Ep.225: Alex (@aebridgeman) is joined by Anthony Bramante (@AnthonyBramante).
My guest today is Anthony Bramante who leads In Control, an automation control systems integrator primarily serving water and wastewater facilities at small and medium-sized towns across the Northern Midwest. Control systems aren’t exactly top of mind for me every day, but after chatting with Anthony I’m seeing them everywhere and realizing how integral they are to our daily lives.
Anthony and I talk about example control systems, the importance of cybersecurity and how vulnerable our water infrastructure truly is, how add-on acquisitions play into their growth strategy, recruiting from college campuses, and designing effective internship programs.
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(00:00:00) – Intro
(00:03:26) – A walkthrough of InControl
(00:06:29) – Anthony’s career
(00:09:15) – What are your control systems doing at various facilities?
(00:12:08) – What are some origin points for new customers?
(00:18:02) – How have you built a positive reputation?
(00:19:32) – How do you find talent?
(00:22:52) – What goes into a great intern program?
(00:25:39) – Where should your salespeople be spending time?
(00:27:30) – Does everything come down to the lowest bid?
(00:30:01) – Is there an M&A process with players in other markets?
(00:34:25) – What is your industry’s infrastructure and cybersecurity state?
(00:41:37) – Could you expand to other municipal facilities?
(00:43:33) – Could you work with airports?
(00:44:31) – What ideas or challenges are your top of mind?
(00:48:37) – How much of your work can you standardize?
(00:50:25) – Is there any new technology you’re excited about?
Alex Bridgeman: Well, Anthony, it’s great to have you on the podcast. I’m thrilled we get to chat a little bit more about In Control and control systems and buying other companies and all that other stuff. I’d love to just start with maybe a walkthrough of In Control and the business and then kind of how you got there. That’d be, I think, a fun place to start.
Anthony Bramante: Yeah, absolutely. So, In Control has been in business for 30 years, 31 years this year. And we say we are an industrial or automation control systems integrator, which like a lot of things is this weird niche, and we’re a hybrid of engineering and manufacturing firm. In our case, 95% or more of our customers are water and wastewater utilities, so municipal utilities. Our customers are small and medium-sized towns, suburbs, small cities all over Minnesota, North Dakota, South Dakota, Wyoming, Montana, Iowa, and into Wisconsin for the most part. And so, the business, we work as part of kind of big capital construction projects often where there might be a new water treatment plant or an expansion to an existing wastewater treatment plant or kind of isolated upgrades within those distributed systems. And we will design, we’ll do the electrical design for an industrial control panel which has a couple of different UL certifications with it that we’re authorized to label once they’re complete. We’ll design those panels, build them, they’re always custom. And then we have a whole team that focuses on programming the PLCs, the programmable logic controller, which is kind of the industrial automation computer, and that will program all the automatic sequence of operations for whatever the equipment does at that given site. And that team also handles most of our field engineering, testing, and commissioning. Then we have another team called our SCADA engineering team that handles integrating and programing we call it SCADA software, but the software that runs on a Windows-based PC or server that you and I would be familiar with that does all of the graphical display of what’s going on in the treatment process as well as the data logging, reporting. And there’s a big component for us too of remote alarming, where this system provides the alarm so that it needs- the treatment systems all need to operate 24/7. We need water in the middle of the night, and if you flush your toilet in the middle of the night, it needs to be taken care of. But the vast, vast majority of municipal utilities do not have 24/7 staffed operations. So, the whole treatment process, all the equipment, the pump stations, the lift stations are all operating by themselves automatically, but if something goes wrong, it needs to be able to send an alarm out by phone or text or through a mobile application to whichever operator’s on call and give them the ability to remotely and securely kind of go back into the system we’ve provided and decide if they’ve got to get out of bed at 2 a.m. and go do something or not.
Alex Bridgeman: How did you become CEO? How did that happen? What was your path prior?
Anthony Bramante: Yeah. So, both my business partner, Graham Arntzen, and I had worked for electric utility or electrical construction related businesses for probably 10 or 15 years each. And back in maybe 2018, I think we were both looking to do something a little bit more entrepreneurial. He comes from a very entrepreneurial background. His parents were both entrepreneurs and owned their own businesses. While I don’t necessarily have that background, I found that I was doing fine rising through the corporate ranks. And the P&L I was in charge of at a big corporation was getting bigger and bigger, but I could quickly see it was getting less and less fun the higher up in an organization that’s a Fortune 500 sized company you went. So I was looking to do something a little bit more entrepreneurial. So we came across the whole search fund or entrepreneurship through acquisition model and said this might be a fit. So we put together an unfunded sponsored search. So my job for, I think my full-time occupation for just under two years was searching to find a company in Minnesota to buy. And Graham and I did that with the intent that we had raised the investment capital necessary, buy out the owners, looking for retiring owners, and then we would take over as the owner operators for day-to-day management. And so, we found, looked at, I think I probably talked to over 300 business owners in Minnesota whose businesses had some relation to electric power or electrical construction or utilities. And we found In Control, and the husband and wife, Jeff and Kay Clemetson, who had started the business in the 90s, were looking to retire and were looking for somebody to kind of take over their legacy. They had built the business to be a just pillar of the control systems for water and wastewater in our region with some really great engineering standards and practices and culture. They were looking for somebody to take it over and continue that legacy and found Graham and I. And so we put together the buyout and took over the business on October 1st of 2019. Then a pandemic hit and then a semiconductor supply chain crisis. And despite all that, five years later, we’re still here and growing and really enjoying kind of the roles we have at In Control.
