Heard it through the grapevine

Heard it through the grapevine

Can CSG keep a hold of Commander’s services customers?

I’ve spent the better part of a year wading through news, speculation and outright gossip about Commander. It started with the unceremonious ousting of the management team including Adrian Coote and Steve Evans, and appointment of CEO, Amanda Lacaze. This was accompanied by speculation about the listed integrator’s inability to pay back mounting debts.

Soon we were hearing Commander’s credit was on hold. A For Sale sign appeared on the door. Then came the much fan-fared turnaround plan and decision to largely exit the hardware reseller business – cutting off almost one-third of its revenues in one foul swoop.

There were reports of Commander staff – and indeed, whole divisions – exiting in droves to join rival integrators. Hundreds were also made redundant, leaving customer contracts ripe for the picking by aggressive competitors.

Then came gossip about the imminent appointment of receivers.

For the last three months, speculation has been centred on who could possibly want to buy Commander’s remaining telco and managed services assets. While there were 150 expressions of interest submitted to McGrathNicol, most agreed the receivers would have a difficult time recouping much of the $360 million owed to Commander’s secured creditors.

We finally got the first piece of concrete news last week when the receivers sold Commander’s managed services business to Northern Territory-based outfit, CSG.

CSG will pick up Commander’s Federal Government customers, including its Group 8 arrangement and Department of Finance contract, along with the integrator’s South Australian government customers. Financial details of the transaction have been kept under wraps, but it’s unlikely CSG had to fork out much to purchase the business itself. The greatest cost is probably taking over staff entitlements for the 220 employees it has now picked up.

There is one very big question left unanswered: What will happen to Commander’s Ipex manufacturing business now it has been separated from the government managed services contracts? Ipex, a stalwart of our industry and one of the largest assemblers to ever operate in Australia, has been left to dwindle in the corner in recent years. The PC builder may not seem like much now, but it was actually Ipex – not Volante nor Commander – that won the Group 8 arrangement in the first place.

It’s also not clear how CSG plans to secure many of its lucrative government contracts, such as the Tax Office and the South Australian IT panel, without Ipex. My understanding was that those were originally based on having local assembly capability.

Many of these contracts will be up for renewal in the next 6-12 months. CSG is confident many will be renewed because of Commander/Volante’s “successful performance” and the staff’s relationships, but I would argue Commander’s reputation is too tarnished to ride on. CSG has won some good, solid business and come a long way this year, but with so many strong contenders out there, it’s going to have to fight tooth and nail to maintain that ground.

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