eServ breaks the reseller mould

eServ breaks the reseller mould

X-Direct is breaking the traditional reseller mould, last week announcing its reinvention as the service provider eServ following a $3 million venture capital investment.

The company owes its birth to the merger of X-Direct, a Sun and Cisco reseller, and network integrator Uniq Professional Services. The financial backing came courtesy of Allen & Buckeridge.

According to eServ's managing director, Ian Buddery, the company realised it was never going to fulfil its growth ambitions without outside help.

"It's very hard to break out of the box that vendors tend to put [resellers] in," he said.

The new company is aiming for a slice of the converging Internet, enterprise computing and network integration markets.eServ will deliver what it calls "NetInfrastructure" - integrated e-business, networking and server-based solutions.

Buddery said the company is already looking to capture $18 million in revenues for the 1999 financial year with a budget of $25 million and "emotional target" of $30 million for next year.

Unusual investment

Allen & Buckeridge's Bob Christiansen admitted the company's role in eServ is unique for the industry.

"Venture capitalists don't make a habit of investing in resellers," he said.

However, Christiansen said Allen & Buckeridge believe broad-based Internet services companies like eServ stand to return significant investment dividends.

In addition to the venture capital, the company has captured the support of Cisco's Asia Pacific vice president, Richard Freemantle, who agreed to become chairman.

Freemantle is expected to bring wide-ranging experience in the networking and IT industry to the table.

"My experience is in acquisitions," he said.

However, Freemantle said the post is "not an endorsement of Cisco's position" on the company and claimed it will not receive any special margins.

He said his interest stems from a long-term personal relationship with X-Direct's management and the belief that projects like this stand to capitalise on the "Internet revolution".

"The growth potential is far greater than people imagine," Freemantle said.eServ's Cisco and Sun heritage will see it continue to focus on network integration and the NT and Unix-based enterprise environments.eServ is expecting to take its business to international markets within 12 to 18 months and is heading for an initial public offering or trade sale in around two years.

Buddery said eServ is also expecting to buy additional expertise in the form of two Internet or networking-based companies by the end of this year. He said an announcement on the first acquisition will be made within 90 days.eServ currently employs 18 people with plans to employ an additional four by the end of 1999 across its offices in Sydney, Melbourne and Brisbane.

Buddery reports sServ gains 60 per cent of its existing revenues from the finance industry, 30 per cent from telecommunications, and the remaining 10 per cent from a variety of industries.

He said the company is looking to add two other market segments to the mix such as the airline and media industries.

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