Distence – Intelligence for industrial assets
Distence is an IoT technology company that introduces intelligence to industrial machines and equipment. We specialize in demanding environments in a fast growing market. Invest in a growing Finnish enterprise that offers intelligent IoT solutions!
Distence is an industrial IoT technology company that specializes in demanding environments. Distence’s solution embeds intelligence into industrial machines and equipment and connects them with business processes. The solution is suitable for both new and existing machines.
Industrial machines and equipment, such as motors, pumps and gears, are valuable assets. But first and foremost, they can be critical elements in a company’s core processes. Up to 80 per cent of the lifecycle costs of machines are made up of factors that can be affected, such as energy consumption and maintenance. For example, 32% of the lifecycle costs of a pump are related to energy, 20% to maintenance, 9% to idle use, 9% to use and 7% to the environment (Tom Dabbs, Plant Performance Services Group). Considering the lengthy lifecycles of machines—up to 30–40 years—these costs can become multiplied over decades.
Digitalizing these machines and equipment makes the condition, use and operation of the machine visible as part of the business process. This information can be used to enhance the productivity, energy-efficiency and safety of the machines or to create completely new intelligent services. Digitalization enables the extension of the useful life of machines worldwide and the modernization of existing machinery without the need to replace old machines. The end result is a higher rate of return for industrial capital.
Distence’s solution is based on over ten years of experience in producing information in demanding industrial environments. Distence has provided its solutions to leading industrial companies in over 40 countries, making thousands of machines intelligent. Its Finnish and Swedish customers include Moventas Gears Oy, ABB, Detector, Lambertsson and Skanska Maskin.
The company has entered a phase of growth. After a long product development phase and making its offering scalable, the company has reached the point where it can focus on internationalization and growth.
Industrial internet technologies at the core since 2012
Distence’s roots date back to 1998 when the renowned Linux expert Kaius Häggblom established a company called Oliotalo. Under Häggblom’s command, the company focused on coding and project deliveries. In 2008, Oliotalo shifted its focus from product deliveries to the sales of products and solutions.
When the Miston family business purchased the majority of shares in Oliotalo in 2012, its areas of specialization were intelligent, remote, condition-monitoring systems and the design of embedded systems. Four years later, the company changed its name to Distence (Distributed Intelligence), which better reflects its core business.
Nowadays, Distence is an IoT technology business that employs 12 people. Its revenue target for 2018 is EUR 1.1 million. Distence’s objective is to grow its revenue to EUR 9 million by 2021. The company CEO is Kim Korhonen. It operates in Finland and Sweden, and its head office is located in Espoo.
Distence has received the following international rewards and recognitions:
- Munich Cleantech Innovation Award, 2015, first prize (Germany)
- Kemira Innovation Challenge, 2016, first prize
- TOP 7 – Global IoT Contents and Congress in Beijing, 2017 (China)
- TOP 25 in Nordic Cleantech Open, 2018 (Sweden)
Join our growth story:
- a dramatically growing market and megatrends support our growth
- a tested and effective intelligent IoT solution
- SaaS-based business is predictable and not dependent on economic cycles
- an experienced team with over 10 years of expertise and experience in technology and the IoT sector
- the focus has shifted from product development to enabling growth
Our business & market situation
Distributed Intelligence as a key factor
Distence specializes in the digitalization of both new machines and legacy assets. With Distence’s solutions, companies providing industrial services and machine and equipment manufacturers can exploit the potential of the industrial internet with the help of robust and proven technology.
Distence introduces intelligence to the equipment using standard sensors and Distence smart terminals. Devices and settings are managed in a device cloud. The device cloud complements the smart terminals, offering a robust, scalable and flexible solution for building intelligent IoT services.
The data collected by smart terminals is processed and analyzed near the machine or device. This edge computing solution minimizes data transfer, saves costs and allows the data to be utilized immediately at the device level, in addition to making it available for business needs in the cloud.
Bringing intelligence to the device level enables building autonomic functions into the device, using algorithms and parameters and controlling the device from the cloud, for example, based on weather data, spot prices for electricity or data analytics performed in the cloud. The platform provides an efficient reporting tool and improves the controllability of industrial machines and equipment that are in unattended or unoccupied areas of the plant.
IoT solution for more profitable business
The Distence solution supports the preventive maintenance of machines and equipment, enhances energy-efficiency, extends useful life, helps to optimize production and paves the way for machine learning and AI solutions. Furthermore, the customer can use the technology and the solutions to build intelligent services and new business models.
