There was a time when SAS Global Communications CEO Charles Davis planned the construction of buildings. Now he is the architect of a channel growth story built on the principles of strategic draftsmanship aligned to a clear vision of what the market really wants.
Things go to plan due to good planning, a policy that Davis has stuck to throughout his career. Perhaps this discipline was instilled during his early days operating as an architect. He then became an IT systems manager, which in turn led to the post of EMEA IT Manager for an international design firm. "Back in the early 90s we were at the vanguard of 3D modelling with live building databases and global team collaboration, all over an international network of 64k kilostream circuits using Bay Networks routers," said Davis. "SAS was my supplier when we moved to Novell servers and Microsoft servers and desktops, and it seemed to be the right time to change career."
SAS is in its 25th year of trading and employs over 145 people with less than two per cent staff turnover. Revenues of £18 million are for the most part attributed to professional and managed services. By design, the firm has limited hardware and software revenues, with 85 per cent of revenues recurring while 70 per cent comes from contracted multi-year managed service contracts. SAS operates to a five year business plan and is currently in the second year of its third planning phase. "The ultimate goal is to move from £15 million to £30 million in revenue of professional and managed services," added Davis. "By that time SAS should be influencing over £200 million of voice, data and hardware sales."
SAS designs, builds, manages and supports converged IP networks and applications for on-premises and cloud-based computing. Its target markets cover all verticals and the high end SME market (what SAS calls corporate mid-market) as well as low end enterprise. The business is split 50 per cent direct and 50 per cent via partners. SAS has helped its partners sell over £120 million of voice, data and hardware revenues with a high level of customer satisfaction that ensures long-term revenues.
The company has been solution centric since 2001 (rather than product focused) and has no product silos to break down and rebuild. It monitors and manages more than 210 customer networks, including 16,000 devices and 10,000 data circuits across 52 countries. Perhaps the biggest changes the company has undertaken is its transition to managing the application path from end user to data centre. To do this SAS has broadened its managed network services capability by adding managed platform and managed application services to name but two. "The strategy is to bridge the gap between the application and network and ensure that all the interdependencies - which are usually overlooked - are monitored and addressed so that our clients' operations run optimally around the clock," said Davis.
"Put another way, we aim to help optimise the end user experience of business critical applications by drilling into the three overlapping areas of network, platform and application performance. We believe it's too easy to blame the network for poor user experience, and that's been the de facto tendency for too long. Our aim is to pinpoint performance issues across the full application path rather than engage in a guessing game or defaulting to a soft target."
Alongside this, SAS has also extended its managed network service to include hybrid networking that includes fixed line public and private networking, as well as medium-to-high bandwidth mobile and satellite networking. This has been a well received service. "Hybrid networking is really taking a hold with clients as they start to adopt cloud services in greater volumes," said Davis. "The growth is predominantly MS Office 365 and MS Azure, as well as VDI from Colt. Clients have started to review their business application strategies and the IP infrastructure to deliver a wide range of applications, so we have to be even more technically, geographically and commercially flexible while keeping access and data secure.
"We are also seeing a greater demand for 10Mb plus mobile data services outside the footprint of the major fixed line networks, as well as a growing requirement for vehicular solutions especially in construction, utilities, highways and transportation sectors. Although vehicular connectivity solutions are still evolving, we're engaged with some fantastic trials and have had some great success already deploying solutions in ambulances, buses through to ubiquitous white vans supporting engineering and public sector services."
There have been three major turning points for SAS. The first was partnering with BT Business back in 1998 when ISDN data networking was the WAN of choice and ISDN dial up Internet access was all the rage. The second was the strategic decision to leave hardware and software sales behind in 2001 and focus on professional and managed services. The third, in 2005, was investing over £10 million in its 24x7 network operations centre over the last few years. "The transition has been a hard slog but has proven a far more resilient business model," commented Davis. "Recurring revenues are now at 85 per cent per annum."
He sees a huge £50 billion-plus opportunity in SME IT services, especially the upper middle market of 500-1,000 staff. This represents around 8,000 prospective clients. "Managed IT services is the high growth area of
the market," added Davis. "There are no major market players, even BT has only a two per cent share. Unlike many of our competitors, we have not taken a 'build it and they will come' type approach. We don't own our own nationwide network ring, we don't own our own data centres, we don't own a plethora of application platforms. What we do is work strategically with industry leaders and build best in class solutions which we then monitor end-to-end (the full application path) 24 hours a day, every day."
Another key point in SAS's strategy is to leverage its agility and technical expertise. "We already have a strong leaning towards predictive (as opposed to proactive) monitoring and reporting and we will be investing further in our systems and resource to support this differentiator," said Davis. "SAS is an insurgent, delivering the right service at the right cost. Enterprise players cannot scale down to this model and SME players are hard pushed to find the investment needed to build this capability."
A current priority is to continue growing profitably at 15 per cent per annum while remaining focused on high annuity revenues afforded by the managed service revenue model. "We are looking for complementary managed IT services businesses to add to the SAS portfolio, but avoiding the me-too plays of managed voice, UC and IAAS," commented Davis. "These are areas where competition is high and are moving to a low margin commodity play. The main factor is to always be customer centric with the ability to understand how we can add real value to a customer and ensure that we do not stray into areas that add little value. SAS will only sell a client a service where our professional and managed services add value, otherwise you are just participating in a price conversation."
According to Davis it is time to change the industry's lack lustre reputation and stop carriers competing to be the 'best of a bad bunch' via proper long-term planning. "There is so much focus on purely 12 month business plans that no one has the time nor stomach to make the required transformation," stated Davis. "At present the telecoms industry is in a continued slow and painful decline that takes customer service to new unprecedented lows.
"There is too much hype in our industry about new technologies which go on to deliver a fraction of the benefits originally put forward. Manufacturers and carriers, through commoditisation of their services, have lost their customer focus and what they want to say does not resonate with their intended customers. The big medium term risk for telecoms is the rise of knowledge workers and the demand for management information. Big data is moving decision making power away from the IT department and moving it to the business analysts. IT staff may lose their decision making power as their role will solely be to provide the correct infrastructure."