Nav Dhunay wants to run your oil well.
Now, before you protest that you don't have an oil well, hear him out, because one of these days you might end up with an oil well or 10, and he's got an idea for you. Dhunay's company, PumpWell, has taken "software as a service"—a concept that's so common in the IT world, it's almost mundane—and yanked it into the very analog world of Alberta's oil fields. Dhunay is offering oil-wells-as-a-service.
PumpWell puts small remote-monitoring and control units next to pumpjacks, the iconic bobbing horse-heads that pump oil from wells. "That in itself is not disruptive or extremely exciting," says Dhunay. "But it's more than just an automation controller." What sets PumpWell apart is what they're really selling: people. Instead of just offering a technological tool that lets oil-well owners keep an eye on their pumps, PumpWell has hired a team of its own oil-production engineers, and it sells their time to small and mid-sized firms on a subscription basis. "We're combining the outsourcing model of IT, and tying it into the oil and gas industry," says Dhunay.
It's outsourcing, but with a twist: Companies like PumpWell are expanding the well-understood economies of outsourcing to new sectors, with the help of technologies that are only now maturing. These include the combination of reliable networks and cheap data storage—that thing we call "the cloud"—that enabled so many IT services to be outsourced in the first place. Another is the "human cloud," the idea that professional expertise can be geographically diffused. Thirdly, ubiquitous cell networks and cheap electronics made it possible to connect objects like pumpjacks to the Internet so they could be remotely monitored, creating a so-called Internet of things. Finally, analytics suites let the companies collecting this data improve their offerings, working smarter as well as cheaper.
Dhunay is a start-up entrepreneur who found himself heading up PumpWell in Calgary after stints in Silicon Valley. As he explains it, the logic is simple: Labour costs are sky-high in the oil sector. A seasoned production engineer can run you upward of $200,000 a year, and then there's the overhead of having him running around oil fields in a truck, checking on things.
PumpWell can use its remote networks to keep oil engineers out of the field, run analytics on monitoring data to promote preventative maintenance, and increase the number of pumps each engineer can monitor. The company's top-tier plan offers to monitor a pump for $12,000 a year. Today, PumpWell looks after 600 wells and, Dhunay says, it's revenue-positive. "Our industrial engineers can manage upward of 150 to 200 wells per person. Traditionally, production engineers are handling 30 to 40."
It's not the only company that's using cloud technology to take outsourcing services into new realms. Across the country, in Cambridge, Ontario, a cybersecurity company is applying much the same model to an entirely different business. ESentire specializes in securing the networks of mid-sized companies with critical intellectual property, like financial services and legal firms.
There are plenty of out-of-the-box cybersecurity solutions out there, many of them automated boxes that sit on a customer's network and blink reassuringly. (J. Paul Haynes, eSentire's CEO, derisively refers to these as "blinky-light solutions.") But cybersecurity threats evolve faster than most one-size-fits-all subscription services can keep track of, and there's value in having veteran operators watching a network for anomalous activity that algorithms haven't yet been trained to spot.
Just as PumpWell puts a control box on pumpjacks, eSentire puts a monitoring box on its clients' networks that offers the company access to all of their traffic. In return, eSentire has security experts monitor its clients' networks 24/7, combining human cleverness with automated analytics (the company puts the ratio at 80/20, a pretty good showing for humans these days) as they watch for attempts to compromise a network.
Like PumpWell, eSentire carved out a niche among mid-sized players. "We're not targeting the tier-one enterprises," says Haynes, adding that most of its clients are big enough to have a full-time CTO, but not a dedicated cybersecurity staff. The pitch appears to have found some traction: ESentire recently attracted $14 million from a group led by Georgian Partners and Cisco, and the 100-employee company is in the midst of planning an international expansion.
"That's where the market opportunity is," says Ning Su, the J.J. Wettlaufer Faculty Fellow at the Ivey Business School, who watches the outsourcing market. "In the past, these small and medium enterprises didn't have access to this technology, but now they do." As Su points out, gathering multiple mid-sized clients, rather than just a few big ones, brings its own advantages. Outsourcing companies can turn the perspective they get from juggling different clients into a part of their offering. For instance, Dhunay says that PumpWell's engineers can offer better service, since they're constantly monitoring wells in varying geographies across Alberta. And the fact that eSentire is monitoring networks around the world means it can spot an attack on one client's network, and block it from every other client's network in minutes. The same goes for each company's algorithms—the more data they collect, the better they can program their software, be it to catch new computer threats or to spot early signs of maintenance trouble on a pumpjack.
It all adds up to a new kind of outsourcing that builds on the mantra of reducing overhead, but uses all the tools of our increasingly networked world to do it. And that's keeping companies like PumpWell in the black—in more ways than one.