BT Engage IT has been a sleeping giant since it was formed two years ago from the fusion of BT acquisitions Basilica and Lynx. But having battened down the hatches and completed its integration, the £200m VAR is keen to shake off its image as the quiet man of the channel and lift the lid on its ambitious expansion plans.
CRN caught up with managing director Martin Balaam to find out how he intends to harness the power of parent company BT to become the brand of choice in the UK upper mid-market.
CRN: First, how has BT Engage IT changed since you took the reins 18 months ago?
Martin Balaam: When I joined, my first role was to complete the integration of the two businesses and design a strategy that excited the management team and employees of BT Engage IT, and also BT.
BT brings us a great brand. That was one of the things that interested me in this business. In my days at Redstone and Xpert, we would spend a lot of time demonstrating that we had a right to sit at the table. I
was interested to understand what it would be like to work for a business that did not have to do that.
Some 80 per cent of the new customers we are now bringing on are either introduced or assisted by BT's account managers and I see us doing more of that. Getting everyone in BT aware of what you do is as big a challenge as getting customers aware of you if you are an independent.
It is no different from selling to a customer -- you need to demonstrate you are a safe pair of hands. But the impact if you succeed is multiplied, as every BT Global Services account team has 10 to 15 account directors each with 10 to15 accounts.
Has this strained BT's relationships with other resellers?
I am not a fan of mandating that you have to use someone else because they are part of your business. We have only been in BT for three years and I imagine BT has transacted with pretty much all the big resellers in its history.
The onus is on us to demonstrate what we can do and ask for a fair crack of the whip. But we know what customers BT has, we know who has what relationships with whom, and we have total access all areas to talk to them.
What functions are you typically fulfilling for BT?
BT Engage IT has four key areas: hardware and software fulfilment; SI services for all the key vendors such as HP, Dell, Cisco, Lenovo, NetApp, Juniper and F5; we then have our own in-life support engineers out on the road doing hardware break-fix and desk-side services; and finally managed services.
Last year we opened our own datacentre so we can do co-location and managed hosting. Typically, the bits of BT we use are the top 25 per cent of BT Business and the bottom half of Global Services. We are UK-only so if customers need a global footprint, it is not our bag.
Has your vendor mix changed to reflect BT customers' needs?
We have certainly taken on a lot more vendors. Lynx was predominantly Cisco and Microsoft, and Basilica had an HP focus. If you look at our vendors now, be they selling PCs, servers, storage or software, you will see we have expanded our portfolio to represent the vendors that BT's customers are typically buying.
How tough is the UK market at
You get different stories from different people. We have been relatively shielded by the downturn because, being part of BT, we have had access to more customers than an independent. We have managed to grow year on year. Apple is in a little bubble on its own in business-to-business and is doing well.
Clearly the public sector has slowed down but this creates opportunities as you have to spend money to save money. In commercial land there has definitely been a move away from talking about costs all the time.
Eighteen months ago you talked to a CIO and the number one priority was how to cope with a smaller budget. Now they are talking about strategy and business. However, there is still nervousness in the ripple effect of public sector spending and a view that we have not seen the pain from that yet.
Where are the sweet spots?
We are seeing reasonable activity in financial services, professional services and construction. Retail is interesting as there are more discussions around user experience now that everyone has iPhones and people are starting to use Amazon 1-Click.
Last year you consolidated your offices in Reading and Wood Street into BT's St Paul's hub. Do you foresee any further changes?
We now have about 100 staff in London, 200 to 250 in Barlborough, about 100 in Letchworth Garden City, and engineers out on the road. There will be no major changes other than expansion.
Also, for the first time, we are putting in some apprentices. At an independent reseller it would be difficult to justify bringing on an apprentice but BT has an apprenticeship scheme and we are very excited to be offered the opportunity to bid for those roles. We have 30 this year and about 40 for next year.
You presided over a buy-and-build strategy at Redstone. Are acquisitions on the agenda for BT Engage IT?
Under private-equity ownership at Redstone and Xpert, it was far easier to fund acquisitions than say you wanted to double the sales force and invest all the profits in organic expansion. You do not have that luxury.
BT is far more focused on organic growth. We have 75 quota-carrying sales staff and right now we are increasing that by 50 per cent and I doubt that is something [private equity] shareholders would have accepted in terms of the impact on the P&L.
We are also putting in two new specialist teams, one focused on security and the other on HP Networking. Acquisitions are definitely on the table but the times when we would do that are more specific.
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