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BizIt 2007 Presentation

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BizIT 2007 McCombs School of Business Case Competition PowerPoint Presentation by Genesis (2nd Place)

BizIT 2007 McCombs School of Business Case Competition PowerPoint Presentation by Genesis (2nd Place)

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  • Transcript

    • 1. Rainwater, Inc ET CitySmart Smart Irrigation for the Future [Karen Cheng] [Eddy Fong] [Paras Gandhi] [Julia Pashin]
    • 2. Background – Water Conservation
      • Austin Key Measures
        • Total Usage/Peak Day
        • Outdoor summer water use
      • Water Conservation Task force
        • Conservation initiatives
          • Goal: 1% water use reduction
        • Grant
          • $500,000
          • Solution for outdoor water use
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 3. Background - Rainwater, Inc
      • 4 th : irrigation industry
        • Products: sprinkler/drip irrigation systems, basic controllers
        • Develops, manufactures and markets
      • Goal: product differentiation
        • Pursue enhanced technology
        • Utilize strategic conservation strategy
          • Grant competition as launching pad
      • Assume
        • Existing research/production facilities
      BACKGROUND STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE
    • 4. Strategy
      • The Genesis Way
      • Current Technology
      • Competitive Environment
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 5. Overall Strategy – The Genesis Way Grant & Partnership Utility Savings Rebates STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 6. Overall Strategy: Current Tech
      • Basic controllers – timer feature
      • ET ‘smart’ controllers:
        • Calculate optimal water need creates watering schedule
        • Methods to adjust original schedules
          • Solar/rain/soil moisture sensors
          • Real-time weather data
        • Proven successful
          • SWAT testing
          • Experimentation
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 7. Overall Strategy – Competitive Environment STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 8. Our Solution
      • The ET CitySmart
      • Competitive Environment
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 9. Our Solution – The ET CitySmart
      • Expand into the smart controller market
        • Best available technology
      • Differentiate:
        • Utilize LCRA water usage data
        • Emphasize low cost to customers
          • Bigger rebates
          • Using phone line
          • Using minimal sensors
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 10. Our Solution – Competitive Environment SOLUTION STRATEGY TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 11. Technology
      • ET
      • Healthy Range
      • How It Works
      • Database
      • NRE Costs
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 12.
      • Current ET algorithms combine
        • Sensors
        • Weather forecasts
        • Landscape information
      • Calculates optimal level of water needed
      Technology - ET STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 13. TECHNOLOGY Customize your Water Zone STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 14. 1. Data is collected at home TECHNOLOGY 1 2 3 4 Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 15. 1. Data is collected at home 2. ET CitySmart sends data to servers TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast 1 2 3 4 STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 16. 1. Data is collected at home 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast 1 2 3 4 STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 17. 1. Data is collected at home 2. ET CitySmart sends data to servers 3. Rainwater servers are updated hourly 4. Rainwater sends customized water schedule to household TECHNOLOGY Solar Sensor Homeowner Profile Rainwater Servers City Water Data Weather Forecast 1 2 3 4 STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 18. Technology: Database TECHNOLOGY STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 19. TECHNOLOGY STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 20. TECHNOLOGY STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 21.
      • Software engineering:
        • Algorithm revisions $115,000
        • Web interface $65,000
      • Mechanical engineering:
        • Engineering/Circuit Development $85,000
        • Prototype Development $35,000
      • Testing: $37,500
      • IBM Server: $17,500
      • LCRA Link: $25,000
      • Training: $112,500
      Technology - NRE Costs TECHNOLOGY Total NRE: $492,500 STRATEGY SOLUTION IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 22. Implementation
      • Timeline
      • Partnerships
      • Marketing/Distribution
      • Sustainability
      • Scalability
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 23. Implementation - Timeline Partner with LCRA/Austin R&D: Design, Build and Test Prototype Manufacture Controllers Sell Controllers Target High-Water Users Widespread Advertising 2 4 6 8 10 20 25 30 35 15 Months Year 1 Year 2 Year 3 STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 24. Implementation – Partnerships
      • Partner with the City of Austin
        • City provides:
          • $200 rebates
        • Utilities bill mailings
        • Access to usage database
        • Rainwater provides:
        • Water consumption decrease of over 1% by 2011
      • Partner with Home Builders/Landscapers/Irrigators
        • Target new homes
      IMPLEMENTATION STRATEGY SOLUTION TECHNOLOGY RISK BOTTOM LINE BACKGROUND
    • 25. Implementation - Marketing
      • Marketing
        • High vs. General users
          • High users consume over 25,000 gallons a month
          • Target High users initially
          • Extend advertising to general public after 2 years
        • Pricing
          • Controller: $249
          • After rebate: $49
          • Annual subscription fee: $36
      IMPLEMENTATION STRATEGY SOLUTION TECHNOLOGY RISK BOTTOM LINE BACKGROUND
    • 26. Implementation - Distribution
