Featured Interview -- Josh Riley and Luke Stephenson

Josh Riley is principal and Luke Stephenson is business manager for Enterprise Automation, Irvine, California. This bonus episode is sponsored by Aveva. Below is a partial transcript of the conversation.

Josh Riley, Enterprise Automation

ADDEDWednesday, August 4, 2021

  • Q
    What suppliers do you work with? Are you certified or endorsed with any?
    Josh Riley: We work with all the major automation supplier’s software, hardware. AVEVA, Schneider Electric are big ones for us. Rockwell, Siemens again fill in a lot that what we do. We’ve been lucky to be an Endorsed Systems Integrator with AVEVA -- that’s its highest tier of recognized partnership with an integrator. And it’s invitation-only, so there’s a lot of demonstrated capability that we go through and there is a vetting process. 
    We also work with Schneider, and currently, we’re the only Alliance Master Partner in the United States. I think they have 16 globally. 
    In fact,  we’re the only integrator in the world that possesses those two top-tier, invitation-only certification or partnership statuses. We’re proud of that. 
  • Q
    What challenges are your customers facing now?
    Luke Stephenson: The real challenge is trying to get them to establish good long-term goals, long-term planning. It’s like doing your retirement planning. Nobody ever really wants to do it, but it’s the thing that’s needed for you to get to the outcome you want. We spend a lot of time learning what our clients want from a long-term goals perspective so that we can just inch our way forward into those goals. 
    Part of that that’s always difficult for them is procurement. And one of the things this long-term planning does is, we can establish budget so they can predict what’s going to happen, get buy-in from management. So yeah, the long-term planning as typically the hardest one to get them to do and to get through.
  • Q
    What’s unique about how you approach a project?
    Luke Stephenson: I’ll go back to what I mentioned earlier about how we have these two market segments, the public, which is primarily water and wastewater, and then the private. Within the water/wastewater’s community, it gets a bad rep because it’s typically low bid. Integrators that are vying for that work are going and finding it by working with electrical subcontractors, or maybe a general contractor who is going to win or obtain a project based on being the lowest price provider of that project’s cost.
    That creates both the being down the chain from the customer, you have an end customer who hires a general, who hires an electrical sub and then the integrator gets put in their group. So that disconnection from end user is not ideal, plus they are coming in late to the design of the system. It’s already been put together or created and then they just must build it. 
    And then in addition, they are competing on winning that work based on the low price. Whenever that’s the only factor in the decision-making process, it tends to drive what we feel are lost value. 
    What we’ve decided is that we don’t do any low-bid-based work. We don’t find our opportunities, our projects that way. We have a strong system for engaging end users directly. We go the water/wastewater county, district authority and say, “How do we plan for your automation needs long-term? What do you see yourselves doing as an entity serving the public?” 
    Those messages resonate with them. And ultimately what that does is it gets us engaged with them directly. We get to work with them and say, “Is this valuable for you? Should we work this in? Can we budget for this? Where does this fit into the 3-, 5-year plan? And then we get to execute that. 
    Then a lot of that transfers over into that other market, that private industry segment, we’re still engaged directly with the end users that tends to be a little more common there which is why I think a lot of integrators prefer that. Those industries, they like working with end users, a lot easier to get things done.
    Josh Riley: When we get to know these clients, one of the first things we try to do is get true goals out of them. It’s not unusual to be talking to the GM, the assistant GM. In the private side, this would be a CEO, CFO. Let’s understand where you guys are really driving toward. What do you want? Sometimes that requires planning that is like we may need to restructure how the entire SCADA system is managed by a company.
    After we do that, we do a whole lot to interview the client to find out what their preferences are. We know that when these things come together there is a team, so there is going to be us, the integrator. There is going to be the client. And then there is typically two other entities. There’s some sort of internal or external design consultant doing the heavy civil, mechanical, electrical. And then there’s eventually going to be a general on electrical contractor. We talk about how is that team going to get formed? What is it going to look like? What are the responsibilities? Now, once we get past that, we create what we call the instrumentation control and electrical standards.
    And to give a real simple example, we’re going to talk to them about a valve. How do you want your valves to work? What IO are they going to have? And it sounds so simple but the outcome from doing it is big. We take this information, and we teach it to the design consultant. We then check all the design consultant’s work. So, we’re taking real standards, and we’re not only asking for them to done, but we’re also making sure they get done.
    Luke Stephenson: And in addition to that, because we’re engaged with clients longer term rather than just a project, our staff is really incentivized to think that way because they are the ones that inherit some of those gripes and complaints if they don’t think about that well enough. Because when the project ends, there are 2 or 3 years left typically on our contract where we’re continuing to help do some other things. So, we don’t want to inherit those problems either.
