Play word association in the swanky new Sydney headquarters of Somerville and, chances are, education will rank highly on the list of connective phrases. This is the sector in which the brand was built, mastered and magnified -- a dominant field for a specialised technology provider.
Yet ask Craig Somerville -- in looking back on 39 years of market existence since founding the company in 1982 -- and the story deviates somewhat.
“Our heritage was actually in the enterprise,” he noted. “We were servicing the top-end-of-town and fell into education.”
As the age-old anecdote goes, the blossoming business was engaged to deploy fibre networks into large-scale campuses before expanding over the course of 25 years, building a strong education sector reputation in the process.
“We’re very strong in education but that’s only one of our verticals,” clarified Somerville, referencing a solid customer base in financial services, legal, insurance and accounting. “We are making a concerted effort to return back to the enterprise and ensure our brand is well-known in that space.”
Such ambition triggered a chain reaction within the corridors of power at Somerville, kick-starting a period of self-reflection, soul searching and strategic planning.
The end result is a new brand initiative shaped by an aggressive enterprise growth strategy and streamlined technology portfolio, spanning the core pillars of Cloud, Connect, Secure and Modern Workplace.
“Our simplified solution pillars ensure stronger alignment with our operations and technology teams, supporting our go-forward strategy to ease the burden for our customers, cementing our position as the leading IT solutions provider to the mid-market,” said Somerville, speaking as CEO.
For a business fast approaching middle age -- by conventional wisdom -- the next chapter of Somerville is more aligned to acceleration rather than resignation. This is the era when a $50 million business smashes the $100 million mark and when $20,000 a month customers morph into $100,000.
“We’re working our way up the food chain,” noted Somerville, following a wide-ranging and exclusive interview with ARN. “I can remember looking back thinking $5K a month customers were exciting but our target today is $100K. We’re starting to build off our footprint.”
In a frank admission of market approach, Somerville acknowledged that the one-time education specialist must now evolve into an enterprise-grade technology provider, embracing the top-end-of-town to trigger future growth.
“We want to be a $100 million business but we're not going to do that in education alone,” he noted. “The logical place is to go back to our roots, open up the channels and build market awareness.”
While education still remains a core priority, the transition from classroom to corporate represents a new level of customer demand and industry competition. Whether up against global system integrators, consultancy giants or national players, Somerville is now rapidly building out enterprise credentials.
“In every major deal we enter we’re seeing a different set of partners,” Somerville recalled. “The competitive nature of this landscape is vastly different but likewise, we offer a different value proposition.
“We’re at that solid size now of not being too little but not being too big -- we offer a high level of personal service and see strong opportunities in securing end of contract work through keeping customer engagement high.”
The execution of a new-look business structure follows an intense period of feedback gathering within the four walls of the Somerville boardroom, motivated by a desire to position the company for long-term growth.
While the direction of travel was clear -- with monthly recurring revenue in the corporate sector high on the agenda -- COVID-19 naturally sharpened focus on “rattling the tree”.
“When times get tough, that’s when all managed service providers [MSPs] start to look at everything,” Somerville acknowledged. “It can be easy to get fat and bloated when times are going well, when you’re bubbling away and revenue and profit is strong.
“But after 1-2-3 years of solid growth, you can become complacent, things become all too easy and you take your eye off the little things. If you can die by a 1000 cuts, you can also grow by a 1000 band-aids.”
The streamlined focus mirrors recent EDGE Research findings -- commissioned by ARN and delivered in partnership with Tech Research Asia -- with attracting new customers, growing annuity revenue, retaining current customers and enhancing end-user experience levels cited as the top partner priorities in 2021.
“Most partners are still running the same businesses they were 10 years ago, largely speaking,” outlined Mark Iles, executive analyst of Tech Research Asia, when addressing the channel during EDGE 2020 in November.
“Granted, the technology they are selling might be slightly different but the way they are selling hasn’t changed. From sales directors, account managers, pre-sales to scoping the project, adding professional services, putting contracts together and creating proposals - it’s the same approach as 10 years ago.”
In a direct message to the channel during the conference, Iles said partners must now assess how to function as a modern business operating at least twice the speed -- “even three or four times faster” -- in order to keep pace with evolving customer buying patterns.
“Partners have to be quicker, nimbler and more agile and that means different people and different organisational structures,” he advised. “If your first step when thinking about doing something new is to sit down and write a large long-winded document outlining your plans, then you’re missing the point - this isn’t how the market is behaving anymore.
