ASX-listed integrator, ComputerCorp, has gone through a tumultuous few years transitioning from a privately owned Western Australia firm into a national, listed provider of systems integration and services. The loss of senior personnel and its founders, along with the failure of an ambitious merger with Leading Solutions earlier this year, have forced a rethink of its image and market strategy.
NADIA CAMERON recently met with ComputerCorp managing director, Robin Rindel, to discuss the company’s past and present position as well as his plans to turn the ship around. Rindell, a South African by birth and accountant by trade, has spent many years in the IT industry and experienced listings, mergers and acquisitions. He relocated to Australia in 2002 and was the Asia-Pacific general manager for distributor, Westcon Group (previously LAN Systems), before assuming the ComputerCorp helm in January last year.
How did you come to join ComputerCorp?
Robin Rindel (RR): I had been working as general manager of Asia-Pacific operations for Westcon Group for three years from home when I decided to take a year off to meet people and figure out what I wanted to do next. A friend of mine knew Kevin Dundo [ComputerCorp director] and was associated with Domenic Martino [chairman]. They, along with CFO, Murray Mansell, had created a consortium and effectively bought ComputerCorp from Hugh [Smith] and Mike Rickers. They were listing it and wanted a non-executive director who had some exposure to the IT industry. I saw this as a good way to get into local business. Up until then ComputerCorp had been a privately owned organisation with a vision to go national through a combination of acquisition and state branches opened either on the strength of a customer or through other opportunities. Being a private company meant access to capital was limited, so the acquisitions they did were quite small. About six months after listing Murray left and I came on as managing director in January 2007.
ComputerCorp recently acquired Queensland integrator, Coretech, and as you pointed out, has made acquisitions in the past. Is this the right strategy for the company going forward?
RR: I think it’s an opportunity for growth. Part of being listed was about getting access to capital. There’s a lot of scrutiny of listed companies and a number of our competitors aren’t listed, so it’s hard to know their position. But if you’re not planning to use the capital that being listed offers you for growth, you shouldn’t be listed. I see an opportunity for ComputerCorp to grow by acquisition in various states – if you take our business in NSW, it’s a pinprick, as is the case in Victoria and South Australia. We have a nice business in Canberra but it could be bigger. There’s obviously risks with acquisitions in terms of culture but as long as they’re properly managed and executed, acquisitions can be good.
Do you see more consolidation in the integration space?
RR: Everybody talks about consolidation because there are a lot of companies in our space and this is a way of addressing that. If you’re to survive there’s going to have to be consolidation. The ongoing pressure on gross margins from a product and even services perspective means you have to find efficiencies and these come from being a larger organisation and gaining economies of scale. We’re already supporting business in states worth $5-10 million from a group perspective, so it doesn’t add any costs to support an organisation doing $40-$50 million.
So in other words the focus is on acquisitions for sales and customer opportunities?
RR: Yes. For example if you take Coretech – they have a good management team, a good reputation and they are uniquely positioned in the education market with some niche services. If we can take those specifically developed modules and replicate that across the ComputerCorp organisation – we have had a focus on education as well – there’s cross-sell opportunities. Also, we had eight people in Queensland; they had north of 50. We had premises that would have supported 45 people. Our lease expired in June, so we moved straight into Coretech’s premises and saved $200,000 a year in rent. The opportunities for us from a consolidation perspective is that we have a lot of this infrastructure in place already and there are duplicate costs we can take immediately out. It’s not like going into Queensland for the first time.
We have to pick acquisitions in areas we want to grow and they have to work with the same vendors as we support. For example in the desktop space we focus on HP, Lenovo and Toshiba; on the storage and server side we have HP, IBM and HDS. We find very little customer overlap with other resellers, which means there’s always an opportunity to cross-sell. If we get these other synergies there’s enormous strategic benefits because the technical and sales skills will be the same.