Crunching the numbers: how the 2015 CRN Fast50 did it

Who grew by an average of almost 70 percent and added more than $250 million in business in the past financial year? The 2015 CRN Fast50, that’s who. 

This year’s crop of fast-growing resellers and IT service providers achieved an average growth rate of 67.5 percent and total revenue increase of $253 million. To think that just 50 companies created a quarter of a billion dollars of new business is a staggering show of success and evidence of the importance of IT to Australia’s economy. That average growth rate makes this the fastest year ever.

Overall, the 50 companies across this year’s CRN Fast50 generated $665.1 million of revenue in 2015, and employed more than 3,000 people. The average CRN Fast50 company was a smidge under 10 years old, employed 66 staff and posted revenue of $13.3 million.

Some 18 companies turned over more than $10 million, and six companies cracked $20 million. The biggest company was Empired (No.13), which means it wins this year’s CRN Fast50 Leader Award. The smallest, Deeptech, snuck into 50th place by growing 26.05 percent. 

Every year it gets harder and harder to score a place on the CRN Fast50. In 2014, the threshold for admission was 18.31 percent; this year it was 26.05 percent – the first time that the barrier to entry was greater than 20 percent. It reflects a strong year in the Australian IT channel, as well as the increasing popularity of the CRN Fast50: as more companies enter, they raise the standard.

I tip my hat to the many companies who entered this year and didn’t achieve the cutoff. There were some phenomenal operations just outside the fringes of the competition. I recognise it’s disappointing to grow at double-digits and still not qualify, and I urge these companies to try again next year.

This year’s No.1 and the fastest-growing company on the list was Canberra-based Sliced Tech, a four-year-old business that posted 192 percent growth to take the top spot. Sliced Tech’s mix includes managed services, security and infrastructure-as-a-service – all fast-growth areas that have clearly provided a winning combination for Sliced Tech’s clients,  predominantly government. 

This year’s biggest company, Empired (No.13), grew quickly through a spate of acquisitions, while also reporting strong organic growth. Empired smashed through the $100 million barrier in 2015 and established itself as a force to be reckoned with. 

Empired is not the only major player to use M&A as a tool for growth. Serial acquirer RXP Services (No.31) is once again among the CRN Fast50, as well as first-timer BigAir Group (No.27), which snapped up well-known IT solution provider Oriel in the 2015 FY. 

States and ages

This year marks a changing of the guard for the CRN Fast50. It is usually New South Wales that fields the most companies. Not this year. Take a bow, Victorians. The southern state left all-comers in the dust, with 19 Fast50 companies. New South Wales was next highest with 13, followed by eight from Queensland, six from Western Australia, three from the ACT and one company, Comwire IT (No.37), representing South Australia.

The fastest-growing Victorian was BizData (No.4), the largest was RXP Services (No.31) and both of the oldest companies on this year’s Fast50 hailed from Melbourne – Trident Computer Services (No.32) and SIAX Computing Solutions (No.35) were each founded in 1985. Both made their CRN Fast50 debut this year. It’s impressive to see 30-year-old businesses with the acumen to grow at double-digits after three decades. 

Victoria is also home to the most successful company in the history of the CRN Fast50 competition, Blue Apache (No.43), which is the only business to secure a berth on all seven lists.

Trident and SIAX are the elder statesmen of this 2015 CRN Fast50, but they’re not alone as long-established companies to make this year’s list. BizQuip Solutions (No.46) has been in business for 27 years, while another 20 companies are at least 10 years old. 

The CRN Fast50 has always been a way to unearth the next crop of fast-growing IT providers, but this year’s batch is evidence that wisdom counts, and age is no barrier to growth.

Return winners

There have been more than 180 CRN Fast50 companies since it launched in 2009. Only one, Blue Apache (No.43), has been in all seven years. Another five companies are also members of the ‘All Stars’ – business to have appeared at least five times. There were no new admissions into the All Stars this year – evidence of the increasingly high barrier to entry and the challenges for companies to grow year after year.

We expect to see more names become the All Stars in years to come. There are now ten IT providers sitting on four appearances each, with both Virtunet (No.33) and Red 29 (No.15) securing their fourth placings this year. We’d love to see them break into the five-year All Stars in 2016.

This year saw 22 first-timers appear among the CRN Fast50. As you might expect, these Fast50 newbies represented a lower total revenue ($204.4 million) but higher average growth rate (75.94 percent). Victoria was the most well-represented state among these new faces, fielding seven first-timers.

Vendors and distributors

Every year, we ask the CRN Fast50 entrants to rate their vendors. But how should we quantify vendors? A ranking by revenue might seem appropriate, but that’s an inexact science, because specialist providers skew the results.