“Why would you write a business plan that is longer than one page? The market is moving too quickly in places. By the time you have written the plan, another partner will have probably executed it.”
The addition of Iles and Simon Paterson -- partner of Allan Hall Business Advisors -- to the Somerville board helped add a “far more critical eye” to the business, creating not only accountability but guidance in shaping the strategic development of the organisation, underpinned by streamlined technology offerings.
“We were held to account as shareholders,” Somerville said. “We looked at the good and bad of the business and like any MSP, we found a complex company. We had businesses in network, carrier, managed services, product and security but this approach was getting complicated and messy.
“The basis of our restructure was centred around the questions of: How do we go to market? How do we brand? How do we align ourselves to technology?”
Enhanced tech portfolio
From a technology standpoint, Somerville’s focus also aligns with recent EDGE Research findings, notably linked to the leading partner solution priorities of security, managed services, digital transformation, customer experience and cloud migration. Hence the creation of four core pillars in the form of Cloud, Connect, Secure and Modern Workplace.
“This covers every requirement of a customer and reflects how the industry has developed from a solutions standpoint,” Somerville outlined.
Specific to cloud -- in the context of “where applications and data live” -- core offerings centre around the provision of public, private, co-location and hybrid cloud solutions, supported by expertise in Microsoft Azure, Office 365, Amazon Web Services (AWS) and data security and back-up.
“It’s not our role to tell customers where workloads need to reside,” Somerville said. “If it’s a Microsoft developed application, it’s clearly not going to run in AWS.”
From a Connect standpoint, this pillar encompasses all aspects of the IP network, offering a direct path to high performance connectivity while connecting users to workloads via an “anywhere and anytime” approach.
“A typical customer has workloads sitting in Azure, AWS and on-premises environments, plus users working from home and in a few branch offices -- this is all connectivity at the end of the day,” Somerville noted.
Meanwhile, the Secure segment of the business will provide “proactive management” against potential security threats, strengthening endpoint, network and infrastructure security posture against attacks that exist in the modern environment.
This includes monitoring and management of intrusion detection systems and firewalls, overseeing patch management and upgrades, as well as performing security assessments and audits.
“Security is a practice not a product,” added Somerville, noting that the business has been a security player for 24 years. “Netfilter was our name and we operated as an managed security service provider [MSSP] yet customers today will say, ‘we’re going to go with a dedicated security specialist’. This has been in our DNA since 1997.”
According to Somerville, the challenge was less in the expertise available rather that security as an offering sat within the carrier network division through a managed firewall, modern workplace via endpoints and network with VPN and perimeter solutions.
“We’ve now pulled all that together in our Secure pillar which helps strengthen our brand in the market,” Somerville said.
Rounding off the four-pronged approach to growth is Modern Workplace, housing the end-to-end design, deployment and management of a customer’s operating environment and fleet of devices.
“This is a strong growth area for the business and represents a changing part of the market,” Somerville explained. “We’ve being deploying a lot of outsourced services for customers by wrapping up solutions in a services component which continues to expand solidly.
“We see this as the last pillar that every customer has to have. But we still also have procurement in place. It’s been positive to have someone such as Mark Iles on our board saying, ‘don’t shoot product’. Our focus is on building annuity and stickiness but we’re never going to throw that product base away.”
Brand enhancement, internal buy-in
The move by Somerville to enhance branding represents a welcome change of pace for an MSP in Australia, with the sales and marketing methods that have dominated the channel for decades now considered outdated, archaic and bordering on obsolete.
With customers turned off to traditional techniques, Somerville is moving ahead to strengthen ways to attract, acquire and engage with end-users.
“This is a big step forward in building our brand awareness and marketing in the corporate market,” Somerville added.
“When we first completed a brand refresh in 2007, the agency we used at the time surveyed large-scale enterprise customers and found our name was synonymous with the top-end-of-town. We actually wanted to rename as Open Networks but the feedback at the time was that Somerville means something in the market, don’t lose it.”
In addition to brand enhancement plans, Somerville also referenced the importance of “breaking the chain” between front-end customer consultation and deep technical expertise.
“One of our core aims was to build confidence in the commercial team to have a deep discussion with customers about our capabilities,” Somerville outlined. “Now they can start with a conversation covering our core pillars and if the customer shows strong interest in security, for example, they can deep-dive with our technical experts.
“Each of our pillars will continue to have a growing number of practices housed within it, supported by specialists capable of delivering increased levels of customer value.”