Losing focus on product is a mistake many channel firms have made as they move their businesses to a services-led model, SCC Group chief executive James Rigby told CRN.
Speaking after his firm posted its end-of-year results for the FY ended March 2014, Rigby (pictured) said the key to SCC’s success was focusing on three key areas: supply, integration and managed [services] and getting the balance right.
“For us, all three have to work and are important elements of the business, despite our focus on annuity business,” he said. “Our product business is still very significant. It is still growing and we are still committed to it.”
The firm posted a significant 93 per cent growth in EBITDA for the last financial year, with Group turnover growing 9.5 per cent to £1.7bn. In the UK, revenue grew 13 per cent to £751m, with EBITDA increasing 27 per cent to £17.1m.
Rigby said SCC's sweet spot was very much on the mid-market area – up to 10,000 seats – because it allows it to still be strategic with customers, and he said the firm was seeing good traction with private sector contract wins.
However, he said SCC was also benefiting from the government’s changing procurement process.
“We have launched a multi-faceted cloud strategy and had some really good public sector wins on the back of that. There are now bigger outsource contracts that are being handed to British mid-market companies like us, but the government still has a way to go because [fulfilment] is still dominated by big US-based outsourcers,” he said.
Looking at the group as a whole, Rigby said the firm will concentrate only on territories where it can be number one or number two in the market.
“We won’t be investing to build a European business if we are number three or four in that territory,” he said.
Earlier this month SCC sold its Dutch business to Misco parent Systemax, leaving it with a presence in four countries: France, Spain the UK, and Romania.
Rigby said the different territories were performing well, with plans to further grow the French services business, which was still lagging a bit behind the UK. Its Romania business was really growing, he said.
“We are really pleased with our investment there,” Rigby explained. “There is an advantage of cost, we have to compete with the likes of India, and we do a mix of back-office functions for our own business as well as customer services,” he said, adding that headcount could grow this year from 700 to about 900.
In terms of investment, Rigby said a lot of due diligence is carried out over acquisitions, but the firm is actively looking.
“You have to be careful with acquisitions. They are expensive in terms of the time they take and it is easy to get caught up in them. We are keen to bring on the right acquisitions, we have our print business pretty much nailed [the firm acquired M2 Digital earlier this year], but are looking at annuity-based businesses or ‘as-a-service’ type models, particularly in security, software asset management and mobility,” he said.
And finally, the firm outlined goals to hit £50m EBITDA in its results, and Rigby told CRN it was well on target to achieve those aims.
“We have a three-year business plan. We are 12 months into that now and have made good progress. I hope to meet our targets in two years’ time and that essentially involves slightly growing our product business and wrapping services around it. We are on track," he said.
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