Tuesday, 4 August 2009

New Maxima team goes for ‘focus and simplicity’

(By Anthony Miller – Tuesday 4th August 2009 10:00am). Focus, focus, focus! And they now seem to be doing it. Maxima, that is, the newly-rebranded mid-market ‘IT systems and managed services company’. Earlier this year we commented on the apparent ‘disconnect’ between Maxima’s mission to become a “focused IT services group” and its broad product, service and client portfolio (see Maxima – a question of focus). Well, in announcing its FY09 results (see here), new CEO Graham Kingsmill and FD David Memory (see New brace of management at Maxima) laid out their plan to realign Maxima's businesses into a simpler and more coherent organisation.

I spoke to the team, and executive chairman Kelvin Harrison, just before they went into the analyst briefing this morning. I thought the strategy made sense, though as always, it will come down to execution. For example, Maxima has some 1,400 active customers, of which the top 100 generate almost two-thirds of its £57m revenues; that leaves an average of £15k per customer for the ‘tail’. Fortunately, much of this comes from recurring revenues from support contracts for Maxima’s legacy software and is rather profitable. What Maxima really needs, though, are more of the £1m p.a. customers (around 10 at the moment) if it wants to reach its aim to build a £100m business. There is huge opportunity to migrate the ‘tail’ to modern products, such as from SAP (one of Kingsmill’s ‘alma maters’), Oracle and Microsoft, and to cross-sell Maxima’s managed services offerings across the client base. This is of course not ‘magic wand’ stuff and will surely keep the top team occupied over the next few periods.

The results, by the way, were as signalled last month (see Maxima trading back on track but will report FY loss), with £11m in impairment and restructuring charges knocking the stuffing out of profits. Even then, ‘adjusted’ margins slumped from 20.7% to 14.6%. Kingsmill and Memory really have much more to do than just ‘tidy up’ the business and they know it. Let’s hope they act quickly and decisively to turn the slideware into profitware.

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