As we say goodbye to 2012 and usher in the start of 2013, Irish Computer asked a number of reseller luminaries for their verdict on this year and predictions for the next.
Justin Keatinge, CEO, Version 1
Following in the footsteps of a very strong 2011 where Version 1 grew by 40% through a mix of organic growth and growth from its acquisition of Cork-based PM Centrix in 2010, Keatinge describes 2012 as "a good year for us". The company recorded its best ever Q3 this year and expects 20% growth for the whole of 2012.
Version 1’s managed services business continues to grow strongly and he claims it is "winning larger and larger deals in this area as we establish ourselves as the market leader in support services and as organisations outsource more and more of their IT function in an effort to drive down cost".
The company expanded its operations in Belfast in May by opening an Oracle Competency Centre, supported by Invest Northern Ireland, to service its Irish and International customer base. It has also "won a number of multi-million euro development projects and have seen strong growth in our Business Intelligence Practice".
While there is still opportunity to grow in Ireland, Version 1 is "an ambitious company" and has started the process "of looking to expand internationally. We are well advanced in our plans to expand into the UK; with our likely entry strategy being [through] acquisition".
Asked what the main inhibitors are to growth, Keatinge says the biggest challenge is finding the right staff. "We could be growing faster," he reveals, "but there are just not enough people qualified in IT. We’re having to look further afield and will take on 10 new recruits following a recent trip to Spain, with a similar trip planned to Portugal."
The technology sector in Ireland is performing really well, he adds, which is why there are so many job vacancies (over 5,000). "We simply do not have the people in Ireland to fill those roles," Keatinge says, "and while retraining initiatives will help long-term they will not solve the immediate crisis. We need to attract more IT talent to Ireland right now. If the visa process could be speeded up, we’d have the additional option of attracting IT professionals from outside the EU."
He is happy with the company’s long-established partnerships with vendors such as Oracle and Microsoft, but new partnerships with Amazon Web Services and insurance solution provider TIA Technology are also "very important to us in terms of meeting the diverse needs of our existing Irish and international customer base and also in terms of growing our customer base and expanding into new markets".
As for 2013, the company has "a strong deals pipeline into 2013 and is confident of another exciting and successful year ahead".
Paul Hourican, CEO, PFH Technology Group
PFH has "ended up where we projected we would", states CEO Paul Hourican. "We had a tough enough start to the year and the deals taking a bit longer to close, but we still pulled wins we wanted." He says 2012 was "a year of settling down and focusing on execution".
Storage was strong, IP telephony was pretty good and PFH also won quite a few managed services opportunities, especially in the government space.
Hourican says customers are thinking differently, citing the example of a large storage customer paying €50,000 in maintenance and looking at ways to address the cost. PFH is now in a position to refresh the equipment and offer a managed service over a five year period and use its own finance engine to help deliver it.
Customers are keen to get their cost per user down but they are also looking at whether storage can be supplied on a cost per user basis or cost per gigabyte. "You’d be surprised at the types of organisations willing to look at it," Hourican reveals. "There’s an appetite for a consumption model rather than acquiring kit."
Cloud computing is an interesting area but Hourican is adamant PFH "will not build our own cloud". Instead, the company is seeking to act as a "single pane of glass for the customer and provision cloud services for them". He believes this gives PFH the flexibility of still being the person in the middle. Applications that are "industrialised" such as Exchange and Office can be moved into the cloud, but others need to stay onsite and PFH has a role to play in integrating and managing the two.
PFH has 1,400 customers in its base split across government, large corporates, mid-tier businesses and small companies. In 2012, a lot of smaller businesses were forced to replace their kit as it began to fall over because they had sweated their assets for as long as possible. There was also "a bit of a surge in network infrastructure sales we hadn’t expected".
While there was a trend in 2011 for government business to be compressed into the final quarter of the year, or perhaps the last month in some cases, Hourican says it was much more measured in 2012. There has been more consolidation too with departments coming together for a tender. "There’s been a bit of smarter buying within the state," he remarks.
He observes that the competitive landscape is changing. Smaller channel companies are getting less transactions and there is more activity from bigger businesses. People at the consumerisation end of the market are buying through retail. The hardware market will decline in value on the commodity side. Hourican calls it "a natural progression of the market to consolidate into fewer routes to market with fewer guys doing higher volumes".
PFH has taken steps on a number of fronts to plug any skills gaps it is confronted with. For very specific niche skills that it doesn’t want to have itself, PFH partners with other organisations. It has hired people from Eastern Europe and Russia, but it’s not a long term solution and the company is actively training its own staff because it has a ready pool of talent available.
As for 2013, he thinks the recurring revenue base will be good and there’s a decent pipeline, adding: "If I get a small growth in overall numbers with an increased mix of managed services, I will be very happy with the result."
Patrick Kickham, director, Datapac
"A very good year for Datapac," is how Kickham sums up 2012. The company "got off to the best possible start with the awarding of an €8 million ICT consumables contract by the National Procurement Service" and the year continued strongly "with a number of other substantial customer wins, one of which was another seven figure deal, as well as several six figure deals".
As well as winning new deals, Datapac is in the fortunate position of consistently retaining customers and renewing contracts. "The length of many of our customer relationships can be counted in their decades rather than years," he says.
The company has also been growing its team, taking on talented and experienced people across a wide range of management, technical, sales and administration roles.
Datapac made "very substantial investments" in its managed service infrastructure and delivery team, Kickham reports. Continuous analysis and development of its managed services has allowed the company to bring an even stronger proposition to the Irish business market. "We’ve reaped the rewards by winning many new contracts and customers," he claims.
