Q&A with Rod Jones Chief Executive Officer at Proactis Holdings Plc (LON:PHD)

Proactis Holdings Plc (LON:PHD) Chief Executive Officer Rod Jones caught up with DirectorsTalk for an exclusive interview to discuss their business strategy, the Due North Limited acquisition, customer market and product overlap and synergies

 

Q1: First off, could you provide us with a brief outline of the Proactis Holdings’ strategy?

A1: Yes, I can’t remember how many years ago now, probably four, we sat round looking at each other in the executive team and we sort of thought some of the things that we do work well and some of the things work less well. The things that worked well, we were providing fantastic software to a group of companies and organisations that were getting tremendous benefit and making lots of savings and our stock price was down around our ankles so we decided that maybe there was a disjoin there and we needed to address that particular element. When we sort of finished this process, which was a terribly long process, we decided that in order to be better for our shareholders if you will, and get better value on the stock market, we needed to be bigger, we were too small so just in terms of size; bulkier would be better, we also needed to be a bit more exciting. Our growth typically is 10-12% on organic and really for investors to want to be a part of this and to really get behind it you’ve got to be better than 30% rather than the 10% so we needed to be bigger, we needed to be going faster, I couldn’t grow it faster in organic terms, it’s not a matter of just doubling the sales force. So we decided that we would need to take on some M&A to assist that, in doing that obviously we still wanted to be profitable and we still wanted to pay a dividend so that was if you like the overriding strategy and in fact that still exists today. So we set ourselves a target of wanting to be a £50 million business which we’ve pretty well achieved, we’d like to be £50 million revenue, we’d like to be £100 million revenue so that’s the sort of trajectory that we would take and that’s the one that’s still sort of exists today. So we want to be growing faster, we want to be getting bigger, we want to take on profitable stuff which means the M&A work has got to be revenue and earnings and we want to carry on paying a dividend so that’s, if you like, the strategy in a nutshell.

 

Q2: Now you’ve just announced the acquisition of Due North Limited, how does this acquisition fit in with the strategy of the group?

A2: Well the thing about Due North is it’s a business that we’ve known about for quite a long time, even prior to its incorporation into Access Intelligence. It does overlap to an extent with some of our existing business, it looks after I suppose the source-to-contract piece we would call it, we have other offerings in that area but we’ve got an awful lot of other offerings that go together with it quite well. So its real benefit to us is it has 300 clients, those 300 clients could become customers of other pieces of our organisation but even so, 300 clients is a nice acquisition and we can do a lot with that. So it fits in, we understand the type of people they are, we understand the support structure, it has the same technology underneath it now as the 12 months so it fits in very well. We look forward to getting to grips with it.

 

Q3: So what does the customer group look like?

A3: It’s almost exclusively public sector so it really tiers just beneath us, it sells at a different price point to a similar type of customer to us so whilst we do compete with it from time to time, our price point is quite a bit higher so possibly the bigger organisations would come to us. It’s almost exclusively public sector which is a very good fit for us, it takes our customer base in public sector to probably 500.

 

Q4: You’ve touched on this a little earlier but is there a significant product or customer overlap across the two companies?

A4: Hardly any customer overlap, the customer market yes but not the actual customers. There’s a couple that have gone to them from us and there’s a couple that they should probably have got and we got but that aside. So on the customer grouping not too much, product overlap yes we have our own version of what they do and in fact we also have another version of it which we only sub as a service in the United States. So we understand it pretty well but it’s one of those things where we built our software to be plug and play so you could take components of our software and run it together with Due North’s so we’re quite hopeful, the basic technology is exactly the same and we understand that market quite well so we look forward to working out what the logical product combinations might be.

 

Q5: Why did Access Intelligence sell?

A5: Well that’s really a question to ask the other fella! If you know Access Intelligence, this is their only piece of application software and this doesn’t quite fit with the rest of their portfolio if you like, other than the run the SaaS businesses for the other stuff, they are not in application certainly not in procurement. So I should think that Access will be streamlining and going more towards their core competencies and just letting this piece come off the side of it, it makes sense to them, it certainly makes sense for Proactis Holdings to bid for it.

 

Q6: Can you me what Due North’s business model looks like?

A6: Yes, it’s exclusively SaaS, it’s Software as a Service, it’s a cloud-based model so cloud-based delivery model and pretty well always has been even on their older ranges of software which fits in very very well. We like that multi-year model very well, we’ve moved our own software to that model, we actually have a little bit of a mix model because of our age but they typically sell on four year deals which is nice so we’re very pleased that that’s the case.

 

Q7: Are there any synergies expected as a result of the combination?

A7: Well like anything when you’re doing due diligence, you sort of examine it for synergy so there’s not many of what I call the silly obvious ones, they’re not running a very inefficient organisation. Proactis Holdings will get a little bit out in terms of the cost of operating the business, we’ll get a little bit out in terms of possibly the cost of running the cloud environment so putting them all on the same data centre and things of that nature. They’ll be quite a bit of cross-sell upsell, some of the things they’ve been selling from third party sources they can sell from us, it makes it more efficient. I’m sure that reorganising our business to accommodate them will help as well in that the number of account managers we have, the number of people addressing our sector, we’re hoping that we can actually get enough smaller synergies out of it to make it well worthwhile. The bigger synergies will come as and when we have our go-to-market strategy with newer products and things, obviously we lose a bit of Board cost and things like that.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
Twitter
LinkedIn
Proactis Holdings Plc

More articles like this

Proactis included in QUANTIQ’s virtual conference line-up

Proactis, the spend management experts, has announced its support of new strategic partner, QUANTIQ, by presenting a session at its upcoming virtual conference. Running from 20-22 April, WinTEQ, QUANTIQ’s annual conference, will be 3 days packed

What are the main advantages of implementing technology solutions

Proactis Holdings Plc (LON:PHD) develops and sells business software, and provides installation and related support services in Europe and the United States. The company offers Spend Control and eProcurement solutions that help organizations to improve operational and

British Land transforms its finance processes with Proactis

Objectives To automate the Purchase-to-Pay and Accounts Payable processes. Full visibility of purchase orders and committed spend. Improved purchasing control, whilst continually aiming to reduce the time taken to process invoices. How Proactis helped Complete access

The key to supply chain resilience and effective risk management

Proactis Holdings Plc (LON:PHD) develops and sells business software, and provides installation and related support services in Europe and the United States. The company offers Spend Control and eProcurement solutions that help organizations to improve operational and

How to manage your purchasing process

All businesses need to purchase goods to meet their day-to-day needs. If you do not have a formal purchasing process in place, you may be spending more than you need to procure items and services. How

Proactis signs contract with Denbighshire County Council

Proactis Holdings plc, (LON:PHD), the business spend management solution provider, has announced that it has signed a contract with Denbighshire County Council to provide its early payment service, bePayd, into DCC’s supply chain. bePayd will enable DCC’s suppliers

Proactis announces 2020 UK Partner award winners

Proactis, the spend management experts, would like to announce the winners of its prestigious UK Partner Awards which recognise the tremendous achievements attained by Proactis partners. Reseller Partner 2020 – Lake Referral Partner 2020 – Unit4

Proactis named Unit4 ISV Partner of the year

Proactis, the spend management experts, is delighted to announce that it has been awarded “ISV (Independent Software Vendor) Partner of the Year” by Unit4. Proactis received the award, based on new business revenue, current mutual customer