWeb caught the upsurge in e-government programmes (see graph).
The Number of e-Govt Projects since 2003 (forecast in 2005)
Source: e-Govt 'e-awareness' survey 2005
The digital transformation of government – and of industries – continues. According to Laurence Millar, the official steering New Zealand's e-government efforts, government services have by now "pretty much" been transferred to the web. The next stage is greater agency integration.
"You do can most things online now but you can't yet do them in a joined up way. So the ability to do that is one of the major themes."
Some examples have been around for a number of years. Through links between the Companies Office and IRD systems, it has been possible for someone forming a company to, at the same time, obtain an IRD number for the new entity.
The extension of that is to merge, rather than merely link, the systems of agencies with a role in a particular transaction. In the education sector, work of that sort is being done to integrate communications between teaching institutions and the parts of government they deal with.
The same is going on among agencies in the health, justice and border control sectors.
Those developments are aimed at meeting the SSC's June 2010 goal of using technology to transform the operations of government "to provide user-centred information and services".
It may be hard to repeat the success of MotorWeb in the vehicle industry but key questions to prompt your thinking are:
The New Zealand e-govt strategy was formed in 2001 and by 2005 had been absorbed into the state Services Commission after the release of the Digital Strategy Document. This document is now being revised, Digital Strategy 2.0, in consultation with industry through a wiki.
The e-government goals as stated in 2001:
To engage with government in its e-govt strategy bone up on some key facts first. Here are some key links:
The history of e-Govt
Government Web Standards Wiki
Summary of new government digital strategy
Digital strategy wiki
This customer story is based on information provided by MotorWeb and illustrates how one organisation uses IBM products. Many factors have contributed to the results and benefits described; IBM does not guarantee comparable results elsewhere.