RXP Services (No.31) was the only one to select Tableau or ServiceNow, but those two vendors represent more than $30 million of revenue. MSC Mobility (No.29) was the only entrant to choose AirWatch or MobileIron, but it still adds up to over $10 million of sales. So, we broke down the data by both revenue, and by popularity – the vendors with the greatest numbers of  partners among the CRN Fast50.

Once again, there were a select few vendors driving the lion’s share of revenue. Microsoft was again on top as both the most popular vendor as well as the biggest revenue driver. Fast50 companies told us that the software giant was responsible for well  over $100 million of total sales, and the vendor has more than 20 partners in the group.

Types of Microsoft work were broad, from major cloud and software migrations from Kloud (No.25), which has deployed 1.5 million seats of Office 365 since being established in 2010, to Insync Technology (No.17), whose claims to fame in the past year included a 6,000-seat Skype for Business rollout for the University of Tasmania, to Mexia (No.12), which is carving out a foothold as an internet-of-things provider to watch.

HP was in second place, with almost $50 million of reported revenue via 14 partners, followed by Cisco, which made up at least $30 million of revenue among the CRN Fast50. Other popular vendors include Dell and Lenovo.

Dicker Data, Ingram Micro and Synnex were selected as the three most important distributors. This year’s CRN Fast50 Leader award winner, Empired, told us that Dicker Data was its main distributor for major vendors Microsoft and Cisco, representing more than $50m of work.       

Services are the most significant wedge of CRN Fast50 revenue. Every year the other two categories – hardware and software – become a smaller slice of business. Services represented more than 70 percent of this year’s total turnover, or $465.8 million. Hardware was worth $119.5 million (18 percent) and software generated $79.7 million (12 percent).

The change may partly reflect a shift in how companies are doing business, away from transactional reselling and towards a managed services approach. But project services were the dominant form. More than a quarter of the revenue in this year’s CRN Fast50 came from ‘consulting and/or professional services’, a massive $173.1 million. Second place was managed services, at 13.64 percent ($90.7 million). Combined, they represent 39.67 percent of the gross revenue. (Coincidentally, in 2014, the combination of professional and managed services made up 40.6 percent of the total turnover – barely one point different.) 

Across the rest of the product and services categories, software development took out third position, a huge rise from previous years. It helped that this year’s group included major software houses such as Ignia (No.22), Outware Mobile (No.20), Myriad IT (No.47), Empired (No.13) and RXP Services (No.31).

The biggest trend was actually a flattening of products and services, with most categories making up around 5 percent of the total turnover. It shows the diverse offerings available from CRN Fast50 companies, where traditional channel offerings such as compute, networking and storage are complemented by the likes of application integration and infrastructure-as-a-service. 

An odd one out was information security, which, at $18 million, barely nudged the dial for Fast50 revenues. It’s a surprise, given that breaches filled the headlines all year, and major vendors ratcheted up their security focus. Perhaps that’s an oversight by the resellers, given that the four companies with the greatest focus on security are all in the top 10: Sliced Tech (No.1), Cirrus Networks (No.3), Cloud Plus (No.6) and Enosys Solutions (No.7).

Other niche areas included application integration – the rarest skillset, with only five IT providers – along with software development and printing.

The vast majority of sales among the CRN Fast50 went into midmarket (33.47 percent) and enterprise (35.05 percent) customers. 

CRN FAST50 SPECIAL AWARDS

All Star Blue Apache - sponsored by Fujitsu
 
As the only company to have appeared in the CRN Fast50 every year, Melbourne’s Blue Apache rightly deserved special recognition this year. When it won its first Fast50 berth in 2009, the reseller was turning over $3 million; this year it turned over almost $13 million.
 
Icon Award Data#3 - sponsored by Synnex

We asked every company who entered the CRN Fast50 to select one company they most admire, choosing from a shortlist of 10. Brisbane powerhouse Data#3 is a rightful winner of this year’s CRN Fast50 Icon Award. It is only the second winner of this prestigious category, which was first launched last year. (Brennan IT won in 2014, and hence was not eligible this year.)

The other nine nominees were: ASI Solutions, BigAir Group, Empired, Ethan Group, Harbour IT, Somerville Group, Southern Cross Computer Systems, and Thomas Duryea.

Leader Award Empired - sponsored by Distribution Central

It’s no secret that growth gets harder as a company gets bigger. That’s why we created the CRN Fast50 Leader Award, to recognise the company that combines scale and speed. The Perth-headquartered business made a huge splash over the course of 2015, bringing together three acquisitions – OBS, eSavvy and Intergen Australia – under the Empired banner.

Editor’s Award VMtech - sponsored by Huawei

With a string of successes, including global and local awards from NetApp, VMtech hit the headlines for all the right reasons. It signed new vendors, chalked up big client wins and expanded in Melbourne. VMtech generated an impressive $400,000 per head and soared past $20 million annual turnover. The converged systems expert has a cloud business but CTO Richard Clark says data centre sales are growing even faster. There’s plenty of life left in the infrastructure channel.