Case Moventas Gears Oy – reliability through intelligent technology
Moventas Gears is a Finnish wind turbine gearbox manufacturer that uses Distence’s service platform, portal and smart remote-control terminals as the foundation for its condition monitoring service. Thanks to Distence’s solution, Moventas found new service business potential in condition monitoring. Wind turbine operators that use Moventas’ gearboxes receive more reliable operating time and avoid the costs associated with unexpected gear breakdowns and interruptions in use.
More case studies are available on the Distence website at: https://www.distence.fi/en/case-studies/
Features of the solution
Flexible IoT solution
Flexibility comes from our product-centered way of working with customers and the modular technology used in Distence’s smart terminals.
Robust and proven technology
We have tested our technology in physically and technically demanding circumstances on five continents, from high-frequency environments to desert heat and the storming Arctic Sea.
Fast market entry
Thanks to our extensive experience and proven technology, our customers receive an industrial IoT solution quickly, with low technology-related risk without the need for major investments in development. The flexible technology can be used in both new machines and legacy assets.
Sustainable and scalable business
Distence’s sustainable business is based on continuous customer relationships. It covers equipment sales, SaaS-based monthly invoicing and expert services.
The operating model is straightforward and scalable. It starts by identifying business objectives and the users of the information, which ensures that the solution meets the customer’s requirements and ROI targets. In some cases, the customer’s business needs are clear and sometimes we refine them together. Next, Distence will configure a pilot solution for the customer, using the technology modules.
The pilot is a central element of the operating model that ensures that the solution features and functionalities meet the customer’s needs. During the piloting phase, Distence fine tunes the solution to satisfy the customer’s wishes, both in terms of the smart terminal and the Condence platform. After piloting, the solution is standardized and installed according to the customer’s business demands.
After a new smart terminal is installed and starts to produce information, it connects to our Condence service platform, which is subject to a monthly charge. Distence’s revenue is made up of both the smart terminal sales and the monthly recurring revenue (MRR). Furthermore, because the nature of the business relationship is continuous, customers tend to have a variety of needs during our cooperation, and Distence addresses these needs by selling new solutions. Examples include customer-specific further development or hosting services. Customers order the devices from Distence in instalments and install them inhouse or with a third-party partner. Distence focuses on providing the technology and operating the service platform. We have outsourced our production.
Rapidly growing market
Distence’s core business is the digitalization of industrial machines and equipment in demanding environments, and its primary market is the industrial internet of things (IIoT). Digitalization of industrial machines has a huge share of the rapidly growing IoT market. However, the use of digitalization has barely started in the IoT sector: currently only 25 per cent of manufacturers of industrial products and only three per cent of oil and gas companies use digitalization to their benefit. (State of the Industrial Internet of Things 2017, PTC).
The IIoT market comprises both new equipment (OEMs) and the retrofitting of existing equipment. The value of legacy assets is billions of euros, considering the long lifecycles of the machines, which vary from 10 to 40 years. Extending the lifecycle and operating time of the machines, decreasing operating costs (incl. energy consumption), optimizing maintenance and spare parts, offering new services and promoting sales can increase the value of the market to trillions.
The expected compound annual growth rate (CAGR) of the global industrial IoT market is approximately 25 per cent, and its value is expected to rise to over 933 billion by 2025 (Grand View Research, Inc.).
Towards edge computing. By 2019, at least 40 per cent of all IoT data will be stored, analyzed and utilized near its source (IDC, International Data Corporation).
The market change has been clearly reflected in Distence’s offers and pilots. The number of discussions, pilot projects and deliveries is increasing rapidly in northern Europe.
Distence’s extensive development cooperation with highly demanding clients, and its over ten years of experience in the field, have given the company an excellent position on the market. Reliability, experience and a proven track record play a crucial role in the segment of demanding environments and business-critical functions.
Distence mainly competes with inhouse development by the companies that are its potential customers. Meaning that its competitors are engineering and design firms. However, these firms offer project-based solutions that are not scalable or continuous. This means that the customer has to take responsibility for the lifecycle management of the software and equipment, which is not part of their core business.
There are also players that specialize in individual elements in the field, such as component and equipment providers, local and global platform providers and alternative solution providers, including companies specializing in industrial automation.
Distence, on the other hand, provides a comprehensive service that produces information for the customer. This information is valuable. In Distence’s view, the growing trend is to outsource this infrastructure, which allows the customer to focus on the information produced by the system and on other currently relevant aspects.