The company is experiencing increased demand for managed services for ICT and print from public and private sectors. Cloud services are another strong area of growth and opportunity for Datapac. "Whether it’s public, private or hybrid cloud, we are seeing more Irish businesses understanding what model best suits their needs and moving to the cloud at a pace that suits them," he reveals.
Unified communications systems are becoming increasingly popular across most businesses. In addition to increased cost savings and efficiencies, there is a real drive in most organisations to provide better communications for employees and customers. "Whether its landline, mobile, e-mail, video or social media, there’s no reason why they shouldn’t all be integrated to improve collaboration and accessibility," Kickham adds.
New contract wins include a €320,000 managed print solution for IT Carlow across all three of its campuses in Carlow, Wexford and Wicklow and a €350,000 unified communications solution for Wexford County Council.
The company also recruited its 100th work placement student in 2012. Since 2004, Datapac has provided paid-for positions to interns and graduates from universities and third level institutions across the country. "Our investment this year alone will be close to €150,000, with more than €1 million invested in total since the initiative began," Kickham adds.
Datapac is "very happy with the level of support we receive from our broad base of vendor partners". He says there’s a collaborative partnership with the vendors "as they keep us abreast of global technology trends and developments and we provide them with a thorough insight into customers’ evolving needs in Ireland".
Despite the ongoing economic turmoil and instability, Datapac is "extremely confident" it will play an important part in the industry in 2013.
"The significant investments we have made in our business in 2012 will provide us with the platform for sustained growth in 2013," Kickham believes. "We can confidently predict increased customer numbers, revenues and headcount at Datapac."
Pat Rooney, managing director, SOTA Technology
Pat Rooney set up Galway-based SOTA Technology 10 years ago after taking redundancy from Cara, where he was regional sales manager. The company concentrates on providing IT consultancy to SMEs in Galway, with a few clients in Dublin and Mayo. Most of its clients are in the medical and legal sectors, but it also has a number of significant contracts with local government and education bodies. Its main focus is on small business server solutions, networking and VoIP.
Rooney describes 2012 as "quite challenging for us. It feels like we have to fight much harder to convert proposals to sales". With customers expecting deep discounts, SOTA has concentrated on networking equipment and VoIP, "leaving commodity items such as PCs and printers for the client to source as it’s impossible to make a decent margin on them for the effort involved". SOTA has concentrated more time on the consultancy side of the business. As a result, total sales have fallen 20% but margins are up. Rooney adds that decreasing its hardware sales has "helped with cash flow as we always pay our suppliers on time, but we don’t always get the courtesy from our clients".
During 2012, SOTA became a Cisco select partner and has started promoting the vendor’s small business product line with some success. Rooney says Cisco enjoys good brand recognition even with non-IT aware clients "and its products and support are top class".
In terms of opportunities, he says the growth in demand for mobile access to company data on the back of the surging smartphone and tablet markets has led to increased interest from clients in providing secure access to information sources. Windows Server 2012 and its focus on virtualisation is another opportunity to get in front of clients with new proposals for them, Rooney adds.
Intriguingly, he lists cloud computing as a potential issue that could inhibit growth. For a lot of SOTA’s clients, the security issues relating to medical and legal data outweigh any possible advantage. He argues it is also difficult for a company like SOTA to justify handing clients over to a cloud computing provider that "will take most of the revenue and leave us with a very small commission".
The wider economy is also a concern. "Many of our clients are sitting on their hands and refusing to invest in their IT infrastructure until the economic outlook is clearer," Rooney reveals.
Looking forward to 2013, he says he is "trying to stay positive, but I feel it will be similar to 2012. We do have a few large projects in the pipeline that should mature in early 2013, but other than that, every sale will be hard won and at minimum margins".
Kevin Ryan, managing director, DCB Group
The word Ryan uses for 2012 is "steady". The company has achieved what it set out to achieve but it didn’t set high targets or plan for a huge increase in business. "We’re not setting the world on fire," he says, "but the bank isn’t knocking on our door either."
DCB Group has done a lot of business with corporate customers over the Web and has established individual portals with a number of them where they can place orders for a defined selection of products at agreed pricing. Products ordered through the portals are being shipped all over Europe and the Middle East. The portal makes life easier for the customer because staff are not ordering products the company doesn’t want on its network "and they know they get a competitive price as well".
In the past, customers would use the web site for information and ring DCB Group for quotes, but now they can use their own on portal to get the relevant information and place an order. Ryan says there has been a lot of interest in the portals and he predicts there may be a bit more growth for the company next year as a result.
But while many customers find the idea attractive there can be complications. For a number of them, they still need to go back to their purchasing department to get a purchase order which makes the overall process more complex than it needs to be. Some may need to change their internal procedures and that can be an issue. Bizarrely, DCB Group has had more interest from non-customers, Ryan reveals.
At a product level, DCB Group has a portfolio of around 30,000 products. It has experienced "huge growth" in its headset business. Digital signage has also improved with sales into the education sector, specifically junior and senior schools. It can be a long sale, however, as schools have to generate the resources with fund-raising activities.
As for potential threats, Ryan doesn’t think the economic situation is going to get any worse but there is a question over where any pick up is going to come from. "Outside factors are going to make a difference," he comments. Post-election, there may be a pick up in the US but the big issue is whether Europe starts to pick up. It would make lot of difference to DCB Group because a lot of its business is aimed at the corporate market.
He says vendors seem keener to deal with DCB Group. "We see more of their representatives than we did five years ago, he reports, "they’re more keen for the business, definitely. From our point of view, that’s good."
Vendors probably have more offers but they have to go back and be approved whereas, in the past, they might have been able to sign them off there and then. They are more price-competitive and trying to do more bundles but it’s taking longer to get them in place.
As for 2013, Ryan says he is "more positive than I was heading in to 2012". The market is not going to suddenly take off, but he thinks the first six months will be slightly better.
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