Wednesday, 1 July 2009

Telecoms Software Company, 12, GSOH, Seeks Partners, Global Experience Required

(By Philip Carnelley, Wednesday 1 July 09, 21:30). We had quite a lot to catch up on at Intec Telecom, the UK-based provider of telecoms billing software, at a briefing this week. Following major changes in leadership – Andrew Taylor, the CEO, has been in place 18 months, and he’s one of the longer-standing members – the new leadership team instigated a strategic review.

The most interesting outcome of the review was that Intec has – perhaps belatedly – decided it needs a partnership strategy. To date all of its sales (£136m worldwide) are direct. But telcos, like other organizations, want solutions, not just products. Most of Intec’s competitors are ‘services companies with a bit of software’ rather than products companies per se. Intec is the opposite: it has a services arm but this is (by intent) restricted to configuring, managing and integrating the core products. The new thinking is that this presents an opportunity as much as a challenge – if Intec can team up with some of the major SIs working in this space then they will prefer Intec products as there is no conflict of interest. This will increase reach and augment its own services team. A couple of ‘names’ are likely to be announced soon – but more will be sought.

The other main agenda item is operational improvement. While the products are fine, so the theory goes, execution could be better. A system backed by new review procedures has been introduced to bring rigour to the sales process. The service delivery model has been reengineered to better leverage global resources: for this is a very global company – too global, as Andrew Taylor admitted, with development on three continents and support in four. And a new, clearer, message to the market will be unveiled shortly.

Intec’s revenue trajectory has been pretty good of late; 9% growth in 2008, 15% (organic) in H109. However as market growth is projected at around 5%, to maintain its trajectory it must take market share and/or persuade telcos to build less and buy more (from Intec, of course) – hence the focus on sales and operations. It is not actively pursuing inorganic growth: management said there are no current plans for acquisitions. But it has the capacity: Intec has £50m in cash, no debt and is profitable – though not exceptionally so, for a software operation, with 10% operating margins. For now it makes sense for management to remain focused on operational efficiency and organic growth.

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