Networks First has put the channel back at the heart of its strategy after abandoning its foray into end-user sales.
Three of Networks First's founders, including chief executive Peter Titmus, took back the reins of the business in early 2013 after concluding that attempts by the previous management to reinvent it as a direct supplier of kit and services had failed.
Talking to CRN, Titmus said the past year had been spent re-engineering the firm to support the channel and winning back reseller customers that had moved over to rivals.
"In 2008 and 2009 we were advised [by M&A advisers] to move into the direct business rather than channel and we took on a new managing director and management team, while I, Steve Niven, Tom Malvaney and Derek Dale pushed back from the business," Titmus explained.
"To be frank, it didn't work out as well as we'd hoped. So we got back involved with the business and have made the decision to take it back to being a channel-centric business, as that's what we know best and where we've been most successful."
The intervening three years saw Networks First's channel sales fall by 60 per cent, Titmus said, although its base of active resellers has now been built back up to 60, with Capgemini among those to have moved substantial volumes of business to the Redditch-based firm over the past 12 months.
"Over the past three years, other companies have been eating our lunch, so we're getting our own back now," Titmus (pictured) said.
"We gave ourselves a 12-month plan to rebuild the channel, which is a lot of upheaval, but we're just about there now. The biggest challenge we've had to overcome is getting the channel comfortable that we weren't going to be inside the end-user sales market again, and we've got there now."
Titmus said the M&A advisers had told him moving to direct sales would secure a higher long-term valuation for the business. But the economic downturn, along with the discovery that a service-led strategy does not always work in end-user sales, torpedoed that strategy.
"The reality is that what we do now has actually become quite interesting, so we get loads of [M&A advisers] phoning us up these days," Titmus said. "There aren't many service-oriented businesses and people have woken up to the fact it's a recurring revenue stream. It may not be as sexy as selling product, but there's a predictability about it. Our renewal rates are very high, so once you've won an account, you're probably going to keep it for three to five years."
The firm, which counts Cisco as its largest vendor but also works with the likes of Enterasys, Avaya and Mitel, still has a direct relationship with 30 to 40 end users, but most of these are legacy customers, Titmus emphasised.
"The reality is, from a pragmatic point of view, you have to work with some end users," he said. "We won't walk away from them but what we're not actively doing is targeting the direct market."
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