IT equipment funder Syscap had big plans in 2008 and
then “the whole world imploded”. CEO Philip White tells Fred
Crawley how focusing on established strengths has helped the
company handle the tough market conditions and notch up its
best-ever January figures for new business.
Go deeper with GlobalData
The collapse of the leasing market in 2008 could not
have come at a more frustrating time for Syscap. Having recently
had a management buyout funded by private equity firm Anacap, the
IT equipment funder was poised for a wave of expansion, with
European offices, a bigger lease book and a series of
securitisations waiting in the wings.
It was just as these plans were
getting under way, says CEO Philip White, that “the whole world
imploded”.
While Syscap’s strength in sales
saw it build revenues as the rest of the market contracted in the
first half of 2008, even White’s widely respected new business
engine struggled to outpace the collapse in market demand over the
course of the following year.
Like the rest of the industry,
White explains, Syscap had to “realign its business to match the
opportunities that still existed” in 2009 – a long process that
culminated in the posting of an EBITDA loss of £268,000 (€316,000)
for the year ending 31 March 2010.
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By GlobalDataWhat happened during the next year,
however, was enough to silence any concerns the market may have had
about Syscap’s ability to handle tough conditions.
For the year ending 31 March 2011,
EBITDA was up to £1.05m, on the back of a 72% increase in new
business to £114m.
Increases in
efficiency
Recessionary increases in
efficiency are much in evidence among Syscap’s results too –
operating expenses were down a further 5% from the previous year’s
diminished figure, while income generated per member of the sales
force rose 30% to £170,000 over the year.
Going by anecdotal evidence, the
year ending this month looks to have progressed along similar lines
– 2012’s first month was Syscap’s best January for new business,
and February looks set to follow suit at the time of writing.
Partly this is due to the return of
demand to the IT finance market, as customers reach the end of
their ability to extend asset life cycles and replace equipment –
White admits lack of demand is still his biggest obstacle, but the
problem is abating as time goes by.
However, as with many recovering
asset finance businesses, the real story behind Syscap’s
performance has been one of focus on established strengths at the
expense of diversification – “we are a company that is a mile deep,
not a mile wide”, summarises executive chairman John Allbrook
neatly.
This approach has meant some
sacrifices – White says had he been asked six years ago whether
Syscap’s destiny lay in Europe, the answer would have been a
definite ‘yes’. Now, however, he feels there is more than enough
work to do in the UK.
Even so, this attitude does not
prohibit a certain amount of opportunism. Syscap continues to write
business on the continent as part of its international vendor
agreement with business software provider Infor,
and White says he will always consider additional European business
– “but only on a transactional basis when a vendor partner requires
it”.
The idea of sticking to expertise
prevails in Syscap’s approach to the vertical markets it works in
as well. For example, take the company’s specialism in finance for
schools. Education business makes up the lion’s share of Syscap’s
public sector division, one of three main lines alongside
professions finance and general IT vendor finance.
Having grown impressively in the
school sector, one might expect Syscap to branch out into fresh
pastures in the university sector. However, says White, this would
be far from an ‘instant win’ – for him, simply identifying a gap in
the market is nowhere near a justification to expand into it.
“We are not generalists,” he
insists. “The value of our business in the schools sector, both to
us and to clients, relies upon understanding customers in that
space, which requires a lot of upfront investment in training and
development.
“In schools our people have to
understand deeply procurement and investment decisions and
understand the challenges bursars face – we want a relationship
where we can honestly claim trusted adviser status.”
On a company-wide level, this has
meant investments such as a partnership with the Department for
Education and the FLA to write a leasing guide for schools, and in
maintaining ‘high touch’ relationships with schools, which go so
far as to have Syscap representatives attend governors’
meetings.
On an individual level, it means
sales staff for the public sector business are recruited almost
exclusively from the public sector, or from businesses that supply
into the public sector.
“A huge part of our proposition is
understanding and empathy in that market, and it is very difficult
to take someone from the commercial team and give them an
educational beat,” says White.
“It takes a long time to reach
trusted adviser status”.
One mainstay of Syscap’s return to
prosperity, both in terms of maintaining sales performance and in
building sectoral expertise, has been the company’s continued trust
in the value of training.
Syscap Academy
“Training is usually one of the
very first functions of a business to be cut during a period of
difficulty, but that wasn’t the case here,” says White.
He is referring to the Syscap
Academy, an in-house sales training programme founded in 2006 and
run at full capacity even at the lowest ebb of the UK economy.
Without the education offered to
Syscap staff in asset specifics, legislative issues and the
mechanics of the public sector, there is no question the business
would have struggled to take full advantage of the opportunities
offered to it by a reviving market.
Even though White and Allbrook are proud of the way their
business has streamlined and focused on core strengths in the
aftermath of recession, their decision never to drop investment in
the academy is a reminder that, even when costs must be cut, a
business can never entirely shrink its way to success.