Alex Bridgeman: So, you mentioned primarily being or primarily servicing water, wastewater utilities. I know nothing about those facilities whatsoever beyond that, you’re right, they need to be able to work in the middle of night. What kind of control systems are you hooking into and what are some examples of things that those systems might be doing at any of these facilities?
Anthony Bramante: Yeah. So, I mean, I think at a very simple- a smaller town might have a single water treatment plant with half a dozen wells and a water tower. And so, at each well site, you’ll have either a small control panel controlling the pump at the bottom of that well pumping water up, just bringing in some signals in terms of level of water in the well, maybe rate of flow. And those control panels can be located not necessarily on top of the well, but nearby. And then that’ll pump into the water treatment plant. And there’s lots of different types of treatment processes, but there’ll be typically a bunch of pumps and motors or blowers and a lot of sensors, whether it’s sensing temperature or flow or level or different analyzers actually measuring process values in the treatment process itself. And oftentimes there might be a gravity filter, so a giant tank with a bunch of, it’s more complicated than this, but a bunch of sand at the bottom that the water filters through and that cleans the water as it goes. And there are regular backwash processes that have to be programmed to flush out filter systems and things. But all those pumps, valves, motors, et cetera, all in that plant would be controlled by one or multiple control panels. And then there might be a few very large pumps we call high service pumps, which are pumping water out of that treatment plant up into a water tower nearby and there might be another control panel on that water tower to measure the level of water in the tower and whether that’s through pressure or a level sensor or some other means. And that’d be an example of a fairly simple system. And the actual hardware and software we are putting together and putting in place is common to a lot of different industrial automation disciplines. So we use primarily Rockwell, Allen, Bradley PLCs. We use SCADA software from a few different vendors. But it’s a lot of typical industrial electrical equipment. And I think notably, if you looked at the control system that goes into a packaging facility or an airport or lots of different manufacturing sites, auto manufacturing, it is very similar, if not identical, hardware and software that we’re putting together. We just happen to specialize in water and wastewater treatment systems.
Alex Bridgeman: From our earlier conversation, you talked about these projects are mainly like a project with some sort of recurring service afterwards just to service the machines and keep them running. You talked about a lot of the installations come from construction projects. What are some of the origin points for a new customer for In Control? And how do they get from maybe they never heard of you or like are looking around at systems integrators and now they’re a customer? What’s that path for them look like and what are some variations of it?
Anthony Bramante: So it’s a very insular little industry and there’s a relatively fixed number of municipal utilities. Like the state of Minnesota isn’t going to add 200 towns next year or anything. It’s the same set of customers. But municipalities are typically served by consulting engineering firms that do municipal engineering, all sorts of civil engineering, municipal engineering. And they will be the ones who often are identifying major plant upgrades or improvements and doing the design work for what that treatment process needs to be or what upgrades a city needs to pursue. So, they’re often familiar with the two or three or four control systems integrators in a certain region that can do that work and will list us in a specification that goes out to bid. So oftentimes we think about, and I think traditionally in our industry, it’s a very project-based, construction-based mindset of there’s a bid out on the street. It’s a 400-page plans and specifications for an upgrade to a water treatment plant at a city. If we have an ongoing relationship with that city and they trust us and have vetted us, we might be listed as we would say the basis of bid has to be the control systems provided by In Control. Or it might say, the control system must be provided by In Control or two or three, one or two of our other competitors might be listed there. And then, we’re providing a quote or a price to either the electrical subcontractor or general contractors who are bidding that work, but it’s government contracts, meaning they really want to get at least two or three bids, and they often are locked into going with the lowest bid of the general contractors. And so one way we acquire customers is by just getting in on a big project and doing all of that work, but through that project, which might take a year or two years or longer to complete, we do a great job providing a great control system solution, which for day-to-day for the operators of that plant becomes how they run their system, how they interact with their day to day job. And assuming they’re like us and it goes well, and for us it almost always does, anytime they have a small upgrade or it’s time to refurb that booster pump station, or we are adding a water tower and a booster pump station, we’ll often be selected then to provide the controls component because that’s got to integrate and talk to the rest of the system. And so just having one systems integrator that’s pulling everything together and one common set of programs has huge benefits just for being able to support and grow that system in the future. We think about it often as we might have to win a competitive bid to acquire a new customer. But then for the ongoing service, we’re able to provide greater value because we’ve got some confidence we’re going to continue to be the service provider for that customer longer term. I think one thing we’ve recognized in our five years of owning the business now is that the amount of technology that’s required in these systems is ever increasing, and the complexity of it, if you look at now compared to 30 years ago, there’s just so much more technology. Even just measured by the number of devices that have an IP address in a treatment plant, it’s got to be orders of magnitude greater than it was 25 years ago. As well as there’s been regulatorily state departments of health, state departments of natural resources, the requirements they place on the water treatment treatment process or the wastewater treatment process are getting more and more interested in collecting greater amounts of data and reporting that. So, if you’ve heard things in the news about like PFAS, the forever chemicals need to be limited to no more than three or four parts per trillion, there has to be a system measuring that and reporting that, and that’s our control system. And so, one thing we’ve kind of identified is the complexity of these systems is increasing, the demand for the information coming out of them and the granularity of control is increasing. Rather than look at this as you do a $10 million plant upgrade, $500,000 of which is a new control system, and then you don’t touch it for 20 years until it’s time to upgrade the plant, there’s really ongoing testing, inspection, and maintenance of these control systems that needs to be done to make sure they stay up and running, to make sure the alarming is working in the middle of the night. And so, we’ve, a couple of years ago, launched what we’re calling our automation and cybersecurity service plan, but really it is a managed service provider offering, and really working hard to kind of pivot our whole understanding of our business from a construction based, project-based business to one where we’re a managed service provider that also provides capital equipment as part of our model.
