SE-listed SecureData is a value added distributor of a comprehensive variety of security products. It's a value-added distributor because it takes these disparate product sets and combines them into specific solutions. It also has a core of highly specialised technical staff, which it makes available to its reseller base to assist with the sales, implementation and support of these solutions.
The company changed its name to SecureData Holdings on 27 July last year, as part of a strategic decision its executives had taken to focus the company's energy on information risk management and security.
Part of this refocus included the disposal of non-core assets, i.e. the company's hardware division and its ERP division, the original basis for the business, and its name - ERP.com. With the disposal of I-Serve in 2006, at a cost of R20 million in terms of a fixed cost project agreement, the company shed the last of its ERP roots. The renamed company has three subsidiaries: SecureData Security, SecureData Content (formerly SBI) and SecureData Services.
Says chief operating officer Brett Parker, ex-Microsoft and SAP in the course of a long career in the ICT industry: "We really started driving the new strategy at the beginning of 2007 after doing the planning in 2006."
SecureData, he says, had always been the star performer in the old ERP.com group, having been acquired by the group in 2000. SecureData's average revenue growth for the period 2000 to 2007 has been 42 percent, profit after tax 40 percent and operating margin 30 percent.
Says Parker: "SecureData has always been a good business; our goal is to move towards being a great business."
In fact, 'good to great' is the theme that Parker and CEO Dean Brazier have chosen to carry the company to 2010. Parker says the company aims to get there by putting world-class systems and processes in place. The company is implementing "a combination of technologies that gives us a 360-degree view of the customer and partner. So integration between Outlook, CRM, help desk and financial systems is important, as is the ability to implement mobile solutions for our sales team. "In addition, the company has relaunched its website as a business tool (versus an online brochure). Most of these have either been implemented over the past year or are in the process of going live."
It is also introducing a partner programme, unusually for a distributor, and with this it intends to incentivise its partners. As Parker puts it: "We're providing resellers with what every partner wants - more access to pipeline and the opportunity to make more margin."
"Security is a sophisticated landscape of technologies," says Parker. "And it is quite confusing in terms of how it works. We've made some bets on what we believe will be strategic products and built solutions around those. Solutions are typically led by a strategic product with tactical products around them."
While SecureData was focused on Trend Micro anti-virus software when it was initially acquired, it has since filled out its product complement considerably. "Trend contributes to revenue quite nicely," says Parker, "but there are others, like TippingPoint, RSA, Juniper and so on that have built out our revenue stream into areas we were not involved in in the past. Trend now contributes around 30 percent of revenue. We also do not have one single customer that contributes more than five to eight percent of revenue. From a risk mitigation perspective, we believe it is critical to have a balance of product contribution and customer contribution."
SecureData wants to grow its services business too. "Services used to contribute six percent to revenue (as at half year 2007) and was up to 17 percent by half year 2008. We expect it to be in excess of 20 percent by the end of our financial year in July."
SecureData facts and figures
Head office: Bryanston, Johannesburg
Branches: Cape Town and Durban, as well as Sensepost in Pretoria and New Generation Solutions in Midrand
Staff complement: Just over 160: 110 technically-oriented, the rest involved in sales, marketing or back office
Revenue at half year Jan 08: R112.2 million
Net profit at half year Jan 08: R13.9 million
Headline earnings per share: 8.7c
SecureData, Parker adds, is looking at acquiring MIS Corporate Defence Solutions, a privately owned security managed services business in the UK. It has South African ownership, and 75 percent of the staff are South African, says Parker. "Part of the reason we are looking at them is that we know them reasonably well, from our previous lives," he smiles. "It's a good fit in terms of culture and this is very important to the deal's success. People fail when they go offshore because they cannot find like-minded people with a similar culture. MIS CDS will provide us with a great springboard into Europe."
Parker believes this will be good for Sensepost's European customers. Sensepost, acquired by SecureData last August, has 100 European customers, which, Parker notes, are always demanding that it open a European office.
The deal will be concluded by the end of May. As Parker puts it: "If it is not done by then, it is not likely to be concluded and we will have to look elsewhere." The company is also looking around the Middle East, although it has nothing concrete in place yet. "The area interests us. We are looking at it as a high-growth opportunity, and we have good friends and good partners there," he says.
That said, Parker adds: "We still believe there is growth for us in South Africa and the rest of Africa, so we'll continue to grow the way we do things and grow the core of the company."
SecureData's recent acquisitions have filled out its solutions portfolio, and its expansion out of South Africa will serve it well as local companies go multinational. As Parker says, when customers are under pressure, security budget is something they cannot afford to cut. With a clear strategy and focus, and the solution set to support that, SecureData looks set to be good, maybe even great, for some time to come.