Our performance Consulting Services divisional report

            

PERFORMANCE

Revenue of US$55.2 million
Reduction in operating costs to protect profitability
EBITDA improvement US$3.2 million
Mason Advisory formed
Challenging sales year with Via Group flat and Analysys Mason contraction

Corporate overview

The Consulting Services division, comprising the majority-owned businesses Analysys Mason, Mason Advisory and The Via Group, accounted for 1% of Group revenues (FY14: 1%) and 1% of EBITDA (FY14: 1%).

Analysys Mason is a global specialist in telecoms, media and technology (“TMT”), celebrating its 30-year anniversary in FY15. The business delivers strategic, trusted advisory, modelling and market intelligence services to the telecoms, IT and digital media industries.

The Via Group (“Via”) is a specialist systems integrator providing products and services to support unified communications and integrated voice solutions.

In May 2014, a new IT advisory business, Mason Advisory was created as a split-out from Analysys Mason. Mason Advisory gives a new focus to the Mason business and its 20-year heritage of supporting business-critical IT projects. Its consultants provide advice on complex IT and digital challenges to large organisations across the public and private sectors.

During the year Datatec disposed of its equity stake in Cornwall Energy Associates Limited, a UK-based research and consulting business.

How Consulting Services creates value

Analysys Mason is wholly focused on its sector and is respected for its exceptional quality of work, independence and flexibility. It helps operators, financial institutions, media organisations, regulators and a range of other public sector bodies in more than 100 countries to:

• Design strategies that deliver measurable results
• Make informed decisions based on market intelligence and analytical rigour
• Develop innovative propositions to gain competitive advantage
• Implement effective solutions to improve business operations

Mason Advisory delivers strategic, trusted IT advice, working with clients to reduce risk and improve efficiency. Advice and support ranges from strategy development through to solution design, procurement, implementation and assurance.

See www.analysysmason.com
See www.masonadvisory.com
See www.theviagroup.com
for more information

Mason Advisory’s work helps clients transform their businesses by making the right decisions in several important areas.

• Getting the best value from IT spend
• Ensuring IT services and infrastructure are fit for purpose
• Ensuring IT delivery is the most appropriate blend of in-house and outsourced services
• Delivering the right level of security for systems and data

Via’s engineers specialise in optimising existing communications investments by integrating IT infrastructure and telephony systems. Through a proven methodology and quick adoption of new technologies, Via helps guide customers and partners through the important processes that translate the tremendous value of unified communications to the bottom line. Customers represent many verticals with particular focus on energy, healthcare, legal and higher education.

Consulting Services’ strategy

The Consulting Services division represents a breadth of expertise through separate but complementary business units specialising in strategic consulting, research, programme management, communications platform integration and technical staff augmentation. With a focus on all TMT sectors, this division provides insight and a vantage point observing trends and developments in the ICT industry.

Analysys Mason’s approach is based on a unique combination of applied intelligence, independent opinions, a passion for problem solving and consistently looking closer and seeing further. This approach engenders strong long-term relationships with clients and Analysys Mason monitors this repeat business by reference to the percentage of company sales in a financial year derived from clients for whom Analysys Mason has undertaken projects during the preceding financial year. The value of this metric was 66% for FY15 (FY14: 60%).

Mason Advisory has been established as a standalone company to focus on its core IT advisory capability. Its CEO, Steve Watmough, has a long history within the IT industry and the business has been set up under his strategic guidance to build an industry leading capability in the IT advisory space.

Via is recognised as a skilled partner in the delivery of unified communications and integrated voice solutions and is a leader in providing professional services to support Avaya and Microsoft-based unified communications solutions. With roots in telephony, IT and messaging products, Via aims to provide services that bridge the gap between telephony and computing to deliver best-in-class, multi-vendor, integrated unified communications solutions.

Notwithstanding an impressive client list within the division, all units are still subject to the combined dynamics of discretionary-spend constraints and dependence on a sizeable volume of relatively small, short-term projects.

All units have a technical bias and a key priority for the division remains sustaining profitability without diluting the significant value propositions delivered by its highly skilled employees.

Progress against objectives

Listed below are the FY15 objectives of the division, including a discussion on the progress towards these objectives. The emphasis on sales diversification, propositions and talent helps to balance the highly volatile nature of consulting.