Alex Bridgeman: And could you use that plan to service other municipalities who maybe installed control systems with a competitor of yours?
Anthony Bramante: Yep. And that happens. Even today, we have a competitor that’s really struggling at the moment, which is a shame to see for the cities that are relying on that competitor of ours to keep their critical infrastructure up and running, but it does provide an opportunity for us. And so, we’re getting calls from customers we’ve never done work with before asking us to come and take over their system, which is a challenge to manage just the incoming work in a growing market, but it’s a wonderful kind of return on the reputation we’ve invested in in the business.
Alex Bridgeman: So, the reputation point is interesting. What are some things you’ve found helpful in building a positive reputation that lasts and grows and compounds with you?
Anthony Bramante: Yeah, I think one thing is we’re honest with ourselves and say nobody trusts In Control because of the brand or the logo or certainly not because of the two guys running the company. The reason customers really appreciate what we provide and really rely on us is because of the people we have working at In Control. And so, from the get-go, and it’s part of what attracted Graham and I to this business, it is that it’s really a people business. The talent of our engineers and technicians is the whole value of the company. Their commitment to serving our customers is really the whole value that we have. And so creating a culture that fulfills that, that recognizes that, that celebrates that is really important. Because ultimately, the city that calls us and has us take over, oftentimes, I don’t think they think about it as I’m calling In Control for help. They think about it as, I’m calling Eric, and I know Eric answers the phone, and he helps me solve my problems, or I’m calling Patrick, and I know Patrick will drive down here at 2 a.m. if he needs to, to help me out of a jam, and that’s critical because I’ve got constituents who are relying on me to make sure the water towers stay full or the sewage lift stations don’t overflow into their basements.
Alex Bridgeman: Yeah, those are important problems to be on top of. How do you find folks who are excited to help municipalities with those problems, especially at such odd hours or inconvenient times? Like, how do you find people who are excited and energized to go do that?
Anthony Bramante: And hopefully the odd hours are very exceptional. So given that we wanted to grow the business and given the importance of having talented engineers and technicians as part of our staff, something we invested a lot of time in early on was developing relationships and developing a whole recruitment pipeline and relationships with university programs that are producing the kind of engineers and technicians we thought would be a good fit. And so, I mean, it takes a considerable amount of investment just in terms of time and bandwidth of like the leaders of an organization. But right now, we’re a 43-person company, and we go to four different collegiate career fairs every year. I think this year we had over 200, approaching 300 applicants. I think my business partner and I, the two owners of the company, did 50 phone interviews. I think we had eight or nine in-person interviews with like a broader group of the team at In Control in order to find two candidates to be our interns for the summer. And it was, I mean, it’s something we do every year and hire one or two, or maybe we’ll grow to the point we have three interns. But it’s part of just building a pipeline of folks. And the whole time, I really emphasize, as we’re going to these trade shows, as we’re doing these phone screenings, it’s really about pitching, here are the core values of In Control. This is why it’s a great place to work. This is why it’s a challenging place to work. And you do that and you do that in front of enough people, you find the ones for whom like the idea of, oh, you mean like I’m going to program something and I’m going to be standing there in front of it and I don’t get to go home until it works because the operator from the city is standing next to me, he doesn’t get to go home until it works because if it doesn’t work, this neighborhood is going to have sewage flooding into its basements tonight. There’s actual meaning in what I do. And for some people, that’s really exciting. And I think we’ve learned to not be scared to say, oh yeah, it can be stressful. People are really depending on you to do a great job. And the people for whom that’s exciting and that resonates, they get it and they want to be on board. We have those- that pipeline’s probably been our biggest. We have a couple of interns each summer. And we’ve done a great job at converting the vast majority of them into full-time permanent engineers when they graduate a year later. But even just getting out there, we get a lot of people who we end up hiring who maybe talked to us two years ago at a career fair or heard from their friend that it was a cool place to work and sounded really interesting to them. They’re excited about the environment. They’re excited about using their IT infrastructure background to improve the water quality of the world and found us. But it’s a- we almost go to more- we’re talking about travel budgets and marketing budgets and things, and we spend almost more time and spend almost as many people to college career fairs as we do to rural water and state water and wastewater shows which is actually the marketing and selling of our business.
Alex Bridgeman: That’s wild. What goes into a good intern program? I love using that for recruiting and it’s also just a great extended trial with somebody. Like you spend a couple months with somebody, and you really find out if you want to have them join your team or not. There’re so many seemingly obvious benefits to an intern program. What makes a good one?
