On a journey to the centre of Centerprise
The components sector is a notoriously difficult one, but UK system builder Centerprise International is still going strong.
Laura Hailstone caught up with company chairman Rafi Razzak to find out how the multi-faceted firm is staying on top
An electronics engineer by trade, Rafi Razzak spent nine years at IBM before forming Centerprise in 1983 with £100,000 of savings and private investment raised from family and friends. Initially focused on assembling bespoke PCs, servers and laptops, Centerprise has grown to become not just a manufacturer, but a distributor, reseller and IT service provider, operating in the
public, corporate and SME markets.
Asked how he would describe the company today, Razzak told CRN: “Centerprise has always been very difficult to describe. From day one I started it as an engineering company, so we never had a specific marketing agenda to say we’re this or we’re that. We’re basically a company with lots of fingers in lots of pies.”
With many UK system builders falling by the wayside over recent years, Razzak realised Centerprise needed to move into new verticals, which is partly why he appointed a new managing director in March (CRN, 29 March). He then gave himself the newly created role of company chairman.
Razzak said: “After 23 years of being the managing director and founder of Centerprise, I wanted to allow someone else to carry the mantle. The daily operational aspect of the job has been passed over to Richard Pursey, allowing me more time to focus on where the company should be going.
“Three years ago we realised that the business we had built over 20 years was coming up to a very challenging time, so we started to look much more at vertical areas. We’ve invested more than £5m in acquisitions in the past three years.
“In my new role as chairman I will be focusing my attention on negotiating the terms of new partnerships, acquisitions and joint ventures.”
In the past three years, Centerprise has acquired: disaster recovery specialists Adam Continuity; Welsh PC manufacturer CFL Computer Systems; security vendor visiOprime from Honeywell; a 10 per cent stake in DVE; a five per cent stake in Equanet; a 20 per cent stake in Virtuality; and a five per cent stake in BMS.
Razzak did not rule out making further acquisitions. “It’s all about quality rather than quantity,” he said. “I like the areas of security, voice over IP, Wi-Fi and managed services. We want to play a role in these areas. The future is not all about one piece of technology, but a wonderful parallel of things happening at the same time. Companies that can exploit that will be pioneers.”
In order to be such a pioneer, firms must surely have pioneering technology. Luckily for Razzak, his strategy director, Stuart Green, has been getting Centerprise acquainted with some new areas of IT.
“We’ve made some quite interesting moves into the security area,” Green said. “Six months ago we bought a company called visiOprime from Honeywell. VisiOprime has got some incredible technology. It has the ability, using its technology on a CCTV system, to be able to tell if there is smoke or steam in a room. It can also determine the temperature of an object.”
Woking-based visiOprime manufactures a range of intelligent video management systems that can support the security of a small office building with a limited number of cameras. It can also provide large factory sites or entertainment complexes with multiple servers and hundreds of cameras linked via a high-speed data network.
“We’ve also been supplying computers into the vehicle diagnostics market,” Green added. “It has proved to be a real opportunity for Centerprise. We did the complete supply for Volvo’s integrated diagnostic accessories. We did that for 162 Volvo dealers in the UK last year. That has now opened up [work with] Mazda and Ford. It involves using ruggardised laptops in a workshop environment.
“Vehicle diagnostics is a keen area in the future, but only where we can add value. We have to provide an integral part of the solution; if we don’t provide that, then we’re not adding value. If we do provide it, then we fully deserve the success we get out of it,” Green said.
Financial services is another area that Centerprise has moved into. “Because we were in a cash rich position, we have been able to use our own money to fund leases,” Green added.
“We are able to cut off some of the restrictions that are placed on us by leasing companies, through writing our own lease business. We’ve been doing it quietly for the past five years. We do quite a small proportion of leasing at the moment. It gives us that flexibility, because most leasing companies won’t do more than 25 per cent software and services. It is another thing that we’re able to do to differentiate ourselves. The clever thing is trying to tie this all together in one big business unit, and seeing how we can take this further.”
Although Centerprise seems to be doing well from its diversifications, Razzak remains concerned about the other players in the system builder industry.
“As a company that’s stayed in the IT industry for 23 years, I definitely don’t want to see the demise of local entrepreneurs in the UK,” Razzak said. “We’ve played a valuable role in bringing technology to this country. I think it would be a shame if all of
the UK system builders disappeared, leaving only two or three big guys left for businesses to buy their services and IT from.”
Green said: “The market has changed considerably. The average price of a PC has dropped by 70 per cent in the past five years, so if you make only PCs you will have seen 70 per cent of your revenue drop. In turn, 70 per cent of your profits will have dropped. System builders will always have a future, provided that they are adding value. That is the key – adding value.”
Jeremy Davies, senior partner at channel analyst firm Context, said: “It is really tricky for UK system builders to stay in business: they are a dying breed. Not only do they face
the impact of all of the vendors moving over to China and margin erosion, but also UK system builders are too small to manufacture on a large scale, so they don’t benefit from economies of scale.” C
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Centerprise International (01256) 378 000
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