Profile: The House of Lorge
- 12 June, 2002 12:42
It is hard to believe that Mike and Tony Lorge come from the same stock, so vastly polarised are their personalities. Tony spends the majority of his time cracking jokes about completely serious subjects while Mike is the epitome of diplomacy.
The brothers are recent additions to Australia's population, migrating from South Africa where throughout the 90s they built their joint IT consulting business into the biggest reseller in the world of ACCPAC (Computer Associates' e-business and accounting range). Tony has no qualms boasting about Lorge Consulting's enormously successful operation in South Africa; it owned 40-60 per cent of ACCPAC's market, 10 times that of any other ACCPAC reseller and sold one installation per week in its first year of operation. It was also one of the first IT consulting firms to comprehend that accounting software installations must be led by business professionals rather than IT professionals, despite requiring a large degree of computing knowledge.
"[Lorge Consulting] was by far the most profitable ACCPAC reseller; nobody came even close to the profitability levels that we were able to achieve," says Mike. "There were a number of things that we did in our business that enhanced our understanding of this space." It is this enhanced wisdom that the Lorge brothers have come to exhibit in a marketplace apparently bereft of it. Each has chosen his designated corner from which to operate - Tony has set up a consultancy firm similar to the successful South African operation and Mike will impart his knowledge to other ACCPAC resellers, showing them how to be more profitable and ultimately more successful. There is a fine line separating the competitive nature of the two models.
When I suggest to Tony Lorge that the Australian scene is already buckling under the weight of too many accounting consultants, he is completely unfazed. On the contrary, he says, the market has huge potential for growth because the current players are unrefined in their approach.
"The current mix of resellers, whilst competent in certain areas, do not have the relative methodologies and/or experience to do the job." When distributing the customer's budget and resources at the start of an implementation, they are failing to achieve the correct balance between consulting, integration and support, he says. They are faced with a much more discerning customer then yesteryear but lack the highly structured methodology to live up to these expectations.
Without being cocky, Tony is confident he and his fellow consultants at the new business Lorcom can show them a thing or two. "We set a different standard for this sort of thing," he says. "We have developed a very strong methodology which covers the way we sell and implement solutions. It is tried and tested and has been successful in selling in excess of 1,000 ACCPAC sites. This type of approach is not commonplace among the current resellers - not only within ACCPAC's channel but across the board of products. Service is the key element of our company. We ensure that more than 50 per cent of the company's resources are focused on implementation and support services."
Entering the Australian environment, Tony feels the biggest challenge is that businesses seem to be more price-conscious than solution-conscious, and resellers are perpetuating this misapprehension. "Save for a few of the strong players in the market, the resellers have an approach of selling on price to the lower end of the market and are not as solution-focused." At the low end of the market, price-conscious selling is probably the right approach, he says, but many businesses learn the hard way that implementing the wrong, albeit cheaper, solution is much more costly in the long run.
By the same token, he feels ACCPAC's e-business and accounting products are sorely under-represented in high-end accounts. For some mysterious reason the Australian market has relegated the ACCPAC brand to the ranks of mid-range enterprise, sending large corporates to recruit the costly services of SAP, Oracle and JD Edwards.
"We can prove to these companies that they can get an ACCPAC solution that does the job at a much lower cost and they do not have to sacrifice quality or a fully managed implementation to do so."
In terms of e-commerce as a connected medium, Tony has a refreshingly grounded perception. He is not about to start selling pipe dreams and hype. "The perception of e-commerce is that it's a global phenomenon but in reality it's not. Even within Australia, trading partners are not e-commerce-enabled. How many businesses here have even a simple version of e-commerce like Web stores, and why is it that so many of them don't? In many cases, it's because it doesn't work; you've still got to advertise like mad to get the users to your Web store and then there is so much credit card fraud that they can't afford to sustain the online payment capability.
"E-business has its place, and I think anybody that doesn't get into it at some point is crazy, but they need to have a business solution first. Too often, people have gone out there looking for e-commerce solutions without having a business solution first, which typically results in them spending a huge amount of money on a system before realising that it doesn't fit in with their business. They then set out trying to fit their business around their system, which is a guaranteed failure."
"Are your consultants each billing 140-plus hours per month?" This slogan leaps out from Pivotil's promotional brochure, challenging resellers and cutting straight to the heart of a fear harboured by the vast majority.
"In the daily hustle, it's easy to forget that you are primarily running a business to generate and grow sustainable profits," explains Mike Lorge. The majority of resellers expend all their energy on the day-to-day business of surviving, leaving little time and head-space to consider their long-term strategic direction, much less the small steps required to get there. Pivotil's aim is to help resellers become more profitable with the least amount of pain.
"There isn't a solutions partner out there that isn't feeling pressure to change the way they do business because they sense and are experiencing that the industry has changed. And they either have to change and meet those challenges successfully or there is a high risk that they might fail. It's becoming harder and harder to just stay where they are," says Mike.
In addition to creating checklists for resellers to follow throughout the integration phases, Pivotil is out to create a community of ACCPAC partners that can share information and experiences. "On a quarterly basis, members submit their financial results to us. We then analyse those results and give them feedback on key performance indicators and benchmarks that help highlight what they are doing well and how that's positively influencing their business, and what people are doing badly and how that's negatively influencing their business," Mike says.
It is a confidential process, which aims to remove the threat of competition by putting geographical space between the resellers. Two-thirds of Pivotil's business already comes from America, a figure Mike says will reach 80 to 90 per cent by the end of 2002. "There's a limited size to the Australian market for Pivotil's services. There are maybe 5,000-6,000 ACCPAC resellers worldwide and almost 90 per cent of those are in North America, so if we're going to be really successful it will be because of our success in the US."
However, Mike believes Australian resellers are proving increasing more amenable to the concept of improving their businesses. "Australian solution partners recognise they need to do things differently - to create an operation run on business principles - and they haven't been afraid to dive into those adjustments."
Still, the transition from being willing and being able is tough. Many business principles run contrary to Australia's underlying culture of mateship and mum-and-dad-grown environments. Mike admits that Australian resellers are reluctant to enforce an "effort equals reward" culture. However, if they succeed in providing a comfortable working environment, while encouraging employees to be productive, resellers will seal a huge leak in their cost structure, he says. "People become more valuable to you the longer they're with you. In the first 18 months they learn the skills and then they take them somewhere else. It's in the second 18 months, and then the 18 months after that, that they're really adding value to your bottom line."
Meanwhile, with the ink on his immigration papers barely dry, Mike says the Pivotil concept is good for promoting Australia's skills and ability in a global context. "This is intellectual property that has been developed here but which we're exporting to the rest of the world and which is bringing in foreign revenue. I think that's an important achievement for the company, as opposed to just appealing to accounting software resellers."
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