Anthony Bramante: You know what, I don’t know, but I can tell you what we’ve done and what works for us. Because I think at the first, years ago, we were a little self-conscious about the fact that there’s big engineering corporations in Minnesota who are going to these same career shows who have a big booth. There’s like five people from HR recruiting there. And it’s like generally it’s one of the owners and one of the engineering managers from our company recruiting. And so, there’s often very formal intern programs. What we tell people is, listen, the intern program is we’re going to onboard you as the newest engineers at In Control. And we’re not going to assign you to a specific engineering team per se. We’re going to make sure you kind of spend some time building panels, spend some time understanding what happens in the electrical design process, maybe get to troubleshooting or programming some PLCs, doing some field startups, understanding what SCADA is, but we’re going to assign you to real projects, real tasks, your time is going to be billable. You’re going to be expected to like have real value on customer projects. At the end of three months, we think you’re going to have a great summer. And I’d say 99% of the time, it’s exactly what happens. And again, for some- but we’re pretty upfront about there isn’t a, hey, every Thursday afternoon, all 40 interns in the corporation get together for a speaker and a happy hour afterwards. We’re a 40-person company; it doesn’t get to happen. I think in a weird way, that almost makes it a better pitch for In Control as a place to work, or certainly for the kinds of candidates we want to work there. If you ever tell someone like you’re going to do real engineering work, real controls engineering work all summer, that gets the people we want being a part of the team for the long term.
Alex Bridgeman: Yeah, I’d agree with that. I mean, even just anecdotally, the times I’ve had the most fun working or friends of mine have had the most fun working is when they’re doing stuff that’s engaging and meaningful versus the happy hours or, like you said, speaker series. I think those are more…
Anthony Bramante: It can be good stuff.
Alex Bridgeman: Yeah. The kind of wrappings that maybe make it a nicer package. But ultimately, your core package, if it’s great and fun, it’s going to be a fun place to work and do some good work. You mentioned, too, that like the marketing conferences with municipalities is a big place to find customers. But since you’re working with general contractors or electrical contractors on a lot of these projects, do you have a sense for where your salespeople should be spending the most time building the longest relationships? If you hired me today, what groups of people would you tell me to spend the most time working with and getting to know?
Anthony Bramante: We generally say the staff at the municipal utility, the operators, the public works supervisor, the public works director, that is the most important relationship to build and maintain long-term. And I think secondarily, it’s probably relationships with consulting engineers who often have a deep relationship themselves with a city for many decades, that this is their city engineer. A city of two, three, four thousand people doesn’t have a staff of five civil engineers on the payroll. They’re relying on an outside firm and so having a relationship there. That’s by far and away the most important. The gritty universe of electrical contractors and general contractors and whose number is low and what’s happening up until the absolute moment of bid time in this cutthroat market is something, is a dynamic our sales engineers have to learn and be a part of and be aware of, but it’s not the most important relationship. I mean, they’re all facing a very competitive decision and they want to win. And so if our competitor gives them a price that’s 5% lower, well, even if they like us, if they take our price, their competitor will take our competitor’s price and be 5% lower in that category. And it doesn’t help them to lose just because they like us. If they end up losing the bid, it’s no benefit to them. So, the important relationship is really building that long-term partnership, we feel, with the utility itself.
Alex Bridgeman: That sounds like it would limit a lot of your pricing power if it all comes down to kind of the lowest bid. Is that dynamic pretty consistent?
Anthony Bramante: Yep, and I’d say I think the positive spin to put on it would be that’s the natural moat, or that’s one of the natural moats for doing industrial control systems work for municipalities. There’s a lot of folks that do our kind of automation engineering work and serve other industries, but they look at us and be like, boy, you’re constantly in this battle to be the lowest price or it’s dealing with government customers who are really slow to change, especially municipalities. It’s just not worth even entering that market. The flip side is once you have a reputation that’s decades old, we have some cities where, we have many cities where, including some large ones, where we have been the incumbent system integrator for their facilities for 20 or 30 years. And there’s just no question, every public works director knows that like, yep, no, In Control is the only company allowed to touch the control systems at the city because it’s so important, we trust them, they provide a great value, they’re who we rely on. And it just takes a long time to build that. And we’ve experienced that firsthand trying to penetrate geographic markets adjacent to ours. We can come up with a million references, all the water and wastewater treatment systems we’ve done, we really know what we’re doing, we believe we provide truly a best in class kind of product. But if I’m two states over, no one’s ever heard of me. And the two or three or four folks they go to that they’ve been doing work with for 20 years, that’s who they’re going to go with. And it takes a long time to break into that. So you’re right. If you’re in that constant bid market, you give up pricing power. But we’ve had a lot of success building a long-term relationship with a customer, which on one hand, you could say it gives us pricing power, we’re able to charge more, but I really think it’s actually genuinely better for the municipalities themselves. We are more longer term invested that we’re not going to do this one project, do it for as cheap as possible and move on to something else. We’re going to try to do as great a job as possible because we know they’re going to rely on us for service in the future. And we want to make sure it’s a good solid system, so we’re not getting called three years from now to fix the subpar work we did when we were just trying to do it as cheaply as possible.
