Somerset waxes lyrical about seeing the Candle light
- 11 August, 1999 12:56
The scramble by traditional direct-selling enterprise solution vendors for indirect channel relationships continues apace as Candle last week announced it had acquired local systems integrator Somerset Systems.
Interest in acquiring the business had been shown by "two onshore and three offshore" companies in addition to Candle, according to Chris Stockton, Somerset's Asia-Pacific director, application integration services.
He said moving to a position under the umbrella of Candle will allow it to expand more rapidly into the growing e-commerce market and the associated enterprise application integration (EAI) services.
"We now have the ability to integrate systems and businesses in order to deliver business over an extranet or over the Internet and that is where we see the greatest opportunities here in Australia," he said.
"If there is one stymie to the broad adoption of electronic commerce it is the fact that most back-end systems are not ready for the front-end systems that are available."
Stockton added that this is where Somerset will be concentrating its growth strategies. "We want to own the EAI space in Australia as much as we can and then move north through Asia.
"We wouldn't have been able to grow as fast as we needed to without the resources of Candle. It's business as usual, but at an accelerated pace," he said.
"The company will remain as Somerset for a period of time, but the reality is that it will eventually change."
Somerset Systems was set up seven years ago as a services company which deals in three spaces - "electronic commerce, workflow and messaging and legacy integration", according to Stockton. "It will retain its name with the adjunct "a division of Candle Corporation" and will continue to use its "e2e, end-to-end business solutions" trademark.
He didn't reveal financial details of the acquisition but placed "very aggressive" growth estimates at 75-100 per cent in the next 12 months. He agreed that other medium-sized integrators and service providers playing in all sorts of e-commerce zones would be silly not to think about aligning with the many bigger suitors that are on the prowl for acquisitions.
"We couldn't have done it locally," he said. "Basically, we just didn't have the cash to grow in line with the opportunities. Being part of the Candle organisation gives us that ability to maximise opportunities and to rapidly grow."
Previously 50 per cent owned by integrator ComTech, it employed 35 staff and generated $4.5 million in annual revenues when taken over by Candle. The development and servicing of customised enterprise applications for large corporates has been its core competency.
No staff will lose their jobs. In fact personnel resources will be expanded, according to Stockton. He also said customers - which include many of Australia's big corporate names - were pleased and congratulatory of the development.
In presenting reasons for the move, Brenda Hunter, Candle's local general manager, revealed the company is focused on building global service revenues. To achieve this the company needs to embrace the channel.
Hunter said that while just two years ago Candle had no presence at all in the channel, the plan was for 15 per cent of 1999's revenues to be generated through indirect channel relationships. That will grow to "more than 50 per cent within three years", she said.
"There are a lot of synergies and affinities in what Candle and Somerset are trying to achieve in terms of providing end-to-end enterprise e-commerce solutions," Hunter said.