Full support in the supply of converged communications and IT services, a pioneering new buy-and-build business model and well planned route to exit offered - that's how mobile dealers can benefit from joining the Intec Business Network, according to Chairman Simon Howitt.
There is nothing secret about Howitt's formula for Intec Business Network's future success nor the rationale that underpins his strategy and proposition. Some get carried away with a great idea only to see it falter no matter how well thought out. But Howitt's big ambition is more a reflection of sound strategy than aspiration and optimism, drawing on knowledge gained from hard earned experience. And his plan to introduce to the mobile channel a pioneering new business model could not be more timely.
The importance of striking an equilibrium between bold visions and real world market opportunities was a lesson learnt by Howitt during his time at Outsourcery, a lesson he is putting to good use now with Intec. "I always want to be ahead of the pack and ride the wave of opportunity, but not so far ahead that you get battered when the wave breaks," he stated. "Outsourcery was far too forward and there were too many doubters. We had a great idea, great positioning and great people, but we were too pioneering. The big lesson learnt - no matter how great the idea, don't be too far ahead."
It is with this knowledge and acute sense of optimum timing that Howitt is introducing Intec Business Network to the mobile channel with great confidence having already piqued the interest of private equity players who form part of the business plan's end game. The objective is to bring a network of mobile dealers together who recognise the need to broaden their portfolios but do not have the resources to achieve their ambitions to become one-stop-shop comms and IT providers. Intec delivers these capabilities through its technology team that operates under the SparkHub banner. Companies using this service alone are called Affiliate partners and by committing over and above less beneficial third party relationships they receive a bigger share of the revenues.
But Intec's primary goal is to drive a buy and build strategy and bring strong customer relationships under its wing rather than simply acquiring customer bases with cross sell potential. This way Intec can help dealers engage with customers loyal to them and provide consultancy services. Mobile dealers who become technology services providers will naturally sell a wider set of solutions which means they could double the valuation of their business. Because of this upside the seller gains extra advantages beyond those of a standard disposal.
"We are clear with all partners that our plan is to build the network and within a three to five year period we will sell," commented Howitt. "At this point we envisage selling to PE and have discussed our plan with a small number of PE companies that are monitoring our progress. The upside of a PE deal is that 'owned' partners will benefit from enhanced values and PE will be attracted by the potential to scale. Partners who have helped to grow the business can continue if they wish."
Howitt aims to have six engaged and active partners by the end of the year, three of them owned by Intec. "Next year we want to reach 15 rising to 25 by the end of 2019," he added. "Within six months of pioneering the concept with Hale Communications we took the proposition to over 25 customers and 15 have already engaged while others are in progress. We appeal to dealers who understand that their customers want more than mobile but they don't have the capabilities to meet this demand. Our proposition enables such dealers to offer a solutions sell that pulls through products naturally. Dealers also need to understand that customers don't expect everything for free and will pay for services if they see value."
Howitt does not want to build a large network of partners, he aims to create a more intimate and hands-on relationship. "We are not looking to buy bases," added Howitt. "We want access to strong customer relationships and the dynamic between the dealer and their customer base is important. A differentiator for those we own is that their identity remains in place and we drive centralised back office synergies."
Building channel relationships that stand the test of time is one of Howitt's long held specialities. His career began in advertising and while working on a number of technology and mobile accounts he was introduced to Yes Telecom. "I joined the company as Sales & Marketing Director and continued for three years following its sale to Vodafone," explained Howitt. "Yes Telecom was acknowledged as a model channel business and its reputation is still an industry talking point. I then joined the team that backed an MBO of Genesis from DSG and was one of four founding shareholders of Outsourcery which launched as a Cloud Services Provider.
"Soon after its IPO in 2013 Finance Director David Burke and myself left. I remained close to David and also Ray Bell who was CTO at Yes Telecom. We collaborated on projects at Outsourcery. The three of us discussed the industry and where it was heading. It was a conversation that gave rise to the Intec concept."
Early last year the trio developed a plan to show how Intec could grow and quietly launched the concept in the summer. "We are now ready to extend our reach to partners who want to remain in their business and drive growth but also have an exit plan that benefits them by taking some value off the table now," added Howitt. "By offering more of a 'club' and collaborative feel they can join something that retains their identity but at the same time they are part of something bigger."
According to Bell, Intec's approach is based on a three stage methodology. "Firstly, investing time to understand our clients business, how they operate, their history and their plans for the future," he explained. "Secondly, we include in our scope all business processes and technology solutions from telecoms services to business applications and physical IT infrastructure. Thirdly, we set out a future technology vision and support the process of change with a plan that is achievable, has something in it for everyone and is business case led. By following this process we are able to help our clients to make best use of technology and improve the way they work."
But the frustration is that too many dealers have their head in the sand, are wedded to products, not solutions, and engage in price wars that devalue the industry. According to Howitt they need to wake up and smell the coffee. "When Yes Telecom was at the forefront of BlackBerry's surge of 'email on the move' we saw some dealers turn their backs and say 'this will never catch on'. In 2010 and 2011 when Outsourcery shared its vision many dealers and conventional providers thought we had just arrived from another planet. Now everyone is rushing into the cloud and providers who scoffed at cloud services are now building their proposition on them. What was seen as futuristic is now standard. It's no longer about convergence of telecoms, it's about the convergence and integration of all business collaboration and communication needs. It's about the convergence of mobile, voice and IT."
Analysis cited by Howitt suggests that just 20 per cent of a customer's technology spend goes into telecoms, meaning that many mobile dealers are leaving money on the table for more rounded rivals to pick up and potentially swipe the mobile spend from under their nose. The opportunity and risk is plain to see and Intec's intention is to help partners capitalise on the opportunities and de-risk not only from the competition but also from the challenge of recruiting specialist resources into their business and onto the payroll. For wise dealers there is a strong incentive to join the Intec Business Network and tap into its technology specialist team. "This function is run by Ray and is what the partner takes to their customers," said Howitt. "We will be developing regional centres for SparkHub to make sure we are close to partners throughout the UK."
Once Intec has engaged with a partner the fist job is to get them thinking about the concept of solutions versus products and to understand where the real value lies. The majority of partners open up quickly, enabling Intec to identify their obstructing issues. "They come to understand that customers need to see value," explained Howitt. "If dealers can show how technology and their skills can improve business processes companies will pay. Customers want help and advice to ensure they make the right technology decisions. So dealers must not fall into the mobile trap and crash the price assuming that customers will not pay for services that are valuable to them.
"The biggest opportunity is getting SMEs to understand that they can benefit from technology they thought only affordable by larger enterprise and corporate organisations. We can show them the value that technology brings to their business. We energise dealers to generate growth from their base, we motivate them to continue growing and share in greater future value. We have been in mobile, we have been in cloud services, we understand the channel, and we have a great blend of skills and capabilities."•