Alex Bridgeman: And we also talked about kind of expansion through acquiring other similar control systems integrators. Would that stand to reason then you should go to these other markets, other states, find the top two or three players, and approach them directly? And how does that M&A process work for you? What do those conversations look like? And then if you buy one and integrate one, how integrated can you get?
Anthony Bramante: Yeah, that’s a great question. And one that, quite frankly, I think my business partner and I and our board are in the middle of figuring out this year. So we really believe a couple of things. One is I think we’ve built something special here at In Control where our approach to doing this control systems work just provides a much better result for our customers and that we’ve learned a lot and put- it costs them to build this but build this managed service provider offering where we kind of move customers onto a regular recurring contract, provide a bunch of services, and are therefore able to just help them get better value out of their systems. And no one else that we can tell is really doing that or pushing that in our industry. And so the motivation for us as an acquisition platform, we really see it as being able to go find exactly that, go to a different geographic market, find the two or three systems integrators, find the one or two that have alignment with kind of our core values, our approach to engineering, and then have existing relationships with municipal utilities, with consulting engineers, and then seek out a partnership. And we’re talking through right now what parts kind of do we integrate and what parts do we allow to run separately. And there’s certainly an aspect that a lot of the actual core engineering needs to- every team of engineers has their way of doing things and there’s a lot of value built up in that. You don’t want to lose that just for the sake of making things uniform. But we’ve talked about some of the principles of how we do our engineering being important to make sure an acquisition has or is able to adopt. But then taking a lot of the back office, just business administration, whether it’s having a good ERP system, payroll, HR, having some of this kind of approach to how you recruit and onboard good talented employees are things that maybe benefit from some integration or some additional support from kind of a corporate parent as we acquire one and then the other. And I think our goal would be to really, if you look out five, ten years, to say can we go find first one and then another and then really three or four or five more of these businesses and really build a platform that allows us the leeway to invest even more in kind of the technology that we’re implementing for all these cities.
Alex Bridgeman: And you can bring over the intern program and campus recruiting, all that stuff too.
Anthony Bramante: Exactly. Yep. And just providing some- and talking, I’ve had a few conversations with maybe four or five business owners of similar sized companies in different geographies already. I’ll say the commonality is often there’s owner operators who have a lot of those engineering relationships. They themselves are very capable, talented engineers and probably very capable and talented at managing engineering teams, but they hit a ceiling where they’ve grown their business to the point that they need a real ERP system. They need the systems and processes to really be able to scale from doing 10 or 15 million of revenue a year to doing more. Or the ever-increasing complexity of what they’re being asked to do on their projects is becoming harder and harder to keep up with. And if you go to one and say, well, listen, you’re trying to figure out how to do this aspect of firewall cybersecurity programming. We’ve got that figured out. Let’s just get your couple of engineers on a call with ours. And after a couple of weeks, they’ve got the playbook, they’ve got the procedures, they can start doing it and vice versa. I think I found that those two benefits have really resonated, that you can help me scale the back-office stuff, and we can kind of share knowledge about the actual engineering we’re doing for our customers.
Alex Bridgeman: The cyber point is kind of interesting. I hadn’t realized so much of the cybersecurity aspect of adding control systems to key and critical infrastructure in small towns. What is the state of infrastructure or cybersecurity like today? And what are some ways that you found are effective at safeguarding some of these assets?
Anthony Bramante: Yeah, I would say the state of cybersecurity for the water and wastewater industry, for water wastewater infrastructure in general across the United States is basically absent. There just is none across the board. And it has, I think, in the past three or four years become so serious. I don’t know if you remember the colonial pipeline hack that happened about three, four years ago, like a big fuel pipeline on the East Coast was hacked. And it was the exact same type of PLCs and SCADA software that we use in our systems that they used. There’s a huge company with a far larger system. That kind of really elevated to the national level the importance of securing our country’s infrastructure from a cybersecurity perspective. And so the Department of Homeland Security has undertaken a bunch of initiatives over the past few years. And as they’ve done so, have kind of looked at different sectors of critical infrastructure. And one of the commonalities is the water-wastewater sector is by far the least prepared and by far the most vulnerable because it is so fragmented. Every municipality has its own water and its own wastewater utility. And they’re just not equipped to handle cybersecurity appropriately. So it’s a huge issue and one that we’re starting to see state and federal regulation address. Just this year in Minnesota, the Minnesota Department of Health is requiring that all public water systems complete a cybersecurity self-assessment or third-party assessment by July 1st, and they do so annually every year from now on. And that’s great for us because we’ve been trying to preach the importance of cybersecurity, and it doesn’t really cost that much just to do the basics of having a firewall, having cybersecurity services, restricting all remote access to encrypted means, all authentication has to happen through multi-factor authentication, stuff that really is not very advanced, it’s pretty common. It’s just missing in a lot of small businesses and certainly at tons of small water utilities. And so it has helped that they’re starting to see some regulatory enforcement of that. And as you can imagine, our customers are very appreciative when they call us kind of freaked out because they got a nasty letter from their state regulator saying like, hey, you’ve got to do all this stuff. And when they call us and we can say to them, you remember that automation and cybersecurity service plan you signed a year ago? This is all covered. Yep, we’ll get this taken care of for you. You’ve already done it. Or for our customers that didn’t sign up for it, being able to say, well, listen, remember that thing we pitched you six months ago? We can help you with a security assessment, but we can tell you, we’re going to strongly recommend you address 15 or 20 different critical areas. And that one service plan we talked about just addresses all of them. So that’s been- it has reinforced the importance of looking at your control system as something that needs ongoing inspection, testing and maintenance for reliability, for cybersecurity, for a lot of things.
