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Dynamic business models equal success

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“Information technology, like everything else today, has been commoditised and this requires us, as one of the leading players in this field and the biggest locally owned IT group, to consistently find and develop new products and services that will add value to our clients and that will command higher prices.”
This is the view of Rob Abraham, CEO of the Bytes Group which is wholly owned by Altron and that was recently the star contributor to Altron’s year-end results.
Abraham believes the local IT market is by no means in a negative phase and says it was segments such as banking and retail that especially contributed to the excellent performances by several of the Bytes companies.
For instance the contribution by Bytes Managed Solutions and Bytes Systems Integration, together with the growth delivered by the rest of the group companies, resulted in a significant increase in EBITDA and enabled Bytes to grow local revenues by some 9%.
Bytes reported a growth in EBITDA by an impressive 11% to R527-million while improving EBITDA margins from 7,8% to 8,7% in the face of flat revenues for the year ended 29 February 2012. Its headline earnings performance consequently increased by 22% to R253-million.
Abraham says that apart from Bytes Document Solutions (BDS) where LaserCom and Nor Paper recorded disappointing performances, the rest of the operations all exceeded expectations.
“We are not worried about BDS as a profit contributor over the long term following some corrective actions in the form of management changes and restructuring of some of the divisions within that business,” he comments.
Abraham highlighted two of the star performers, Bytes Managed Solutions and Bytes Systems Integration. Bytes Managed Solutions, run by Deidre Le Hanie, operates in the retail and financial services markets and has been extremely successful in the last few years in both these sectors.
This year, its EBITDA increased by an impressive 18%. Rob Griggs and his team at Bytes Systems Integration (Bytes SI) also produced record results – especially in terms of the African and Middle Eastern businesses which after two years of investment, are now delivering a good return.
Together with a good performance by its local businesses, Bytes SI increased revenues by 19% and EBITDA by 27%. Bytes Connect, Bytes People Solutions, Bytes Healthcare Solutions and Bytes UK all performed equally well, says Abraham.
He believes that although the local market remains extremely competitive with the really big contracts being highly contested where the winner takes all, Bytes’ good track record, depth of experience and price competitiveness enables them to remain in the lead.
He also sees growth potential in gaining more business from the public sector as one of the biggest spenders on IT in the country, expanding selectively into Africa and ensuring that the group remains a key player in new and developing technology and cloud based offerings.
In reviewing the sectors in which the group are operating, Abraham also commented on the health industry and says that he welcomes the government’s national healthcare initiative as the only solution for the nation’s health challenges although he is not sure that the money required for such a venture could be raised.
He sees Bytes Healthcare Solutions, which is continuing to invest in research and development in terms of exciting new offerings, continuing to play an important role in this industry in the future.
“We are already active and highly successful in large parts of the African continent, the Middle East and the UK and we will continue to consider acquisitions in all areas as and when they prove to add value to our group.
“In this regard I believe that the new government sales team that we have put together, alongside  the recent acquisition of Unisys Africa which is an active participant in the public sector, will contribute to us enlarging our service portfolio to the  public sector segment of the IT market.
“We believe that the public sector offers huge potential growth as it is currently the biggest local investor in terms of IT expenditure,” he says.
In discussing his business approach, Abraham says that Bytes’ strategy is industry leadership. We believe in a federation where our go-to-market strategy is to take the best solution possible to our customer base through independent, specialised business units.
“All these units are tasked with industry leadership which has to be either number one or number 2 in the sector in which they are operating. And the plan is working as we are indeed either leading or second in all our markets,” concludes Abraham.