If you were to meet a pair of businessmen by the name of Bond and Adler, you’d probably have some reservations about their past and hesitation in predicting a rosy future. However, that is not the case with the two founders of Melbourne-based Invizage Technology.
Brad Bond and Paul Adler — no relation to the respective disgraced corporate giants, Alan and Rodney — are a pair of former school mates who took separate paths into the IT industry before combining their talents to form an alliance that grew to become Invizage Technology.
From humble beginnings, the company has grown to the point where in the 2002/03 financial year it turned over more than $6 million, the majority of which was good margin services. Invizage currently employs 68 staff at its four offices in Melbourne, Sydney, Brisbane and Adelaide.
Having shown more than 100 per cent growth per annum, the company has been on the BRW Fast 100 for the last three years.
It all started when the two former students from Melbourne’s St Leonards College met up one night in 1996. At that stage Bond was running his own computer repair business, PC SOS, and Adler had started a software development company, Tailored Software Solutions.
As Bond recalls both were targeting small to medium enterprises.
“There were obvious parallels in our interests and ambitions,” he said. “We decided there and then to undertake a joint venture to do some Web development because we saw that as the hot opportunity at that time.
“Unfortunately, we were a little ahead of our time and that never really got off the ground but we did decide to merge our other two businesses because we had complementary skills. He was good at sales and I was good at the technical side of things.”
That was 1997 and the two collaborated and worked without employees for another year or so happily “doing bits and pieces of custom software development and PC or network support” for whomever needed it.
Before long they were so flat out that a decision was made to bring on a casual engineer.
The rest is now history. Demand for IT support amongst small businesses was really taking off.
Despite doing “little or no advertising”, by 1998 they had “about 10 employees”, all bar one of whom were in the support side of the business, Bond said.
“That is when we decided that it wasn’t feasible to continue doing the software development,” he said. “We realised that we didn’t have a lot of value to add in that area and that there were a lot of competitors doing it as well if not better than we were.
“Whereas with the IT support for SMEs, we realised we had some sort of unique offerings and we were continually finding new ways to add value to what we were doing. In 1999 we started up in Sydney to support customers who had offices there as well as Melbourne and then in 2000 we changed the name from PC SOS to Invizage Technology.”
Interestingly, where most resellers are looking for ways to add services revenues to their box-shifting heritage, it was the other way round for Invizage. It started offering procurement services to its customers as a value add to the support it was providing.
“Effectively we become the IT department for small and medium businesses so if that means they want us to buy their infrastructure for them as well, then we will do that,” Bond said. “We define our market as being organisations up to 250 users.
“We are in the business of supplying, building, maintaining and supporting the IT infrastructure of customers in that size range. We consult with them as to what they need and help them get the best out of it.”
So just how did this once little company grow so rapidly, especially during a period where many parts of the industry stagnated or went backwards?
Bond said the industry downturn from 2000 onwards didn’t affect Invizage Technology much at all.
He couldn’t say that it didn’t affect it at all but emphasised that very high growth was sustained during that period.
“What I think has happened over the last couple of years is that a lot of the one-man band and small operations have gone under,” Bond said. “They were just not viable when things got tough and that is evidenced by the number of people we have coming through our recruitment process who were previously running their own business.
“Before the downturn, there were no barriers to entry for people who wanted to run their own business. All you needed was a mobile phone and a screwdriver and you could call yourself an IT support company. So there were literally thousands and thousands of people running around doing that.”
Bond said that all aspects of the industry, including IT support companies, had seen a lot of consolidation during the past few years.
This was only going to accelerate in the support space and there would only be “a few larger players”.
He and his partner are positioning Invizage to be one of the survivors.
Another factor that has contributed to the growth of the company has been the increased dependence that small-to-medium businesses have on their IT systems.
“SMBs used to believe that they could get away with their systems being down for a day, now most of them realise that it costs them money,” Bond said. “So when their incumbent support providers — whether they be one-man bands or small companies — couldn’t make it in time or couldn’t solve the problem because they didn’t have enough people they got frustrated.
“That is when they started looking for larger, more stable providers. We picked up a lot of work from that and we continue to do so.”
Invizage Technology’s revenue model works around procurement, service and maintenance contracts.
Bond said that 60 per cent of its income was in services. Customers were contracted to pay a monthly retainer, which included a set amount of proactive maintenance and reactive services, or help desk support. They worked to service level agreements. Additional services, special projects or procurement was billable on top of the set fees.
The challenge for Invizage is to maintain the extremely high levels of growth.
Bond said there was still some resistance from companies in its target market to locking in preventative maintenance contracts.
Many just didn’t see the value until they had a disaster that cost them money.
Bond sees opportunity in further market consolidation.
He said there was not a lot of capital for the purchasing of new servers, Windows 2003 would not be as good for business as W2000 was and that the benefits of upgrading to Small Business Server 2003 were hard to sell.
He saw some opportunity in voice-over-IP “but the hardware is still too expensive” for most SMBs. Meanwhile, there was some good money in security solutions at the moment for support providers with sufficient resources because “smaller companies cannot respond to increased demand” when a new virus hits.
Bond said that the secret to Invizage Technology’s ongoing success had been rooted in fundamental business principles such as debt control, customer service and in having quality, contented personnel.
“Debt control is a big issue,” he said. “SMEs are notoriously bad at paying bills. It is very important to have a good credit control system and we pay a lot of attention to that. You can’t just send them a bill and hope that they pay it.
“Customer service is what this whole company was built on and our very high customer retention rate is why we have been able to grow at such a great rate of knots. Instilling good service ethic in all employees is a key to customer retention.
“We have to be there for our customers to when they need us and it is also important that the staff understands it affects them as well. They have to understand that if we don’t have customers, they don’t have jobs.
“Looking after our staff has also always been something that we have been very focused on. We support a social club and the general social nature of the company means that we have a very small staff turnover which is extremely rare in this industry.”
It is all systems go for Invizage, according to Bond. The plan is to keep growing the business at a manageable rate.
“The foundation is in place for us to continue doing what we do,” he said. “We have to make sure that as we keep growing, things don’t fall apart. We want to ensure that our customer service levels don’t drop and that our staff retention levels remain the same.
“We are always very conscious of maintaining these high standards. While we have enjoyed very high growth, it has also been very controlled growth. We could have grown at a faster rate than we have but we probably would not be here today.
“We have learnt to say ‘no’ sometimes and to always watch our cash flow to make sure that the growth doesn’t get out of control. It has been a good grounding for us to now take the business to the next level.”