Alex Bridgeman: What would be like an example of a top of the line cybersecurity set up for a wastewater facility? So, you talked about firewall, multi-factor. What would the ultimate package look like for the best top of the line cybersecurity?
Anthony Bramante: I can send you a proposal. It’s not a lot. And frankly, it’s not that different than what every small business should do. Or if you try to go get cyber insurance as a small business, what a good insurer will require of you. It’s basic things like making sure, and I’ll highlight some of the differences, but I think you think about overall network security, that all of the assets, so computers and PLCs in the SCADA network, in the controls network, are segmented from the office network, so they’re separate and they can’t directly talk with one another, and they are segmented from the public internet. And you accomplish that most often through just a firewall with a bunch of rules limiting traffic into that controls network. And then let’s take it a step further, limiting all of that traffic to only encrypted means. So, anyone trying to, from outside that network, gain remote access, that operator who wants to check his control software in the middle of the night to figure out why he’s getting an alarm has to do so through a VPN tunnel in our case, or there’s other encrypted means. As they establish that encrypted connection, they’re going to provide a username and password, but there’s some second form of authentication we’re all kind of familiar with now, you get a buzz on a mobile app or a text message or something to verify these credentials are valid before you access it. So, we talk about those as really important things. These days, firewalls with security services come with a whole host of they call it gateway antivirus, but basically they’re doing some antivirus screening of all traffic in and out and across the network. They also provide various types of network detection and response. So, they’re looking for patterns in network traffic that might match malicious patterns and have the ability to isolate and block certain endpoints within that network. So, certain computers or PLCs, if they detect that they’re doing something malicious. And so having those types of services is important. Another area is around data backups and data security. And so, backing up Windows PCs is something pretty straightforward in a business, but backing up a PLC or backing up a radio is often a very different exercise. And so that’s one thing where there’s still a lot of manual touches of going around a plant and actually backing up different devices is the way that’s done.
Alex Bridgeman: What’s the time investment and maybe example dollar investment to go from zero to that system? How long would it take?
Anthony Bramante: Yeah, it’s not a lot, and that’s what at times can be frustrating when trying to convince people of its value. But I’d say most of our customers for a smaller city, and a lot depends on how complex the system is, how many water towers do we have to drive out to, but between probably $5 and 15,000 a year is really what we’re talking about to provide that layer of inspection, testing, and maintenance. And I’d say, we’ve got some customers that have really large dispersed systems like rural water systems where it might get up to be $25,000 or $30,000 a year. But that’s doing all the preventative maintenance, all the regular semi-annual and annual inspections and testing of 30 or 40 sites spread out over 50 miles of a rural area.
Alex Bridgeman: So far, you’ve focused on water and wastewater it sounds like predominantly. But are these systems similar enough that you could expand to other municipality facilities that do kind of slightly different activities, but it could be a new market for you?
Anthony Bramante: Yeah, I think there’s certainly a possibility of that. When we think about it, and maybe to take a step back, I should mention, the water and wastewater industry is growing drastically and probably will for the next 10 years. There’s been a recognition recently that our country is under-invested in water and wastewater infrastructure for about 20 or 30 years, and so we’ve got a lot of aging infrastructure that needs to be replaced. So a lot of the funding that came out of ARPA, the second or third COVID stimulus bill, and a lot of the infrastructure bill that got passed through Congress goes to fixing our water and wastewater infrastructure. And that’s money that states and cities will be spending really over the next 10 years. And so, one of our challenges is we want to grow and we are growing, but you’ve got to pick where the growth is going to be, have the least risk and you’re going to be able to provide the best return. And right now, we can’t keep up with the growth in the water and wastewater sector specifically. But one day that might end or one day we might want to grow beyond that. And so certainly we’ve talked about smaller electric utilities being one area of growth outside of the water-wastewater realm where there’s a lot of crossover and a lot of similarities in customer types and in the product and services we provide. That’s probably the biggest. And then in general, control systems integration. Now, there’s hosts of industries, whether it’s transportation like rail, whether it’s packaging, manufacturing, airports, just the list goes on and on, that would be potential areas we could expand into.
Alex Bridgeman: I’m a big aviation geek. What’s the airport market like? What kinds of systems at an airport could you work with?
Anthony Bramante: It’s a good question. I don’t know a whole lot. We did- we stumbled into doing a project to replace or redo the controllers for a luggage handling system for an airport I think in Wyoming about a year ago. So again, it’s the same PLCs, it’s writing code in the same development studios but that run all the conveyors that just move luggage around behind the scenes and then out into where you pick your luggage up when you land. So that’s just one example. I’ll say it’s outside of my realm of knowledge, but when I drive around now, I just see industrial control panels everywhere and certainly all over an airport whether it’s controlling radar or the other navigation, navigational aid systems or all the lighting systems. There’s lots of things out there.
