The Space Between Perfect and Good Enough
Profile | Michael Miller
Founder and chief executive, TIP Technologies Inc.
Because Nothing’s Perfect
Quality management isn’t the sexiest part of the space business, but the space business probably wouldn’t be all that sexy without it.
Space hardware manufacturers, particularly the big prime contractors, rely on vast supplier networks made up of thousands of companies providing anything from brackets to traveling wave tube amplifiers. Though often custom-built to exacting specifications, these parts, because they are assembled by humans — or machines programmed by humans — necessarily fall short of perfect.
That’s where TIP Technologies comes in. The Waukesha, Wisconsin, company provides software that documents the condition, history and genealogy of components throughout a manufacturer’s supply chain and processes. Having this information at their fingertips helps managers decide whether a particular batch of components that might display some small flaw — such as a nick on the surface — must be replaced, need repair or can be used as they are.
Good decision-making on a development or manufacturing program, which depends in large part on identifying the people who are best qualified to make a decision, can help keep things on schedule, minimize delays or avoid expensive rework that often becomes necessary if a component fails during late-stage testing. In some cases, it could make the difference between mission success and failure.
Michael Miller, who founded TIP Technologies 26 years ago, is fond of saying that his company operates in the space between perfect and good enough. If everything had to be absolutely perfect, he says, nothing would ever fly.
TIP, whose business is 95 percent aerospace and defense, has seen its revenue increase dramatically in the past couple of years and is now looking to the space sector for additional growth. In particular, the company is eyeing the entrepreneurial space industry that has been gathering momentum in recent years, driven by the likes of SpaceX and Virgin Galactic.
Miller spoke recently with SpaceNews Editor Warren Ferster.
I realize you’re a privately held company but what can you tell me about TIP Technologies’ annual revenue and how much of that is space-related?
We’re in the mid single digits [of millions of dollars] relative to revenue. Our best estimate would be roughly 10 percent of our revenue would be space-related, with the balance being aerospace and defense. A lot of the times we don’t necessarily know what percentage of our customers’ product is going into space — we’re not privy to that. But Orbital ATK, Moog, Teledyne, Lockheed Martin Management Data Systems — these are all customers that are fundamentally space-related as opposed to when we talk to companies like BAE Systems or General Dynamics, who sometimes make components that go into space systems.
What does the growth curve look like?
We had been flat for a while, so I brought in a new person to run sales and marketing and I moved that person up to be president of the company. Ron Dolan has a great deal of experience managing and growing software companies, so we went from basically a flat situation to growing new license revenue at roughly 100 percent a year. But with software companies a large component of revenue is based on maintenance and you can’t really double maintenance in a year; it’s just not practical. Our expectation is to grow total revenue on the order of 30 percent or more per year for the next several years.
Do you expect space to become a larger percentage of your overall business in the coming years?
It’s certainly where we are doing most of our business development right now. We see a great deal of opportunity in that there are a large number of early stage firms that typically start out handling much of the quality functionality on paper. That’s practical in a small environment, of 10, 20, 50, maybe 100 people, but those companies are going to reach a point where the risks of error in paper and the inefficiencies are going to make what we do optimal.
Have you been able to make inroads to date in this emerging space market?
I can’t talk about it until we have the purchase order and even then it’s at the discretion of the customer whether or not we can give out names. We have demonstrated our products to multiple companies and we have verbally been told we’ve been selected but have not yet moved forward.
What about with the more-traditional space companies?
We’re already at nine of the top 10 aerospace and defense companies. There’s certainly opportunity for growth within those organizations. Just because we’re at Boeing or General Dynamics doesn’t mean we’re at every single business unit and every location. So there’s opportunity for growth there. But the biggest opportunity is in the emerging markets and commercialization space. We see that as being that perfect place for us to play.
What about international business?
TIP Technologies participated in the International Air Show in the U.K. and at that time began a relationship with ISBE [of Germany] to market and distribute our product in Europe, the Middle East and Africa. We currently have several customers in EMEA and in 2016 will continue our expansion there. Space as you know is our major focus, and we continue to work with governmental, private and commercial space organizations to expand our footprint there.
You’ve talked about a portal initiative that will make life easier for your customers. Can you provide details?
For the vast majority of our customers, our software is installed on premises. But one of the challenges of the primes is that they have to work with and connect to thousands and thousands of suppliers, and in the defense area there’s a great deal of concern over allowing any connection into internal systems. There’s a tendency of the primes not wanting to have to connect to 10,000 or 20,000 suppliers, and so our concept is to have a centralized clearinghouse or portal for that information where the primes and suppliers would connect to the same data point. The primes then only have to worry about one connection to one server as opposed to 20,000 suppliers connecting in.
Do you do any direct business with government space clients such as NASA or the U.S. Air Force?
We don’t currently have direct business with the government although we are in the process of getting listed and from a business development standpoint we’re active in that area.
Some of the emerging space companies that you are targeting as potential customers are vertically integrated. SpaceX, for example, builds much of its rocket componentry in house. Doesn’t that limit your opportunity to do business with these companies?
I wouldn’t say that at all. Supplier management of course is a big part of the quality management service but we’re just as big in terms of managing internal processes from a quality perspective — managing in-process production, inspection and tests. Nonconformances occur whether you’re buying the parts from a vendor or building the components yourself. The industry is full of intelligent, dedicated people, but even when you’re talking about 3-D printing and semi-automated processes there are still people involved and a big reason why quality exists as an application is because of the potential for human error. Things are never absolutely down-to-the-molecule perfect — you’ve still got to make decisions on whether a part is good enough or do you scrap it and start all over and delay the program. Those kinds of decisions have to be managed internally just as much as looking at the supply base.
How many employees do you have?
We have 38.
Are you staffing up? You mentioned the possibility of establishing a Washington presence.
We’re working with an individual [in Washington] on a contract basis but we anticipate that position transitioning to a full-time company employee. Also we moved to a new headquarters at the beginning of this year approaching two-and-a-half to three times the size of the building we were in before so we have room to grow.
Does or could your company play a role in mishap investigations?
We would if the company responsible for managing that mishap was using our software.
I would think your quality control documentation system would be very useful in investigations.
Absolutely, because you’re going to want to look at the area where you believe the failure was — you’re going to want to go back and look at everything that happened with every component: who touched everything, were there any problems, how were those problems resolved. That data resides within TIP. If you go back to the early days of aviation, there were a lot of aircraft that fell out of the sky due to mechanical problems. When that was investigated a lot of it came back to finding that rework was done — again, it’s an imperfect world — and often it was determined that the rework was incorrect: It was the wrong type of rework, or the person who did it wasn’t qualified.
Do you ever play an active role in mishap investigations?
Absolutely not. Again, for the vast majority of our customers this is inside their firewall — it’s just our application, our toolset being installed in their environment. We would normally never have access to their data.