FY15 objectives	FY15 execution of objectives	FY16 priorities
Targeted sales activities to continue to diversify the customer base and improve scale	Recruited Alex Henschel as a partner to head a new office serving the DACH region, based in Basel Senior hires in Latin America and Hong Kong to establish market opportunities Continued investment in the Analysys Mason Research business outside Europe and the US (notably Asia and Middle East and North Africa “MENA”)	Analysys Mason to establish an entity in Basel, Switzerland, to penetrate the DACH market Analysys Mason to identify regional market opportunities in Latin America and North Asia and build up the delivery team as appropriate Analysys Mason to maintain European market share while continuing to grow Latin America, Asia and MENA sales Mason Advisory to maintain its leading position in providing technology advice to the emergency services sector Mason Advisory looking to establish a foothold in the enterprise sector for global companies looking for independent IT advice Via to develop product and service opportunities in the managed services practice
Specific initiatives to improve resource recruitment, development and retention of high-calibre people	Senior hires secured with business development expertise Continued focus on internships and graduate recruitment, including establishment of a graduate training programme at Analysys Mason	Identify senior hires that can provide geographic or proposition diversification along with business development expertise Continue to recruit high-calibre interns and graduates Retain talent by offering career development and progression
Seek acquisition opportunities to improve scale	Due diligence of a potential acquisition target performed, but ultimately management decided not to pursue the opportunity In May 2014, a new IT advisory business, Mason Advisory, was created as a split-out from Analysys Mason. The core focus of the standalone business is on meeting the growing IT/cloud/security technology requirements of major public and commercial enterprises	Seek appropriate acquisition opportunities

Markets

Analysys Mason experienced a reduced demand for consulting services during FY15, in particular from the Asia-Pacific and Middle East region, compared to the previous year. While demand in Europe was relatively flat, the Americas saw significant growth year-on-year.

Analysys Mason’s deep technical knowledge and unique commercial insight laid the foundation for strong demand for Regulatory and Strategic Advice services while Transaction Support and Operational Consulting experienced a slowdown in the second half of the year.

Analysys Mason’s Research division experienced growth in emerging markets and a stabilisation of demand in Europe and the US.

During FY15, Mason Advisory delivered quality advisory work across several sectors and geographies. The business continued to build on its impressive track record with the UK and international emergency services clients and made solid strides in developing its enterprise IT capability.

Via is positioned to take advantage of the growing popularity of Microsoft Skype for Business (“SfB”) – formerly Microsoft Lync – with 7+ years of experience with Microsoft Unified Communications. Over the past year, Via has focused on and invested in knowledge and services infrastructure to build a robust managed services practice to support SfB customers, both on premise and hosted through a recent partnership with One Source Networks. Via also continues to support an Avaya practice of a few larger customers.

Performance

Revenues were US$55.2 million (FY14: US$72.6 million). The lower revenues translate into lower utilisation levels and consequently lower divisional gross margins of 34.6% from 37.3%. EBITDA has improved to US$3.2 million (FY14: US$2.1 million) due to operating improvements at Via and following the transfer of Intact to Westcon. Analysys Mason focused on cost-saving initiatives in response to downward sales pressure in order to preserve operating margins on a lower revenue base. The FY14 comparatives include Intact revenues of US$15.4 million and EBITDA loss of US$1.6 million. From FY15, Intact is included in the Westcon Group results.

Partner and vendor relationships

All units build and maintain relationships with partners and customers throughout the process of an engagement – from thought leadership to sales, through project management and engineering up to project completion, to ensure that services are delivered to support desired outcomes. The nature of the specific engagements differs both by unit and by project.

Analysys Mason occasionally partners with other consultancies on specific projects, delivers research to industry vendors and operates as a vendor independent trusted adviser to its customers.

Mason Advisory prides itself on its independence. This allows Mason Advisory to provide impartial advice to clients that genuinely reflects the best options to meet their needs. However, it’s crucial that Mason Advisory understands the evolving technology market, and to do so it participates in a number of vendor-led consulting liaison programmes. Mason Advisory also embraces strategic partnerships where they support its aim of building the business, while ensuring clients receive the best possible service.

Via’s relationship with industry leading unified communications vendors is very important and Via is required by its major vendors to participate in and promote annual customer satisfaction surveys to maintain partnership certification levels. Via continues to score highly in these independently run surveys.

Outlook

In the year ahead the division’s units will continue to focus on targeted business development activities, proposition enhancement and talent development.

Analysys Mason has experienced strong demand in Asia as well as the Middle East and expects this to continue during the first half of FY16. Analysys Mason expects revenue in Europe to increase following the recruitment of an experienced consulting leader in early 2015 and is planning to open a new office in Switzerland serving the German, Austrian and Swiss markets.

Mason Advisory is looking to grow its business in its chosen sectors in order to create a profitable and sustainable long-term business to meet the demands of its clients and offer a rewarding environment for its staff.

Via’s managed services practices, centred on SfB, is anticipated to be the cornerstone of the business moving forward. FY16 will likely be a challenging period for Via as it transitions its business model, however, management led by CEO, Kevin Carswell, is confident that the initiatives and groundwork that is being performed both directly and through partners will improve the profitability of the business.