You could forgive Brennan managing director Dave Stevens if he were comfortable with the status quo in the local IT industry. After all, the 27-year-old company serves more than 1,700 businesses and its web site lists the likes of Aurizon, AustralianSuper and Australian Unity as customers.
But Stevens is not comfortable with Australian firms playing second fiddle to international competitors.
“We’re the biggest and we're 1,100 people roughly,” Stevens said when we interviewed him in February this year, soon after Brennan’s rebrand and before its March announcement that it had acquired Canberra-based Fast50 firm CBR Cyber.
“But there's daylight between us and say, DXC, that has 5,500 people. So why the big American, French, Japanese, Indian [companies] – why they dominate our market, not a local Aussie, is something I think is wrong and we need to fix.”
Stevens is far from the only person that’s vocal about the competitive position of Australian-born technology companies.
Last year, TechnologyOne CEO Ed Chung stated that "Australian tech is world-best and has shown it can compete and win in every market in the world, but continually finds itself fighting for recognition and respect with governments at home.”
Also in 2024, an Australian Parliamentary Senate inquiry looked at supporting the development of sovereign capability in the Australian “tech sector”.
Stevens argued that local IT providers need to get better at talking to and working with each other.
“I think it's a really healthy time in the marketplace – it’s very competitive. But I think there's an opportunity to grow some homegrown talent.”
“The Aussie tech industry is not great at collaborating with each other and is very concerned about who owns the customer and all that sort of stuff, whereas they could get a lot further down the track by collaborating.”
For example, “why build your own kind of mini-SOC with five people in it when you can buy a wholesale product off another Aussie company who’s probably going to be doing it better than you are because they've got scale.”
“I think the Aussie tech industry needs to start to create its own specialties and the generalists of the world buy from the specialists.”
M&A could also be used to build a stronger home-grown technology industry, Stevens said.
“It's beholden on the industry, on my peers, to do a better job. Grow, invest in meeting the market. Stay here, stay the course, and don't sell too early.”
“Private equity is quite active in our space. They're rolling up 20 or 30 smaller MSPs and then selling it as a consolidated group. Why don’t the MSPs themselves do that and take the upside that private equity is taking?”
Revenue shift
With a handful of acquisitions over the past few years, Brennan’s revenue mix has evolved.
Stevens said that cybersecurity made up about 20% of revenue, digital transformation activities around 15%, and cloud about 25%. The balance is made up of managed services, a part of the business that “has never been larger”.
While managed services remains a major component of Brennan’s revenue, system integration is providing strategic value.
“Our ability to be able to help our customers grow revenue or control costs, or whatever the case might be, is definitely more prevalent through the systems integrator side, through the digital transformation.”
“What you see happening in mature markets like managed services is, where you're unable to add significant value to a customer incrementally, year on year, they start to look at you as a cost centre, and they start to be concerned about how much you charge to essentially keep the lights on. I think that's happening in this industry currently.”
On the project side of the business, Brennan introduced a “fixed fee, fixed outcome” offering.
“It forces us to be extremely descriptive about what we are going to deliver … and how we are going to go about doing that,” Stevens said.
He said being able to scope jobs appropriately was key to making the model work.
“There are a lot of small players especially who don't do that scoping piece and then all of a sudden they're discovering things as they're delivering … so if you don't do that bit, then you are going to fail.”
Eyes on federal government, AI
Asked about what’s next for Brennan, Stevens mentioned that “we don't do any fed gov work of note. It probably makes up 10% of our customer base or something, whereas it could be significantly larger, so we'll invest around those sorts of areas.”
“The AI side of the world continues to be interesting. Hard to place bets at this stage, but definitely need to be at the table having those conversations.”
“We do a lot of data engineering type work on that front. And I think a lot of customers are investing a lot in terms of structuring their data in such way that they can get an LLM across it and really start to enjoy the benefits of AI.”
“So there's still a lot of plumbing work being done. We see a heavy investment from that perspective.”
“Let's keep the industry local”
For all Brennan’s success, Stevens wants to see the local industry building more large, home-grown businesses.
“Let's keep the industry local. I mean, there's a good few, sizable local IT companies. We all know who they are. But there could be two or three times more.”
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