Feeling the pinch?

Trade

Pictured: PFH boss Paul Hourican
A brief encounter with accountancy convinced PFH boss Paul Hourican it was not for him. As he tells Billy MacInnes, his talents lay elsewhere
Most dealers were “gentlemanly” in keeping fairly closely to the IBM margin structure, but PFH was different
With the tightening of available skills in ICT it’s getting harder for companies to hire and retain qualified staff
I need to grow the business, which is why he recently recruited a professional services manager in Dublin even though it was a big cost and people are asking me ‘why do it now?’
If I was to take people out and try and influence them with my golf, they wouldn’t buy anything from me
Among the giants
PFH Technology Group was established in 1985. It employs around 160 people (including 80 engineers) in three offices in Dublin, Cork, and Galway. The company is aiming for a turnover of EUR*36 million this year. The list of vendors it deals with includes Cisco, Microsoft, IBM, Citrix, VMware, HP, Symantec and Alcatel-Lucent.
PFH boss Paul Hourican originally studied to be an accountant. Ask him why and he replies that accountancy was one of those careers where you could study part-time while you worked in a full-time job and, hopefully, could apply what you were learning in a day-to-day role. Mind you, he’s since come to the conclusion that it’s “better to employ one than to be one”. Hourican half-jokingly adds that, if he had become a fully qualified accountant, “I’d never make any decisions”.
Brought up in Dublin, Hourican started as a trainee accountant in the building industry in Cork, although it wasn’t long before he had moved into sales and had begun selling houses. With a massive downturn in property in the late 70s and early 80s, he moved to Bryan S Ryan, a very large Olivetti supplier, where he sold systems running accountancy software. He recalls that he found it quite easy. Taking a chance, Hourican and two others from the company left to set up their own business, armed with an agency agreement for Sord Computers. However, the three fell out after about a year, and Hourican struck out on his own. By his calculations, he had to sell two and a half computers a month to break even. Again, he was selling mainly accounting systems. Hourican spent three years trying to get an agency for IBM PCs, describing it as a “frustrating” process involving lots of form filling. “Eventually we got it,” he says. Most dealers were “gentlemanly” in keeping fairly closely to the IBM margin structure, but PFH was different. “We aggressively went after opportunities and we did it by discounting. We were willing to take 15% margin where everybody else was looking for 25%.” At this stage, PFH was essentially Cork-based and mainly selling to SMEs and multinationals, primarily in the pharmaceutical and hospitality sectors. It did not move further afield until the establishment of a Dublin office in 1996. Even so, Hourican admits, the company was “struggling to expand outside Cork” and he realised it was unlikely to expand except through an acquisition or merger.
Two years ago, PFH merged with CK Business, a similar type of business with bases in Galway and Dublin and a strong focus on government and education. “It was quite a good fit,” Hourican says, “and it doubled the size of the company. The cultures were quite similar but our ways of doing business were slightly different.” In addition to giving PFH a presence in the West of Ireland and beefing up its Dublin business, CK also brought a Alcatel/Lucent business and a strong focus on virtualisation. He admits there was some “heartache” involved, “but would I do anything differently? Not really. The key thing is we didn’t lose any customers”. Despite the acquisition, Hourican admits it is still a challenge “getting people to recognise that PFH is a national brand” even though the business in Dublin is probably equivalent to a third of the overall company. With three businesses – Cork, West of Ireland and Dublin – Hourican believes PFH is in a fortunate position as the economic situation starts to bite. “We’re lucky in having a foot in different camps. We’re always going to be there or thereabouts,” he says. The firm was also lucky back in the early part of the decade after Y2K because its main vertical markets, pharmaceuticals and hospitality, were doing well. Nevertheless, he detects a “definite tightening in the market” at the moment. “I would challenge any capital expenditure in the current environment and be asking ‘do we really need this?'” Hourican concedes that there is no reason his customers should not adopt the same ethos. At the moment, it’s easy to see the hand of finance “in a lot more deals” but it could open up opportunities if an IT provider could go back to a business and make a case for saving money through outsourcing: “Hopefully, we can pick up more on the services side.” The outsourcing message is one that PFH is promoting to its SME customers. With globalisation helping to drive big outsourcing deals that “don’t necessarily help our business long-term because we’re not a global player”, the company has decided to focus on the indigenous market. “A small business with 100 PCs has exactly the same challenges and it would be better to outsource staff and support. We preach the message they should not carry the overhead of IT support staff in their organisation,” Hourican argues. The company built a NOC two years ago and has enjoyed a pretty good response, although there is a challenge in spreading it out to the wider customer base. “You have to be talking to the business owner or finance manager for them to see the merits,” he remarks. With the tightening of available skills in ICT it’s getting harder for companies to hire and retain qualified staff, whereas a business like PFH can attract them because it has the scale. Also, if it’s doing projects in sexy areas such as virtualisation and VoIP, it’s easier to keep staff. “They get on to new projects all the time; that’s what attracts them,” Hourican observes. But he says it’s a constant challenge because not enough people are coming out of the colleges with IT skills, pushing companies like PFH to “grow their own” from scratch. He believes PFH “probably has more of a footprint than most other partners” because it has such a presence among SMEs. “We probably have more touches with businesses in Ireland,” he claims, adding that the company has “tried not to take its eye off the ball because [SME is] where the bread and butter is. Indigenous business is very important, and I’m passionate about it.” The difficulty is that a lot of SMEs don’t see the value in IT, they just view it as a cost. “We do business well with people who see their IT infrastructure as critical to their business.” One way to instil this type of thinking is to ask whether there’s someone within the organisation spending time on IT and whether they would be better off doing their normal job. Hourican is confident that PFH’s experience of 27 years in business will stand it in good stead. “We’ve seen downturns and upturns before,” he says. The costs are fixed, with a high content of labour and a base infrastructure cost. It’s about making sure you manage that cost correctly. It’s also important not to trim right back and take the money. “I need to grow the business, which is why he recently recruited a professional services manager in Dublin even though it was a big cost and people are asking me ‘why do it now?'” One thing he suggests is that the era of charging daily rates are nearly gone. “We’re moving more towards fixed price contracts. That’s the way it should be. We are a mature industry and we should be able to cost out the job. We want to take risk out of any project,” Hourican says.
Away from work, his main preoccupation is family “and a bit of golf. I’m a very good golfer but there’s nobody around to see me when I’m playing well,” he claims. It’s definitely not something he uses as a business tool. “If I was to take people out and try and influence them with my golf, they wouldn’t buy anything from me.”

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