Several independent tier-two integrators claim to have won customers from larger competitors in the midst of industry consolidation.
Last year was a turbulent time for local integrators as rivals across the country were bought up or joined forces. Deals made in the latter part of last year included S Central's purchase of AGM IT, and Leading Solutions' acquisition of BCA IT. Both acquirers signalled their intention to buy more businesses this year.
But while it appears to be unpopular to stay in the mid-tier, those left in the game say business is booming. The Somerville Group director, Craig Somerville, saw consolidation and the shrinking mid-tier as an opportunity for those remaining.
"We often sit and talk about this issue around the table here. As we see many organisations being sucked up, there's less and less mid-tier players," he said. As smaller players continue to disappear, Somerville said many of their legacy customers were ruing the loss of high-touch relationships. He cited Commander as an example where some acquired clients were dissatisfied about working with a bigger provider.
"It's continually been a source of opportunity for mid-tier players that offer very personalised service," Somerville said. "Once a company's part of a bigger beast, it's tougher for them to meet that. They are fierce competitors and that makes it tough to be competitive with them at times. They have bigger vendor discounts and backing, for example.
"But for customers that see value past the dollar, there's opportunity. We've had companies move to us because their partner merged into a bigger group." Southern Cross Computer Systems (SCCS) CEO, Mark Kalmus, said it had experienced an exceptionally busy end of calendar year. He attributed some of this to consolidation.
"Once those companies get into acquisitions and mergers mode, they take their eye off the ball," he said. "They are worried about internal processes, people issues or integration. People are also worried about their position and how they fit in.
"We have picked up a couple of jobs against the bigger groups. I think we have been helped by those factors." The majority of these wins involved services like consulting, over general infrastructure, Kalmus said.
NetStar managing director, Chris Meager, said the boost in size from a merger or acquisition could bring some advantages such as operational efficiencies. "I think there's a place in the market for both," he said. "We have not found that it [consolidation] has been hurting our business.
"It's not changed the level of competition. Australia is a heavily competed market. There's no shortage of people asked to tender. But it [consolidation] hasn't changed our business model."
SCCS' Kalmus said its bottom line was also buoyed by overall customer interest in IT investment. "The industry is very upbeat at the moment. I don't think this has got to do with [the launch of Windows] Vista, refresh cycle times or infrastructure regeneration. A lot of organisations have been sitting on decisions for a long time," he said.
"They've decided it's time to move on investments. The economy is strong, and they have more money to spend."
Somerville said things were getting tougher at the top of the market as big players had a firm hold on enterprise. But he claimed there was still plenty of meat to chew further down the pipe.
"The bigger guys offer different services and can bring those to market quicker than us. But in areas where we can apply a niche focus, we're doing well," Somerville said.