Revenue at reseller Bytes hit £240m in its last financial year, thanks in part to currency issues caused by the Brexit vote, and its sales team having success with the likes of AWS and Oracle.
For the 12 months ending 28 February, sales at Bytes UK rose 24 per cent annually to £240m while operating profits hit £8.7m. For Bytes Software Services, the Microsoft business, sales rose 20 per cent to £217m, with net profits up 13.3 per cent to £6.8m.
Around 60 per cent of Bytes' overall business comes from Microsoft, down from 80 per cent five years ago. Although the proportion has declined, the business itself is still growing. Bytes' managing director Neil Murphy said that Microsoft has been - and will remain - an important strategic partner, but noted changes to its channel strategy over that period.
"Microsoft as a percentage of our overall business in an interesting one," he said. "We're not defocusing - we are a Microsoft business and I hope we always will be, as long as the rewards are there. Our salesforce go where the money is. As long as they make commission selling Microsoft, they will keep selling it.
"As everyone knows, Microsoft has been reducing the fees and commissions to resellers consistently over the last few years, and as a consequence, our sales guys are selling other vendors' solutions, which is a natural thing for them to do. But last year our Microsoft sales in dollar terms was $315m, up from about $260m the previous year. But you can see the growth we're seeing there, despite the percentage going down. Our sales guys are making good margins with others vendors such as AWS and Oracle."
He added that the price rises Microsoft enforced at the start of this year, as a response the plummeting value of sterling after the Brexit vote, has had a positive impact. He added that the vote has been good overall for the business.
"Brexit does not seem to have had anything but a positive impact for us," he said. "This is partly because we've won some business from Europe because of the low pound. We probably had about £10m of business from European businesses because of the low value of the pound. That's had a positive impact."
He quipped: "More of that please! More turmoil in the currency market. I am joking."
Bytes now employs around 300 staff, including 10 in a new Watford office run by former Comparex boss Mike Chambers, whom Murphy said it doing a great job and has fitted in well. Sales of Azure and Office 365 were up 23 per cent over the past year, and its services business as a whole - home to its helpdesk, SAM and managed services teams - enjoyed a 32 per cent sales boost.
Microsoft has been beating the drum for cloud services for a number of years now, and is encouraging its partners to do the same. Murphy said that this has prompted some changes to the way it compensates its staff.
"We've been paying our staff upfront for 12-month deals, for example, in order to keep them motivated to do the deals," he explained. "That certainly helps. At the same time there is monthly recognition, so we split the commissions essentially so there is still a short-term incentive to do these deals. We've had to make some financial calculations to mitigate any kind of downturn we could have experienced. But luckily we haven't."
Although some resellers have found transitioning their commission models towards the cloud painful, Murphy said that the firm has not lost a top-30 salesperson in more than five years.
He added that although cloud services are doing well, they still represent a small portion of sales in the grand scheme of things.
"The bulk of what we sell, about 80 per cent of software sales, are on-premise," he said.
He added that although cloud messaging is strong from vendors, in reality, many are also reliant on on-premise sales.
"I think 90 per cent of talk [from vendors] is cloud, but 90 per cent of the sales are probably still on-premise," he said. "Here is the thing: you sign the agreement with these vendors but the delivery mechanism is your choice - on-premise or off-premise. You can do both. You have to be quite careful when people talk about their cloud sales because customers might be consuming that software in the cloud or on-premise. It is hard to measure."
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