Analysis: NSW attracts half of IT spend

Leap Consulting may live thousands of kilometres away from 90 percent of Australians but it hasn't stopped it picking up customers around the country.

The Perth reseller (No.31)has sold Microsoft's Business Productivity Suite to customers in Port Hedland and an accounting firm's outsourcing unit in India. Remote management, support and delivery is helping resellers add customers and add revenue without necessarily adding size.

A lot like their customers; SMBs, in other words. Nearly the same number (39) of resellers as last year had businesses with fewer than 50 staff. Many though packed a punch far above their weight.

Of the 15 resellers with 11 to 25 staff, five pulled in eight-figure revenues (over $10 million). The dollar-per-weight champion this year is ISPone (ranked 16th) whose 13 staff brought in $27 million, or $2 million an employee.

Matrix CNI (No.41) wasn't far behind with 10 staff bringing in $1.6 million each.

The oldest on the list was Southern Cross Computer Systems (No.33), one of four resellers founded in the ‘80s. Another 13 companies go back to the ‘90s; 22 were early noughties (2000 until 2004); 11 launched from 2005 to 2007.

The men (there were no women) leading the CRN Fast50 were a relatively young bunch given that nearly half the list had revenues over $10 million. Fifteen managing directors were 35 or under; 19 were aged between 36 and 45; and 16 were 46 and over, though none older than 60.

Next: Location

Industry estimates place 45 percent of IT revenue in Australia spent in Sydney. The CRN Fast50 hit this number almost right on the head.

NSW pulled in 46 percent of the total revenue with $343 million. It relied on fewer resellers to do this, however, with 18 resellers instead of last year's 23.

The state that showed the most improvement was Queensland, which delivered eight resellers making $73 million, up from five last year. Analysis of the Queenslanders' customer base reveals some surprises. Mining drew an average 9 percent of revenue, well behind manufacturing, 23 percent, and government, 13 percent.

In comparison mining (23 percent) helped Western Australia's six resellers ($14 million total)
hold their own.

Hats off to ISW Development (No.18), the list's first from Tasmania. ISW, which is a majority software and services business, had a terrific year with 54 percent growth to $7 million revenue.

Victoria contributed 14 resellers and $290 million to the CRN Fast50, but they were on average the most successful, just pipping the NSW contingent. Victorian resellers generated on average $20.7 million to NSW's $19 million.

Next: The big guns

Four resellers cracked the magic $50 million mark; Integ Group (No.37), Southern Cross, NSC Group (No.39) and Brennan VDI (No.45). And despite being the oldest, Southern Cross showed that age was no impediment with the largest jump, up 24 percent to $67 million.

Southern Cross managing director Mark Kalmus says that maintaining growth in a 100-person company took a multifaceted strategy and a secure financial base.

Last year Southern Cross made a "huge" investment setting up a Canberra office which will take 18 months to two years to pay off.

"You need to be a profitable company that has sufficient funding and retained earnings that can reinvest in these things," Kalmus says (see breakout). "You have to take a longer term view and have deep enough pockets to make the investment work over a period of time. You can't expect to get a return straight away."

Anittel (No.1) showed that for superfast growth there is nothing like an acquistion spree to increase revenue. Led by mergers and acquistions expert Ilkka Tales, the national reseller-ISP shot up 310 percent to $21.78 million in revenue.

Anittel raised the money through a public listing and is still on the hunt for more resellers.
Software Traction, our second place-getter this year, gets a special mention for managing to grow 234 percent through organic sales of IBM gear to $9.6 million.

Software Traction is also looking to go public but has chosen to list on the Australian Small Scale Offerings Board.