Telcos charge into integration
- 06 October, 1999 12:56
Systems integrators watch out. Here come the telcos!
In what could be a sign of things to come, up-and-com-ing network integrator FTA Solutions has been snapped up by Nomad Telecommunications. FTA will now be known as Nomad Solutions and will operate as a separately managed subsidiary of the as-yet little-known telco.
"I think if you are going to survive in the systems integration space in the future you are either going to need to be part of a telco, or aligned with one," said Charles Spooner, FTA's and now Nomad Solutions' managing director.
Spooner said it was inevitable that carriers will put their indomitable stamp on the integration marketplace.
"There is not a lot of margin left in the carrier's traditional space so they are having to look elsewhere to see where they can add value," he said.
"You only have to look at Telstra which now touts that it can build your Web site and provide customers with a complete solution."
Indeed, Telstra has already had considerable success in integration winning high-profile, mega-deals like Qantas.
Spooner believes carriers will increasingly buy up integrators who have exceptional systems integration capabilities.
"Nomad was looking for an SI core team and that's what we had," Spooner said.
"This has got to happen. When you look at the critical mass of technical expertise, where does it reside?
"It's in systems integration companies like us but it's also very finite. You can't just spin a network engineer out of a mould; it takes three years to train one.
"And these guys don't have three years, they can't afford to wait, so they have to buy."
Like any other market, Spooner said, the carrier space will consolidate and end up being a battle of the giants vying to see who is left standing.
"The question is how much of the industry is going to be eaten up while they all fight for survival?" Spooner said.
"We're already seeing a very strong trend in the Victorian marketplace, where not only are hardware margins down to single digits, but services margins have also fallen to the very low double-digit mark.
"You're going to need very deep pockets to survive in this kind of marketplace."
That's exactly what Nomad gives FTA, he said.
"We've now got a parent company with hundreds of millions of dollars in the bank, who have given us a charter to grow the business as quickly as possible," Spooner said. "We can now go the full nine yards."
FTA Solutions sprang up from the ashes of former distribution/integration company Force Technology.
Spooner, who was a former managing director of networking vendor Fore Systems, bought out the company, refocused it on integration and quickly assembled a team of talented engineers and salespeople.
"We grew more quickly than I had anticipated and I was basically faced with two choices - keep it at that size and grow incrementally or look for an equity injection into the business", Spooner said.
Spooner said that most venture capitalists wanted to take 51 per cent of the business or put a board over the top of management, so it made just as much sense to make FTA part of a much larger company.
"I wanted to make sure that for whoever I brought in, there was a synergy between what we were trying to achieve and what their goals were and I think we've done that.
"We're not being absorbed into a big amorphous mass, we'll still run very independently. They're Nomad Telecommunications, we're Nomad Solutions and for the most part it's business as usual except we don't have any restrictions on our growth."
While Nomad is little known in Australia at the moment, Spooner said "it has the right backing and the right people running the business" and suggested that much more would be heard from Nomad early next year.
He refused to give financial details of the deal but said: "I'm very happy with it, I've got no complaints and I don't think any of my staff do either."
Spooner said he had agreed to remain with the company as had all other FTA staff.