      • Sales Channels
        • Hardware stores
        • Website
        • Landscapers
        • Irrigation Installers
      IMPLEMENTATION STRATEGY SOLUTION TECHNOLOGY RISK BOTTOM LINE BACKGROUND
    • 27. Implementation - Sustainability
      • Short-Term
        • Low price
        • Quickly and aggressively penetrate market
      • Long-Term
        • New Homes: Maintain home builders partnership
        • Communication: Include broadband/wireless
      IMPLEMENTATION STRATEGY SOLUTION TECHNOLOGY RISK BOTTOM LINE BACKGROUND
    • 28. Implementation - Scalability
      • Expand into other cities
        • Las Virgenes, CA (76.2% outdoor)
        • Scottsdale/Tempe, AZ (66.5%)
        • Walnut, CA (63.9%)
        • San Diego, CA (62.8%)
        • Denver, CO (59.7%)
        • Phoenix, AZ (58.7%)
      IMPLEMENTATION STRATEGY SOLUTION TECHNOLOGY RISK BOTTOM LINE BACKGROUND
    • 29. Risk Analysis
      • City of Austin Partnership
      • LCRA Partnership
      • Price Match
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 30. Risk Analysis
      • No City of Austin Partnership
        • Unlikely because Rainwater saves water and money for Austin
        • Marketing
        • Rebates
      • Contingency (No Partnership)
        • Higher Prices = Lower Market Share (3%)
        • 2008: 151% ROI
        • 2011: 254% ROI
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 31. Risk Analysis
      • No LCRA Partnership - minimal risk
        • LCRA statistics are a core component
        • Publicly available
      • Competitors Price-Match
        • Low price is competitive advantage
        • City Partnership: Cost below Manufacture
        • No Partnership: Cost still below Manufacture
      RISK STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION BOTTOM LINE BACKGROUND
    • 32. Bottom Line
      • Rainwater
      • City of Austin
      • Consumers
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 33.
      • Net Income 2011: $2,000,000
      • Cash Flows 2011: $1,300,000
      Bottom Line: Rainwater STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND Year ROI 2008 271% 2009 306% 2010 351% 2011 410%
    • 34. Bottom Line: City of Austin BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND Year Total Water Saved 2008 0.78% 2009 0.86% 2010 0.97% 2011 1.11%
    • 35. Bottom Line: Consumers BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND Consumer Years to Break Even High 1.01 General 1.55
    • 36. The Genesis Result
      • Rainwater
      • City of Austin
      • Consumers
      STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 37. The Genesis Result Grant & Partnership Utility Savings Rebates BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND
    • 38. The Genesis Result Utility Savings Rebates Grant & Partnership BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND
    • 39. The Genesis Result Utility Savings Rebates Grant & Partnership BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND
    • 40. The Genesis Result Utility Savings Rebates Grant & Partnership BOTTOM LINE STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BACKGROUND
    • 41. Thank you.
    • 42. Appendices STRATEGY SOLUTION TECHNOLOGY IMPLEMENTATION RISK BOTTOM LINE BACKGROUND
    • 43. Appendix: Rainwater Projected Financials
    • 44. Appendix: Water Conservation and Costs
    • 45. Appendix: Consumer Costs and Savings
    • 46. Appendix – Water Assumptions
      • - Percent Households – High Water vs. General : normalized distribution graph of water use by frequency (16,000 household sample); sample from Austin Green Building Program Database March 2001-2003
      • - Average Water Use –180 gallons per day (TWDB Water Use Survey X 3 ppl per household (US Census data) X % High Use/General
        • water use growth rate equal to household growth rate
      • - 58% Outdoor Water Use – given in case
      • - 12% Outdoor Water Saved - Study
    • 47. Appendix – Market Assumptions
      • Number of Austin households: City of Austin data for 2005 and 2010, annualized for growth rate)
      • Market penetration estimates
        • General: 5%, 9, 10, 11, 12; growth rate in teens
        • High: 5%, 9, 10, 11, 12, 15; growth rate in teens
    • 48. Appendix – Product Cost/Price Assumptions
      • Product cost: $165
        • cost comparison of competitor products (based on 80% mark-ups)
        • closest product from ET Water
          • save about $30 from using only a phone line (no broadband) for internet access
      • Selling price: $249 ; 50% markup of cost
    • 49. Appendix – City Cost Assumptions
      • Amount of rebate: $200 : existing rebate is $100 for replacing residential controllers with smart controller equivalents
        • Justification: cost analysis to city of Austin: percent of water conservation budget that will go toward rebates net of savings in water bought (under 10% after 2007)
        • cost of gallon by acre-foot: $57.50 (LCRA website – rate for pre-bought water)
          • 1 acre foot ~ 281K gallons
      • Austin water conservation budget :
        • Austin Statesman article: With conservation, city could delay $330 million water plant , 2/12/2007
    • 50. Appendix: Rainwater Assumptions
      • Rainwater has existing, and the new product will make use of:
        • Research facilities
        • Production facilities
        • Labor
        • Website
    • 51. Sources
      • Irrigation Controller Report for Orange County
          • US Department of the Interior – Bureau of Reclamation
      • Water Conservation Task Force – City of Austin
          • 2007 Water Conservation Strategies Summary, rebate info.
          • http://www.ci.austin.tx.us/watercon/taskforce.htm
      • Texas Water Development Board
          • Water Use Survey 2004, Water for Texas 2007
          • http://www.twdb.state.tx.us/home/index.asp
      • Smart controller company websites:
          • http://www.accuwater.com/app
          • http://www.weathertrak.com/
          • http://www.irritrol.com/
          • http://www.etwater.com/public/index.html
      • Irrigation Association – conservation and SWAT industry info
          • http://www.irrigation.org/SWAT/Industry/