Scale and financial credibility will be central to winning managed services custom in a post-2e2 world, the chief executive of Redcentric has asserted.
Tony Weaver claimed Redcentric's strong balance sheet and asset base will act as key differentiators as he seeks to build an identity for the fledgling brand – which is an amalgam of parts of Redstone, Maxima and InTechnology.
Weaver was talking to CRN following the completion of the integration of InTechnology Managed Services, which Redcentric acquired last November, following the brand's creation and stock market debut in April 2013. As of 1 July, the firm has been trading as a single business with a single platform under the Redcentric brand.
Although its runrate revenues are approaching £100m, Redcentric is not yet an established brand in the market, Weaver conceded.
"InTechnology, Redstone and Maxima were genuinely well-known businesses in the space and the challenge for us is to make sure we convey all the good those businesses had into this new brand as we drive it forward," he said.
With 450 staff, three datacentres and a national MPLS network, Redcentric now belongs to an elite band of managed and network service providers with genuine scale, Weaver said. He listed Alternative Networks, Adapt, Civica, Capita, BT, Virgin, Six Degrees, Phoenix and Azzurri as among the competitors Redecentric rubs shoulders with.
"There aren't many companies now that look like us and the big sell to customers is we are an owner-operator," he said.
"The challenge in the post 2e2 world is people are now asking a lot of questions about who owns it [the datacentre] and what will happen if something goes wrong. With us, they can walk in and see it's my staff and we have control of it."
Mid-market customers want to buy from firms that are small enough to care but are financially strong, he added.
"When you're selling managed services, people are looking to make multi-year commitments to you and they need to see the financial credibility and strength of the business behind the service to be convinced you will be here in five years' time," Weaver said. "As a public company, we can tick all those boxes. We've got very low gearing in the business and a strong balance sheet and base of fixed assets."
Redcentric owes half of its presence to Maxima and Redstone, two businesses that were in bad shape before Weaver and business partner Ian Smith became involved and knocked their remaining assets together.
Although Redstone was "on a sorry path to ruin", the once-mighty telecoms VAR had invested tens of millions of pounds into an MPLS network that now forms the core of Redcentric's offering, Weaver said. Maxima was also bloated and over-leveraged but had a strong managed service prowess, he said.
The InTechnology acquisition was mainly to add scale, Weaver explained. Although the integration process saw the closure of a back-office hub in Birmingham and a small support office, cost-cutting was carried out on a targeted basis only, Weaver said.
"We were very open about where the areas of duplication were and ran the due process on it. We did it quickly and fairly, and everyone got treated properly," he said.
Weaver added: "There was significant interest in [InTechnology Managed Services] because it is a really high-quality asset," Weaver said.
"[InTechnology owner] Peter Wilkinson had built a really great business and was genuinely interested to understand what would happen to it. He didn't want someone to come in and asset strip the company and Ian and I have a long track record of buying businesses which gave him confidence that we would deliver what we said we would."
Weaver and Smith's track record would suggest more acquisitions are a certainty for Redcentric but Weaver said organic growth is now the priority as his sales team – led by newly recruited group sales director Andy Mills – looks to cross-sell a wider range of IT services to existing customers.
Redcentric has about 2,000 mid-market customers but many take only its basic network services and are not drawing on the firm's full portfolio of mobile, telephony, database, applications, security, web hosting and e-commerce solutions.
"Ultimately, putting three companies together was a little bit of a landgrab," Weaver said. "Now we've got a really good customer base and a great portfolio of services, let's sell those customers more services."
Redcentric's typical customer would be a mid-market firm turning over £50m to £300m that is looking for a personal touch from board-level staff at their IT partner.
"I can still personally interact with 50 customers without any trouble at all," Weaver said. "If they want comfort from us they can pick up the phone and ring me directly, and that's a really big deal."
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