IT Lab talks growth science

With their sights set on becoming a £100 million business IT Lab’s CEO Peter Sweetbaum (pictured) and Group Managing Director Geoff Kneen share insights into their growth strategy...

ECI-backed IT Lab’s summer acquisition of Milton Keynes-based MSP Mirus IT created a £75 million business and builds on the purchases of Content and Code in September 2018 and Perspective Risk in May 2017. Mirus IT was established in 2002 as a provider of IT support for local SMEs and secured a presence in the managed print sector with the acquisition of Leighton Buzzard business 2r Systems in June 2017. According to Kneen more purchases are on the cards as IT Lab seeks to become a £100 million business over the short-term. “We will get there by completing more acquisitions to finalise our strategy as we continue with our underlying growth rate which remains strong,” he said.

Sweetbaum reaffirmed that buy and build has long been a crucial component in IT Lab’s growth objectives, and offered some caveats to like-minded but budding MSP leaders. “M&A is not a proxy for a poor sales and marketing strategy,” he commented. “If you cannot grow organically and don’t have a sales and marketing strategy that fuels growth – you need to rethink.

“M&A is additive, not a solution. We’ve seen buy and builds in this space that have been crushed by the weight of debt. There was no vision and they paid the price. We want to get to the top of the plateau so needed to move up market, become more relevant to clients and more strategic. Signing contracts with SMEs for a few hundreds of pounds a month is not going to get you to £100 million. The final piece is value add delivered though capabilities and experience, through intellectual property and doing something different. It is a combination of these elements, along with timing, that will get you to the top.”

M&A is additive, not a solution. We’ve seen buy and builds in this space that have been crushed by the weight of debt. There was no vision and they paid the price

IT lab was established in 2001 by Sebastian Grey to deliver technology support and solutions to SMEs in London. In 2016 an MBO was completed and the business became backed by ECI. The company now delivers 24/7 IT managed services, cloud solutions and cyber security services, as well as technical advisory, transition and transformational services across the Microsoft 3 Clouds. As IT Lab sets about creating the conditions for 60 per cent growth it inevitably has new hurdles to overleap. “The biggest current challenges we face are bringing together the companies we have acquired and taking on larger and more complex clients,” explained Kneen. “We have been successful in all aspects of the business but significant changes like this are always going to be a challenge to businesses and people.”

IT Lab is now a 750 person organisation serving 890-plus managed service clients including a number of globally recognisable brands such as McLaren, BP and Crest Nicholson. Outside of the London HQ, IT Lab has two other UK offices in Manchester and Luton, and another office in Cape Town. Its typical customers are mid-market firms that are at a crucial growth stage and aware of technology and how it can help them. “For these businesses we would typically provide strategic guidance strongly aligned to the Microsoft 3 Clouds,” added Kneen.

Sweetbaum warned that the costs of providing such support should not be underestimated, particularly in the context of vendors ‘changing the model’. “We have to stay tightly aligned with Azure, Dynamics and Office365,” noted Sweetbaum. “Our clients do not have the skills and capacity to keep pace with the likes of Microsoft and its monthly, weekly, sometimes daily release cycles. It is a challenge for us and we have to invest to keep up.”

Signing contracts with SMEs for a few hundreds of pounds a month is not going to get you to £100 million

IT Lab is a Microsoft Gold Partner in several competencies and needs to be on a permanent lookout to deepen its skills and offerings around the Microsoft stack. “This is particularly true of our work in helping clients benefit fully from the Microsoft 3 Clouds and the transformational capabilities of Dynamics, SharePoint, Teams and Power Apps alongside Office 365 and Azure,” added Kneen. “AI and RPA are also key technologies that we are bringing into our wider portfolio.”

IT Lab typically has five core service lines into larger customers. “This makes it hard to dislodge us, so it is important to have that breadth of capability,” emphasised Sweetbaum. “Of course, we have to evolve and change. Then there is innovation around how you serve, what you serve, how you engage with customers, the systems and tools you use.

“In terms of your value, the more bleeding edge you get the valuation can vary greatly. Your value depends on what you do and how progressive you are. But the fundamentals always apply – do you have customers? Do you have cashflow? Do you have profits?”

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