PowerOn's shift to managed services sees revenue hit £3m

Managing director Phil Mercer talks to CRN about moving into managed services and next stage of growth for the Microsoft partner

PowerOn has hit the £3m-revenue barrier for the first time, partly fuelled by its shift into the managed services space, managing director Phil Mercer told CRN.

The Microsoft Azure partner expects turnover to jump £800,000 for its financial year ending 30 September 2019.

Mercer (pictured above left) said the firm has been seeing an uptick in customer interest around ongoing service engagements rather than one-off projects in the past couple of years.

"We've gone through quite a bit of change over the last two years," he said.

"We saw a change within the market around the areas that we focused on - working with Microsoft and IT management solutions and security solutions - and the kind of engagement motions with customers starting to look towards how they transform the user experience.

"Previously, we were doing quite a few project-type engagements; helping customers implement new technology solutions. We've now got much more into a motion where we're helping customers transition their environments into more of a modern form.

"Rather than it being project by project, it's now much more about ongoing service-based engagements and they've really helped us grow those revenue and service lines with our customers.

"We would certainly be pushing to increase that revenue for ourselves but also increase the share of that being managed services, which would put us on a path that we could start to grow even more rapidly."

Mercer co-founded PowerOn six years ago with Steve Beaumont. It is one of only eight Microsoft Elite partners in the UK, which the MD said helps the company keep its "finger on the pulse" of technical developments from the tech giant.

It has a 41-strong workforce and offices in North Lincolnshire and York, the latter of which PowerOn is planning to move to a new location three times the size of its current office.

The £3m-turnover target was reached through organic growth, and Mercer said the intention is to continue to grow in this manner and that M&A was not on the horizon yet.

"We're still talking a little bit of time before that would manifest itself into starting to drop entities into other countries," he said.

"We want to strengthen and solidify our position in the UK. We're only a small entity within the UK market, but we want to have that strong backbone that allows us to then have choices around growth.

"Decisions may be made around how to best accelerate that or capitalised on that as well, once we're in a good position.

"Adding those annuity service-based contracts into our portfolios as we are doing now gives us good strength, financially speaking, which means we will be better armed to be able to also make choices along those lines in another year or two's time."

Mercer was coy about disclosing the operating profit for the financial year but did say that it has operated on a "reasonably thin" margin, as it has funnelled most of its profits back into the business.

He added that this will change in the next couple of years as he hopes to push the firm from a minimum of 10 per cent operational profitability to around 30 per cent.

"Not investing would be counterproductive, but we're looking to land the investments that we've made over the last several years, [so we] can essentially push that growth higher," he explained.

"We are going to see a change for our baseline operating profit because we're not necessarily going to have the same level of investment profile that we've made over the last two or three years because we want to land those investments to really change the business, then that will start to increase quite a considerable amount over the next two to three years."