Total commitment, a bit of fun and continual growth is Adrian Macleod's credo in his bid to position NextGen as a powerhouse in the Internet economy. And his competitive edge? Those alien concepts of profit and long-term, sustainable growth.
Rebecca Munro looks at what many Internet companies would consider a bizarre approach.
NextGen Systems managing director Adrian Macleod is extremely inspired about his Internet, database and portal company. This passion is not unusual in an industry renowned for big bucks, fast change and life-altering discoveries. But Macleod tries to temper the excitement with a healthy dose of realism and is adamant that cowboy-style operations are far less favourable and profitable to long-term strategic planning, the development of existing skills and infrastructure and honest evaluations about industry trends.
Two years ago Macleod decided the Web was a serious business opportunity rather than a transient phenomenon and started a concerted campaign to relocate his business without having to totally change the skill base and infrastructure he had already established. "This year is my year of the Web. We are now not doing any new business that is not Web-related.
We have grown up from a client-server style of development and now use SQL and PowerBuilder as our front ends. The market we are in is hot and we have ended up with a lot of the certified people in the country because we were willing to send them overseas" Macleod said.
Prior to its immersion in the Internet, NextGen concentrated on client-server projects and database development that tended to focus on big applica-tions, big projects and long-term contracts, a far cry from contemporary high-risk Internet ventures. "The '80s and early '90s were characterised by back-end systems. Now we are in a period of services and e-business that has been building for the last 10 years," explained Macleod.
Yet Macleod wouldn't have altered NextGen's course for a position as an Internet startup company. "From a business perspective it has been great. There was far more certainty involved and I could build up the business based on actual demand."
Typically, NextGen has had only two or three projects going at any one time, but they tend to last a couple of years. "We have one customer that was initially a three-month contract yet we have been there for two years now," Macleod said.
Macleod attributes NextGen's ability to expand in terms of staff numbers and areas of expertise on this job security, especially in an industry renowned for its fluidity.
Developing the company has always been Macleod's ambition. Making money and playing with some "fun technology" have been additional bonuses but his ultimate goal is to be "the next IBM. We put a lot of money back into the business and consequently have doubled both our staff and our revenue year on year."
The foray into the wide and competitive world of the Internet will further expand NextGen's horizons, based on a four-pronged strategy that mixes the old with the new. "We will provide our traditional programming services but our platform of choice is now the Web as opposed to the client-server, although we will still use our database skills as a differentiating factor. The second initiative is to use our existing infrastructure to get the applications we have developed out to the customers. Thirdly we will host externally developed applications, which have typically been the domain of companies like OzEmail. We are doing this with databases, Web servers and Domino hosting. And finally we are becoming an independent content provider, started by the launch of Oztips.com, Ozleague.com and after September we'll extend the sports theme and create other sites like a community notice board," Macleod added.
According to Macleod, Ozleague.com, the second instalment of NextGen's sporting sites that offer up news and tipping facilities, took six weeks to develop and relied on already existing skills and infrastructure. "Ozleague.com gets 40,000 hits a week. With this amount of traffic we can make money through advertising and the cost of delivering the service is very low because we are using existing infrastructure," said Macleod.
One of the more significant hurdles in NextGen's move to the Internet was the establishment of relevant infrastructure, a task Macleod concedes was easily the most cost intensive aspect of his business, as well as being an inherent component for future growth. "The greatest cost is putting the Internet infrastructure together. We now have 50 servers sitting in our server room. We build them ourselves because infrastructure is definitely a killer. The ongoing challenge at the moment is capital."
NextGen's evolution from database developer to multimedia provider has not been without its business as well as technological trials and tribulations. "Right from the very beginning we discovered we had to get in the face of users in order to make them define what it is they want," said an exasperated Macleod. In the relatively new medium of the Internet and e-business, defining, managing and controlling customer expectations becomes even more difficult, especially with the presence of "cowboys" in the industry who "promise the Earth to customers who just end up dissatisfied when they don't get it".
And the future will hold just as many challenges, according to Macleod. The brain drain will continue to influence how NextGen grows as finding the right skills to move into areas identified by Macleod has often been a frustrating experience, only to get worse with the increasing popularity of contract and outsourced work. "Contracting really sucks. It consumes your existing skills without developing them. That's why we don't work on-site."
The dearth of skills in the local market forced NextGen both overseas and into graduate recruitment, a policy that appears to have paid off with a little time and investment. "You need to have long-term goals to have this sort of strategy because a graduate will only become productive after six months and a full team member after 12 months. And that's after investing a lot of time and training in them. But with the massive demand we have experienced in the last 18 months, we needed a way to develop the company more. It's getting tough to even hire graduates now," said Macleod.
According to Macleod, the growth of NextGen, and companies similarly reliant on services, could be an impossible exercise in Australia. "The GST is really going to overprice our services and is going to be a disincentive. Services have never been taxed and they have been the growth area. If the Government is serious about Australia being a financial leader of the Asia-Pacific region they need to think seriously about this issue," warned Macleod. The Government's poor showing on a number of issues has moved Macleod to consider taking his operation off shore, a sentiment echoed throughout a number of Australian businesses. "Internet censorship has led me to consider moving the Internet services overseas. Add to that the fact that bandwidth is a lot cheaper outside of Australia and the idea becomes more attractive.