Alex Bridgeman: What ideas or what challenges perhaps are top of mind for you right now that you’re spending the most kind of mind share on?
Anthony Bramante: Yeah, I think right now it’s really thinking carefully about how we build a managed service provider offering and how do we kind of transform the way we think about how we serve our customers. And part of it is there’s a lot of how we serve our customers now that we really don’t think about as project based. Our company culture is to think about this customer is always going to be with us. We’re going to take care of them for the long term. There’s some mindset shift of we’ve got to have a different contractual arrangement with them to make that make sense for the long term. And so, spending a lot of time just thinking about how we restructure some of our organization to serve kind of this new managed service provider offering and make sure we can do so in an efficient manner, but one that still maintains that customer relationship between the engineers at our company and the operators of the water treatment plant or wastewater treatment plant we’re serving.
Alex Bridgeman: What are the big questions that go into designing that service plan? Like within that, what are the big…
Anthony Bramante: Yes, I mean, there’s a lot of things. And this is one of the challenges of very people-based businesses is their lead engineer might be Randy. Randy’s the guy that’s been providing their control systems for 10 years. And behind the scenes, there’s a lot of people at our company that go into providing it, but Randy’s the person they call. And that can become unsustainable for some folks where they might be trying to work on a big project that’s going to require them to do some programming or do some engineering for two weeks straight. But taking incoming phone calls to fix relatively minor problems at their other customers is a constant disruption or distraction. So there’s a natural tendency of like, boy, we could have maybe more junior engineers or technicians handle some of those lower hanging fruit and allow this person to stay focused on what they need to be focused on. But we want to do that in a way that continues to deliver the same level of service for the customers and doesn’t undermine that relationship we as a business have with them. And so just thinking about how you structure taking incoming service calls from customers, how they get routed, how you assign and allocate people from maybe a dedicated service team to those customers in a way that preserves that there’s a senior project engineer there who really owns that relationship.
Alex Bridgeman: What else is top of mind for you right now? Or what have I, yeah, what have I not asked you that you’re dying to talk about?
Anthony Bramante: No, I think we’ve touched on it. I think the other thing that’s just really top of mind for me is the cybersecurity, and we haven’t really talked much about it, but kind of data piece and the ever-increasing complexity of the data and the reporting, it’s just how do we make sure we’re building good scalable systems that we can easily put in place at hundreds of different customers, upgrade efficiently, support efficiently, typically defy traditional approaches to software development where a lot of these tools and structures and practices already exist because it’s this weird world of industrial control systems and you’re integrating and configuring things, sometimes on a little touchpad, sometimes it plugs into a computer and has something that looks like code. So just making sure, as we build new platforms now, we’re doing so in a way that they’ll scale in the future is always a challenge.
Alex Bridgeman: You mean like you could add other elements to them or other devices eventually and expand that way?
Anthony Bramante: Yeah, other enhancements or features in the future. If somebody says, boy, I’d really love to get this type of reporting out on a recurring basis, and could you just send it directly to the state regulator after I confirm it, building out a little tool that automates that piece of their workflow.
Alex Bridgeman: That’d be pretty nice. You talked also about how all these projects are custom, like every setup is a little bit different. How much can you standardize? How much can be consistent?
Anthony Bramante: That’s a good question. One thing, one of the reasons we really appreciated In Control’s approach to engineering is from the beginning there was a real drive towards standardization. So, without getting too technical, I’d say we actually have an incredible amount of you call them standards. That might be blocks of programming code or established drawings or templates where we’re always going to engineer, design, and program something using the same building blocks. And it makes an enormous difference for cross supportability. A lot of places, the engineer that stitched together all this custom stuff is the only engineer that understood how it works. And anybody else who comes in has to spend a lot of time reverse engineering what they did to even understand what they’re looking at. And because we have a very standardized approach, and that’s something that goes to our DNA as a company, it means that an engineer at In Control can show up at a customer’s site where he’s never been before, go online with the PLC, and immediately understand what’s happening because, well, that’s a motor block. All motors operate the same way across our whole install base because we’ve been using one common way of programming them. And it makes a huge difference when somebody’s trying to troubleshoot that under pressure to fix something that’s broken or figure out where the problem is, that they already understand the building blocks of how the technology works. So, I mean, it’s a balance of trying to push that standardization as much as possible, while still giving the flexibility to be able to have it fit lots of different applications that are always going to be different.
Alex Bridgeman: Is there any new technology you’re excited to use or a new version of one of your PLCs or sensors that you’re excited to start including more?
Anthony Bramante: Yeah, it’s not- so nothing in water and wastewater that we use is new. We say we’re always going to be 10 to 20 years behind everything else because these systems have to be reliable and nobody gets a prize for getting there first, but there’s a big negative cost to being there first and finding the bug. If the water tower runs out of water in the middle of the night because you adopted a new technology that wasn’t 100% proven, that’s a far greater cost. So, they’re not that new, they’ve been around for a few years now, but new protocols. One’s called MQTT, that’s intended to be a protocol that’s really meant for cellular communication, that’s a really efficient way to do data across industrial cellular networks. And we’ve done a lot of industrial cellular networks, but we’ve always used kind of a traditional PLC data concentration architecture to do that work. And I think with things like the ever-broadening cellular coverage with some new technologies around different data protocols, there’s a potential to change kind of some of how we do data concentration in what we call our SCADA systems or the control software that allows some of it to exist in the cloud without losing the kind of onsite reliability that these systems need.