  • Q
    How much of your business is repeat?
    Luke Stephenson: About 80% to 85% of our business is repeat. Let me describe how we define that. Once a client places a purchase order with us, or places an order project, help, service, anything like that, the first 12 months following that, any orders they place we consider new client business. So, if Pepsi comes along and has a line upgrade, and they hire us, and then for the next 12 months, we get two or three POs, we consider all that new client business when we book revenue. At the 12th month mark and forward, that becomes existing client business.
    About 80% to 85% of our revenue is with customers after the first 12 months. And then it’s usually repeat. Some customers have been with us for 10, 15-plus years. If they stick around that long, it’s letting us know that they see value in what they’re getting and what they are doing with us.
    Josh Riley: Yeah. And I’ll add, some of these long-term relationships are with municipalities, which, if the people listening understand the procurement processes, that means they’ve gone to bat for us multiple times. It’s really an endorsement of our relationship.
  • Q
    What do you expect for the next 12 to 24 months?
    Josh Riley:  A lot of that is going to fall on Luke. We’re trying to grow. We’re trying to grow faster than we ever have. And you’ve got a company that is owned and run by engineers who are trying to get good at sales. You take somebody who starts a company who is a salesperson and you get this incredible amount of sales coming in but their operations are a bit of a disaster. We’re the other way around. We’ve got the engineering absolutely nailed, and the sales thing is something that we’re learning and progressing, and it’s going well. 
  • Q
    What advice would you give to a prospective customer researching automation/controls engineer or system integrators?
    Luke Stephenson: Products solve a myriad of issues and can present the right tool for the job. But most products are capable, right? And what introduces more variability or undesirable project outcomes is implementation. So, maybe that’s no surprise coming from a systems integrator. But if someone came to us and said “Hey, it’s got to be this technology. It’s got to be this technology.” Other than a very few, that’s going to work. We can make that work. There are going to be pros and cons certainly.
    So, we would say, make sure you understand who is going to be doing the implementation. Do you have a high level of trust or faith in their capability? 
    The second thing would be using a show-and-tell evaluation method. Ask to see test documentation for the last project they did. If they can produce that very quickly, you can look at it and see that it wasn’t written in chicken scratch. You’re probably headed in a pretty good direction. Come up with some show-and-tell methodology.
    The third thing would be hiring practices. Whoever they staff your project with or their company with, they end up being the extension of staff to get your project done. Do a little digging into how they find talent, how they replace talent. 
    One of the things we pride ourselves on is finding really great talent. And while there are always differences in people’s ability or experience, creating that sort of team-based level playing field so our customers can say, “As long as EA shows up, I’m taken care of.” And we’ll deploy the right resources and make sure they are supported. 
    I would say products are great but make sure you really make an emphasis on implementation. Choose your integrator before you choose your product if you are in that position. Use a show-and-tell-based method so you can see that the work they are doing is what they say and do. And then, investigate their hiring practices, make sure that they are hiring great people that you can count on.
  • Q
    When somebody asks, “Why should I choose CSIA certified?” What would you tell them?
    Josh Riley: EA is certified, and it’s something that’s part of our standard sales deck. When we’re going out and we’re talking to clients, we’re talking about it every single time. And it comes back to we’re after qualifications-based work. And it doesn’t matter whether this is private or public. We’re always looking for the qualifications-type work.
    CSIA certification is simple to understand. In the end, it’s saying that not only can you put project together, but the business runs well. Anything from HR to accounting, all of it, it’s run well. The clients we work with see the value in that – it is a differentiator that we use.
  • Q
    If you could go back in time and sit down with your younger self what advice would you give him?
    Luke Stephenson: Start networking and interacting with people a lot earlier. I was fortunate enough, with limited interaction, to meet Josh and Scott and Derrick [Malcom]. And fortunately, for my life and my family’s life, that has led me down a positive path and a career that I enjoy with people I love working with. 
    But there is probably a lot more that I could either paid it forward or even learned other things if I would have started networking earlier. It is only in the last 2 or 3 years -- partly because of my role at EA -- that I’ve really started to leverage events and LinkedIn, and just different things to be able to interact. Frankly, I am no pro at it even now, but I think I would start earlier.
    Josh Riley: For a long time, I really thought of myself as an introvert. Hey, I don’t really like to hang out with people this and that. And I found that that just wasn’t accurate. That’s not what was going on. And what was really going on is I just like being around interesting people. And when I’m around interesting people, I love the conversation, I love to be out and talking and chatting and… So, I wish that I knew that earlier, I had a mindset that didn’t let me network and get to know as many people as I could. So yeah, looking back on it, I would have said “Change that mindset, that’s not right.”