Few resellers have notched up two decades in business. Markinson Business Solutions (MBS) celebrated its 20th birthday with a company review that looked at how it should position itself for the next 20 years.
Markinson started in the mid 1980s developing bespoke applications for the distribution industry across several vertical markets. It then moved into other industries such as retail following the expansion of distributors.
The business had traditionally focused on providing ERP systems to the wholesale and retail sector and specialised in inventory management and warehousing. Markinson found customers expected more from their ERP as it evolved into a more sophisticated platform, CEO Ian Whiting says.
"Your accounting system five to 10 years ago would be a strategic advantage because it would cut down your transaction costs. What people need now is to extend the reach of their business further."
The global financial crisis had forced businesses to look at lifting efficiency and productivity to lower costs and raise profits. Companies were asking themselves how well they serviced their customers and whether they had chosen the right partners and suppliers.
The search for answers had led to integrated systems and renewed interest in analytics and business intelligence software.
"In that relationship management space, CRM is really a platform to build a solution on. A lot of organisations think they will put a CRM system in and that will solve the problem. But it's really the catalyst for improving how they interact with their customers, partners and suppliers."
As the market and customers' expectations had changed, it became obvious the integrator needed to follow suit.
Markinson saw that instead of defining itself solely on the success of its integration work it needed to provide services that met or exceeded customer needs, which were more broadly defined than just IT.
"One of the first rules of any business is that you need to continue to evolve to grow your business. And that's important for us as an organisation. While we have been regarded as an IT organisation we have a number of people with skills in many industries that have the knowledge to help businesses improve their business," Whiting says.
"If a company is going to do anything they tend to talk to their accountants or their legal people. We want to be one of those people where (customers) say let's talk to Markinson about how we can better do our systems and processes."
Two years ago, however, Whiting realised the integrator was only meeting a portion of his customers' needs when it came to ERP and CRM. Markinson launched into an acquisition spree and bought three companies in 12 months: Adexio, Acuere and New Zealand's Xeron.
The acquisitions added 214 clients and four offices, two of which are in New Zealand, and doubling staff numbers. The company is predicting revenue growth in excess of 20 percent for financial year 2010-11.
The influx of talent brought a mix of consulting expertise in business intelligence, CRM, workflow, business process management and review. Staff included technical and business consulting, solution architects, pre-sales and support services. The acquisitions increased the company's geographic coverage with its first New Zealand office. Whiting adds that all acquisitions were funded from the company's cash reserves.
"We saw there was much more need for relationship and business management solutions. Reporting and business intelligence-analytics were a key driver as well. We were able to create solutions with one or more of those services.
"There is no doubt that MBS is a very different company than it was 24 months ago. We are now able to offer additional services," Whiting says.
The integrator has changed its hiring practices over the years, away from IT specialists instead to hiring to people with industry knowledge. Whiting says it is easier for people to pick up the IT skills than a decade ago. Markinson's software skills have expanded to encompass Qlikview, Microsoft, Progress Software, Sage and Zap.
Markinson's expansion was intended to deepen expertise in selected areas; it has no plans to move into unrelated technologies. Whiting says the market is requiring more boutique services. "People used to try to be the one-stop shop. These days there is a lot more focus to provide individual components."
Markinson sees recent accolades that its renewal is taking it in the right direction.
In 2010 the company won an award for the highest customer satisfaction levels and highest revenue for Sage Saleslogix CRM accounting software in Australasia (Australia, New Zealand and the Pacific Islands).
Markinson had won the Highest Revenue Award the previous year.
"You've got to make sure you respond to the market needs. The fact that we got that award for the highest customer satisfaction is testament to that focus which is reaping rewards for the business. One would expect that if the customers are satisfied they are more willing to do business with us so it's helping with the top and bottom line of revenue as well."
The company recently signed two new clients to the Sage Saleslogix CRM platform: All Crash Parts and MT Data, the largest suppliers of GPS tracking and fleet management solutions in Australia.
Times are changing again. Sage, like nearly all software vendors, is rolling out cloud versions of its software including Saleslogix. Whiting says the change will impact resellers because it will spread revenue over a longer time.
Markinson is already managing its cash flow in preparation for this transition, and it is buffered by the profits from its services. However, Whiting doubts that the fallout will be greater than a shift in accounting.
"You have to plan your resources in advance for that, whether you're a vendor or a reseller. It's purely cashflow. I don't think it's anything different. I think it provides a lot of opportunity too - we will get involved with more organisations who see SaaS (software-as-a-service) as more acceptable to them too."
Whiting says potential customers will be attracted to SaaS services because of the low implementation and maintenance costs compared to on-premise software. The downside is a loss of control over where your data resides.
Whiting says more customers are looking at hosting, and he thinks there will be a migration from on-premise to hosting to SaaS.
"Organisations are moving one step at a time and testing the water. The biggest challenge for SaaS is sovereignty of data, where it's located and who has access."
The integrator has looked at how it could optimise delivery of SaaS applications in its solutions and services portfolio.
It already provides hosted software through an arrangement with Brennan IT. While new customers have shown interest, existing customers were happy to keep their on-premise models.
"For people that have already made that investment in infrastructure and software licences, they consider it as the next wave of technology upgrade they might do."
Whiting has good experience of cloud-based software; he worked for ERP SaaS vendor NetSuite before joining Markinson in 2005.
He says any company in the IT industry needed to be aware of SaaS. In his experience at Markinson, the services tended to be rolled out as point solutions rather than total business solutions.
Markinson sticks close to its ERP roots and that means keeping a close eye on the competition. He keeps a close eye on his former employer and others.
"NetSuite has been in the market for a while now and it hasn't made a major impact. One of the reasons Salesforce has been able to get exposure is because it's the type of product that a local department head can get on his own budget rather than having to go to the IT dept for approval.
"And then the IT managers are finding they have four or five departments using it before they know it and I think that's helped to spread that capability."
The penetration of SaaS into the ERP software market varies by industry. NetSuite has focused on financial and professional services rather than warehousing and distribution. "If we were in a deal against them one of us is in the wrong place," Whiting says.
The pace of change in the industry means Markinson will need to constantly review its plans. Whiting says resellers who have been around for 20 years or more may have done well doing "the same old" but might run into trouble if they forget to look ahead.
"Hopefully we are never one of those ones. Hopefully we have the foresight to keep looking."
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