The Distence Team is a balanced mix of profound experience from machine and hardware manufacturing industry, unbiased creativity and entrepreneurship with a vision for the possibilities of digitalisation. The team consists of experienced professionals with industrial background as well as energetic and technology-intensive entrepreneurs with international experience.
Kim Korhonen has served as the Distence CEO since 2014. His previous position was Head of Sales at Distence. Kim has also worked in a range of sales and marketing management roles at Efore, IBM and DELL.https://www.linkedin.com/in/kim-korhonen-b6050/
Head of Sales
Janne-Pekka Karttunen has worked as Head of Sales at Distence since 2017. He has over ten years of experience in sales roles at global companies such as Cartego, Ascom and Niscayah (Securitas).https://www.linkedin.com/in/janne-pekka-karttunen-6b42a819/
Head of Technology
Pasi Lahti has served as Head of Technology at Distence since 2010. He has over 16 years of experience in R&D and the development of technology. Pasi has worked at Aalto University and as Head of R&D and System Developer at Distence since 2006.https://www.linkedin.com/in/pasi-lahti-3bb4b851/
Panu Virtanen has been the Distence Operations Manager since 2017. His previous roles include product development management roles at Ensto and operations management at Vilant Systems Oy.https://www.linkedin.com/in/panuvirtanen/
Juha Pankakoski is the Executive Vice President, Technologies at Konecranes Plc. Before joining Konecranes in 2015, Juha worked in telecommunications and IT.https://www.linkedin.com/in/juhapankakoski/
Harri Ollila is a partner at VNT Management Oy. He has over 22 years of experience in the electrical engineering industry and over 5 years in the communication technology industry. Harri has worked in management roles at Elcoteq for several years (SVP, European Operations and SVP, Corporate Relations) and in sales and management duties at ABB. He has also worked as an energy consultant at Ekono.https://www.linkedin.com/in/harri-ollila-78a0a0b/
Juha Silvennoinen is the CEO at Serres Oy. Formerly Juha has served as the President and CEO of GS-Hydro, as President at Metso Minerals and in various roles at ABB. He offers a wealth of experience from several industries and large global corporate environments.https://www.linkedin.com/in/juha-silvennoinen-2881a047/
Chairman of the Board
Timo Tammisto is the chairman of the board and CEO and Partner at Miston Oy. Timo has several years of experience in both small and large public IT and consulting companies in the US. For 10 years, he served as the CEO of Solotop, a technical trading company.https://www.linkedin.com/in/timo-tammisto-a18a21/
Unlisted growth companies are high-risk investments. Making a high-risk investment involves risks, for example the risk of losing your investment, lack of liquidity, irregular or rare dividends and dilution of your stake. Please study this risk warning before making a high-risk investment.
It is recommended that you familiarize yourself with the investment target of your choice, reduce risks by investing in several investment targets and balance your investment portfolio with more liquid investments. We also advise you to pay attention to the Target Company specific risk descriptions, which you will find included in the pitch materials.
Attached to the pitch there is a creditworthiness report that may be relevant for the investment decision
As with any company seeking to gain a new foothold on the market, there is always a risk of failure.
At the operative level, the risks are related to the company’s ability to penetrate the selected markets and sell its products. Finding and recruiting the right people and partners is critical for success. This also includes successful strategic partnerships and cooperation arrangements.
External risks include competition, possible negative trends in the global economy, and technology trends. The rapidly growing market attracts new operators: the competition becomes tighter with more players on the field. On the other hand, the emergence of new players shows that the solution is important for the customers’ business. This, in turn, increases competition between the customers, which increases the demand for Distence’s products. Experience and flexibility are Distence’s main competitive advantages, but the time window will not remain open forever. As market trends change, our solution will be able to adapt to different verticals, thanks to the technology on which Distence’s solution is based.
Any fluctuations in the global economy can also slow down the company’s decision-making, which has a negative impact on the growth rate. Technology trends and other possible industry trends could develop in directions that differ from the direction chosen by the company. This risk can be managed through careful market monitoring, close cooperation with customers and partners and flexible technology architecture.
The third group of risk factors includes the company’s finances and the time allocated to financial management. Currently, Distence’s expenses exceed its cash flow because of its aggressive growth targets. This means that the operations depend on external funding. The aim of this round of investments is to expedite the company’s growth.
Because Distence’s products and solutions have been installed on thousands of sites globally and their benefits are proven, and because the company’s product development has been strong for ten years, we believe that our solution has excellent potential to succeed.