Alex Bridgeman: So, are you talking about moving from instead of using like a local Wi-Fi or some router in the water tower, it just hooks up to the local Verizon or AT&T cellular or something different?
Anthony Bramante: No, you got to take a big- so many systems to this day, and I don’t think this will change, it won’t ever go away, but use data radios that aren’t anything like Wi-Fi or cellular and existed decades before those things did. But so, uses often a licensed or banned radio frequency that can shoot over very long distances, often point to point. And traditionally, that’s how communication and control was done. If you think pre-internet days, a long time ago, that is how it was done. And it’s still how many of these systems work because that’s what’s reliable. And so, rather than have a dedicated radio frequency between a water tower and a water treatment plant, you might do that through a cellular connection. So, there’s a cellular modem at both ends or a cellular modem on the water tower, which then has a lot of different communication means but a connection back to the network that the plant is operating on.
Alex Bridgeman: And so, would that be faster, safer, more reliable? What are some of the benefits of that versus the one-to-one?
Anthony Bramante: There’s pros and cons. The initial cost is often much less expensive. You’re not putting up big radio antennas and tuning the system in. It has less interference. So one of those problems with those traditional radio systems is in an urban area, there’s just a lot of radio noise and a lot of different frequencies. And even if you have a license from the federal government to use that particular frequency and only you are supposed to be able to use it, there’s other people who are out there causing interference, and it can be more susceptible to interference from like solar storms and weather and things. But actually, in some cases, it’s very reliable. With cellular, you’re at the mercy of the cellular towers, infrastructure, and their reliability, which is generally pretty good, except when it’s not. I think it’s gotten a lot better now, but in rural areas, you can have reception issues over time. And so, those are some of the tradeoffs either way. And then for cellular, there’s an ongoing cost. Somebody’s got to pay for that data plan. Somebody’s got to pay for the cellular modem radio upgrade every three to five years. We have radio systems that the hardware has been unchanged on for 10, 15 years, and they’re still going great. And so, there’s pros and cons to both approaches.
Alex Bridgeman: We just had that solar storm like a couple weeks ago that created all the cool northern lights. And I think it hit the northern hemisphere harder. Did you notice any like interferences and stuff? What happened with some of the systems you work on?
Anthony Bramante: Whenever there’s a forecast, we always just send a reminder to our whole team and sometimes to some specific customers that like, hey, when you have radios that have marginal connection strengths, these are the type of events where all of a sudden, you’re going to start to get comm fail, communication fail alarms on your control system. And unfortunately, there’s not a lot you can do other than say, well, wait till the storm’s over, and then it will be back. But that would be an example of where a radio that’s had chronic communication issues, changing to cellular might be an approach we would suggest.
Alex Bridgeman: Oh, okay. So that could be a good upgrade opportunity then. Did that happen at a couple municipalities too?
Anthony Bramante: I mean, not from that storm, at least not yet specifically, but certainly, yeah, there’s quite a few different municipalities where like, you know what, you’ve always had trouble getting this particular water tower to communicate properly. We’ve tried different frequencies. We’ve tried a lot of different things. How about we just switch it to cellular? And it may be we may maintain both communication types so one can fail over to the other, but it may just be more reliable to go with cellular at times.
Alex Bridgeman: And so, with these solar flares, would they destroy anything permanently or just a temporary interference and it would be like an EMP or something that would destroy it permanently?
Anthony Bramante: Yeah, so those types of solar storms, it’s just temporary interference that causes the problems. Lightning is the thing that when it strikes a little booster pump station out in a rural water system can fry a lot of electronics. So that’s the other, when kind of the late summer thunderstorms roll across the Midwest, we often get a lot of emergency calls, and that can involve replacing equipment that has been fried by lightning.
Alex Bridgeman: What does that look like when you open a panel after it’s been struck by lightning?
Anthony Bramante: Sometimes it looks no different, which is the unnerving part. And sometimes you’ll just see some things that are burnt out. It’s far less dramatic than you might think.
Alex Bridgeman: I was thinking about the tornadoes that went through Omaha recently and destroyed a bunch of the hangars. There was a- it got to one side of the Omaha airport but didn’t touch the terminal with the airlines. I mean, it just destroyed this series of hangars and all these private planes, like tens of millions of dollars of damage. And I was thinking about like, okay, if you had something like that happen, what does that look like versus a lightning strike?
Anthony Bramante: Yeah, yeah, fair enough. No, a tornado would be pretty catastrophic. I don’t know of a tornado hitting any of our customer sites with our equipment on it specifically, but it may have happened. Yeah, it was terrible when those things go through.
Alex Bridgeman: Yeah, well, let’s pause here and not jinx anything. But Anthony, thank you for coming to the podcast. This was super fun. Glad we could spend a little time together. And yeah, I hope for all time, there’s no damage done to any other control panels, tornado or otherwise.
Anthony Bramante: Absolutely. And thank you, Alex, for having me on. I’ve really appreciated the chance and you’ve got a great podcast, so I’m happy to be a part of it.
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