Misco draws a line under cost-cutting with system refresh

Reseller has returned to profitability at a group level, CEO says as he talks through £750,000 ERP investment

Misco has chosen Oracle NetSuite OneWorld as its new ERP system, a £750,000 investment the IT reseller hopes will reassure the market that it has finished swinging the axe.

CEO Alan Cantwell said that after a protracted "painful restructuring", partners should take its announcement as a signal that Misco has moved on, and is now open for business.

Cantwell said the impact of recent cuts in the UK and Hungary is that the rest of Misco's European operations now have a better chance of success, particularly in the value-add market.

"Spain, Italy and Sweden are more of our traditional core Misco businesses, and they need to evolve, need to move up the value chain and develop more value-add services, to become relevant.

"Holland, on the other hand, is a far more mature service delivery company - it's much larger, much more profitable.

"And we've been able to help [these countries] by restructuring Hungary and the UK and the cost base in the UK that would ultimately flow down to them. We've been able to effectively take away a significant chunk of their fixed overhead that they had no control over. So now they're free to invest in those value-add services that previously they would never have been able to."

Cantwell said Misco's Dutch business brings in revenues of €160m (£141m), with Italy at €40m (£35m), and both Spain and Sweden at €20m (£17m) apiece.

He said those markets are now more "free" to grow, and that aiming to better support European partners was a key motivation behind choosing Oracle NetSuite.

"There is so much potential in Spain, Italy and Sweden because at the moment they're relatively small fish in quite a big pond. They only have an active engagement with quite a small percentage of their clients, and that's one of the reasons for bringing NetSuite on board; to improve our opportunity to engage with a bigger proportion of the existing clients," Cantwell said.

"I want to really drive home that the restructuring in the main has happened: Misco is now a profitable group … If we were in a pure 'close up, get the wagons protecting us', we wouldn't be investing in it.

"This is a massive project. We're talking five languages, five operating systems, five existing ERPs all being replaced inside six months… The team at NetSuite has made this journey so much simpler, and I sit here with significant confidence that the project is going to plan."

Misco plans to implement NetSuite OneWorld in a multi-phased approach. Phase two is planned to start at the end of 1Q 2018.

The investment comes after months of upheaval for the firm, a period Cantwell himself conceded was "an ugly phase".

Misco's UK office in Watford was shut in April, shortly followed by an announcement in August that it was shaving €23m (£20m) from its cost base across Europe.

The cuts, which came after group operating losses of £16m in 2016, included shutting the UK warehouse in Greenock, Scotland, and a significant headcount reduction in both the UK and Hungary.

Amid grumblings from staff and local politicians alike, Cantwell justified the overhaul by claiming 2016 operating losses of £16m.

Elaborating on the challenges that his company has been through over the past 12 months, Cantwell directed a warning against complacency to other channel players.

"I spoke to CRN about the A-List [an annual guide of UK channel top figures], and one of the questions was to describe in three words what my views were of the channel; and I think that the channel is not challenging enough.

"They're not investing in things such as the NetSuites, in value-add services.

"The channel needs to watch out because there are a lot of people who are sitting there waiting to nip on the heels of some of the bigger guys."