Data drives ICT opportunities

The growing use of technology as a business enabler is creating opportunities for information and communication technology (ICT) firms.

Rob Evans calls it the consumerisation trend that is driving change in the business technology sector.

“There is a view at the executive level in industry that says, ‘I can do it on Google, why can’t I do it internally’,” the Velrada chief executive says.

“They ask why it is so hard to get this information on their own systems.

“People want the design and usability they get in the consumer world.”

This shift in thinking is one factor driving demand for ICT services, and Mr Evans expects it will accelerate.

“Our biggest customers are all focused on using technology to lift productivity and efficiency,” Mr Evans told Business News.

“The technology and the infrastructure they have now creates more data and opportunities to analyse it than they even understand.”

With ICT projects now driven by a business agenda rather than a technology agenda, there has also been a shift in project delivery.

“Industry has shifted away from the big, top-down, technology-driven projects,” Mr Evans said.

“The customer these days wants to see quick iterations, quick progress.

“It’s about time to value, making it usable, flexible.”

Empired managing director Russell Baskerville has seen a similar shift.

“They want flexibility,” he said.

“Don’t tell me about the infrastructure, I’ll put it in the cloud, and how quickly can it be done, so I’ll get my benefit quicker.”

Mr Baskerville has also observed a shift away from the days when ICT consulting was independent from delivery of technology projects.

“Now the clients want both services combined,” he said.

“Our customers are not seeing that as a conflict; they are seeing that as holding you to account.”

Mr Baskerville believes a big shift in Empired’s business, particularly through its acquisition of Intergen, leaves it well placed for these changes.

“Five years ago, Empired was a pure infrastructure services company; today that represents probably 25 per cent of our business.

“We’ve changed toward application services.

“We see ourselves as the largest dedicated Microsoft systems integrator across Australia and New Zealand.

“We see Microsoft as very well placed to take advantage of this cloud shift and the proliferation of data.”

Mr Evans said Velrada, whose clients range from mining giant BHP Billiton to mine camp manager Sodexo and aged care provider Silver Chain Group, was also aligned with Microsoft, which he believes is a global leader in data analytics.

“We took a view that we would become more of a Microsoft-oriented technology business,” he said.

“We still do a fair amount of consulting work, but a lot of our customers want both.

“They want you to make recommendations and deliver it.”

Mr Evans believes Velrada’s combination of business smarts and technical innovation gives it an edge.

“Microsoft see us as being quite uniquely capable of helping its customers get value from their investment,” he said.

Atos managing director Australia and New Zealand, Peter Robertson, believes state government agencies going through the GovNext reform process face a similar challenge.

Atos, along with Datacom and NEC, has been contracted by the state government to shift ICT infrastructure delivery to a cloud-based service model.

This will include increased use of independent data centres (see page 22).

“It will be complex for agencies to capitalise on this change,” Mr Robertson said.

“The move requires a lot of digital transformation capability.”

Mr Robertson said Atos was on track to hire 20 new people in Perth to support the GovNext work.

The group plans to draw on its global capability, but will also engage local sub-contractors with specialised skills.

“The ecosystem of suppliers is going to grow,” Mr Robertson said.

Datacom and NEC have adopted a different delivery strategy, by including local ICT firms in their consortia.

The Datacom consortium includes Kinetic IT, which is ranked as the largest ICT firm in Western Australia on the BNiQ Search Engine (see page 23).

Empired has been contracted to the NEC consortium specifically to work on centralised identity services, which will govern the way people and agencies can access ICT infrastructure.

The five-year contract will add $15 million to Empired’s revenue, though Mr Baskerville believes there is considerable upside.   

Mr Baskerville said this was another positive step for Empired, which posted revenue of $84 million in the half year to December 2016 and is on track for a strong full-year result.

M&A disruption

Mr Baskerville anticipates Empired will also benefit from the market disruption caused by mergers and acquisitions.

“The change in the listed landscape has been dramatic and it has happened in a very short period of time,” Mr Baskerville said.

“That is, without doubt, driving disruption and creating opportunities.”

Under the latest M&A deal, listed company DWS has announced a friendly takeover of national player SMS Management & Technology, which has 74 people inWA .

This follows SMS’s expansion of its Perth presence three years ago through the purchase of The Birchman Group Asia Pacific.

The DWS deal comes after Japan’s Nomura Research Institute completed its purchase of ASG Group and CSC Australia wrapped its purchase of UXC in 2016, and also follows Dimension Data’s takeover Oakton in 2014.

Another niche deal in the local market was Ajilon’s purchase of 22 per cent of Landgate spin-out Advara, which late last year was awarded a $140 million to deliver ICT services back to Landgate.

Mr Evans also sees M&A disruption as creating opportunities for established players like Velrada.

Another major trend in the national market has been the growing profile of the Big 4 accounting firms in the ICT sector, in both consulting and project delivery.

Mr Evans believes the biggest change in the market has been the shift in demand, from rapid expansion in the iron ore and oil and gas sectors to a relentless focus on costs and efficiency.

“For us, standing still is never an option,” Mr Evans said.

“The world changed here very rapidly.

“I don’t know any other part of the world where it happened so quickly.”

He said the market was tougher and more competitive.

“There’s greater expectations on value and quality and outcomes from customers, but that means you raise your game,” Mr Evans said.

He said one of the positives for WA was the massively expanded base of iron ore and gas production, which supported large numbers of service providers, such as facilities managers, engineers and maintenance companies.

“They are all looking for an edge and technology is an enabler of that,” Mr Evans said.