Consulting – Divisional report

Bram Moerman Analysys Mason CEO

Performance
  • Revenue of US$51.4 million
  • Challenging sales year putting pressure on operating margins
  • EBITDA of US$1.9 million
Corporate overview

The Consulting division, comprising the majority-owned businesses Analysys Mason, Mason Advisory and The Via Group, accounted for 1% of Group revenues (FY15: 1%) and 1% of EBITDA (FY15: 1%).

Analysys Mason is a global specialist in telecommunications, media and technology (“TMT”), established for more than 30 years. The business delivers strategic, trusted advisory, modelling and market intelligence services to the telecommunications, IT and digital media industries.

The Via Group (“Via”) is a specialist systems integrator providing products and services to support unified communications and integrated voice solutions. Effective 1 March 2016, Logicalis US, an international IT solutions and managed services provider announced that it has agreed to acquire Via from Logicalis’ parent company, Datatec Limited. As such, Via’s performance for FY16 is included in the Consulting division and its future performance will be included as part of Logicalis’ results.

Mason Advisory was created in 2014 but has a 20-year heritage of supporting business-critical IT projects. Its consultants provide advice on complex IT and digital challenges to large organisations across the public and private sectors.

How Consulting creates value

Analysys Mason is wholly focused on its sector and is respected for its exceptional quality of work, independence and flexibility. It helps operators, financial institutions, media organisations, regulators and a range of other public sector bodies in more than 100 countries to:

  • Design strategies that deliver measurable results
  • Make informed decisions based on market intelligence and analytical rigour
  • Develop innovative propositions to gain competitive advantage
  • Implement effective solutions to improve business operations
  • Mason Advisory delivers strategic, trusted IT advice, working with clients to reduce risk and improve efficiency. Advice ranges from strategy development through to solution design, procurement, security and programme delivery.

    Via’s engineers specialise in optimising existing communications investments by integrating IT infrastructure and telephony systems. Through a proven methodology and quick adoption of new technologies, Via helps guide customers and partners through the important processes that translate the tremendous value of unified communications to the bottom line. Customers represent many verticals with particular focus on energy, healthcare, legal and higher education.

    Consulting strategy

    The Consulting division represents a breadth of expertise through separate but complementary business units specialising in strategic consulting, research, programme management, communications platform integration and technical staff augmentation. With a focus on all TMT sectors, this division provides insight and a vantage point observing trends and developments in the ICT industry.

    Analysys Mason’s approach is based on a unique combination of applied intelligence, independent opinions, a passion for problem solving and consistently looking closer and seeing further. This approach engenders strong long-term relationships with clients and Analysys Mason monitors this repeat business by reference to the percentage of company sales in a financial year derived from clients for whom Analysys Mason has undertaken projects during the preceding financial year. The value of this metric was 69% for FY16 (FY15: 66%).

    Revenue % contribution

    • Analysys Mason
    • Mason Advisory
    • Via

    Mason Advisory is focused on the primary challenges facing large organisations in relation to IT. Big areas of current interest include IT cost reduction, IT service improvement, migration to cloud services and implementing effective organisation-wide IT security. Mason Advisory continues to provide industry leading specialist expertise in the field of mobile communications services to the emergency services sector.

    Via is recognised as a skilled partner in the delivery of unified communications and integrated voice solutions and is a leader in providing professional services to support Avaya and Microsoft-based unified communications solutions. With roots in telephony, IT and messaging products, Via aims to provide services that bridge the gap between telephony and computing to deliver best-in-class, multi-vendor, integrated unified communications solutions.

    Notwithstanding an impressive client list within the division, all units are still subject to the combined dynamics of discretionary spend constraints and dependence on a sizeable volume of relatively small, short-term projects.

    All units have a technical bias and a key priority for the division remains sustaining profitability without diluting the significant value propositions delivered by its highly skilled employees.

    Progress against objectives

    Listed below are the FY16 objectives of the division, including a discussion on the progress towards these objectives. The emphasis on sales diversification, propositions and talent helps to balance the highly volatile nature of consulting.

    FY16 objectives   FY16 execution of objectives   FY17 priorities
    • Targeted sales activities to continue to diversify the customer base and improve scale
    • Analysys Mason established a company and opened an office in Hong Kong following successful hire of senior staff in early FY16
    • Recruited David Healey, a well-known expert in smart energy/smart cities, to build a new proposition at Analysys Mason
    • Continued investment in the Analysys Mason Research business in Asia and Middle East and North Africa
    • Analysys Mason to develop its offering in the smart energy/smart cities market focusing on telecommunications advice to utilities
    • Analysys Mason to further build out the Hong Kong delivery team as appropriate
    • Analysys Mason Research to evaluate opportunities to develop an enterprise proposition
    • Mason Advisory Home Office delivery role on Emergency Services Mobile Network (“ESN”)
    • Mason Advisory looking to establish/build additional capability in the enterprise sector for global companies looking for independent IT advice
    • Mason Advisory to build additional IT security skills to support public and private sector clients
    • Via to integrate its sales and services practices with Logicalis US
    • Specific initiatives to improve resource recruitment, development and retention of high-calibre people
    • Continued focus on internships and graduate recruitment, who are brought quickly up to speed using the proven graduate training programme at Analysys Mason
    • Identify senior hires that can provide geographic or proposition diversification along with business development expertise
    • Continue to recruit high-calibre interns and graduates
    • Retain talent by offering career development and progression
    • Seek acquisition opportunities to improve scale
    • Due diligence of a potential acquisition target performed, but ultimately management decided not to pursue the opportunity
    • Seek appropriate growth opportunities in research capabilities
    Markets

    Analysys Mason’s Consulting division experienced quite a volatile year with a slow H1 compensated for by a stronger H2. In terms of geographies, there was a noticeable recovery of demand in Europe offset by a decline in the Americas. Overall demand was relatively stable year-on-year.

    While Analysys Mason Consulting’s core propositions of regulatory and strategy advice experienced a decline, increased demand for transaction support compensated for that.

    Analysys Mason’s Research division experienced growth in emerging markets and a stabilisation of demand in Europe and the US.

    During FY16, Mason Advisory delivered quality advisory work across several sectors and geographies. The business continued to build on its impressive track record with the UK and international emergency services clients and made solid strides in developing its enterprise IT capability.

    Performance

    Revenues were US$51.4 million (FY15: US$55.2 million). The lower revenues translate into lower utilisation levels and consequently lower divisional gross margins of 33.5% from 34.6%. Cost reduction initiatives were undertaken during the year, but operating margins have fallen and EBITDA is US$1.9 million (FY15: US$3.2 million). Analysys Mason and Mason Advisory have reported a positive, albeit reduced EBITDA, while Via has reported an EBITDA loss. From FY17, Via will be included in the Logicalis Group results.

    Partner and vendor relationships

    All units build and maintain relationships with partners and customers throughout the process of an engagement – from thought leadership to sales, through project management and engineering up to project completion, to ensure that services are delivered to support desired outcomes. The nature of the specific engagements differs both by unit and by project.

    Analysys Mason occasionally partners with other consultancies on specific projects, delivers research to industry vendors and operates as a vendor independent, trusted adviser to its customers.

    Mason Advisory prides itself on its independence. This allows the company to provide impartial advice to clients that genuinely reflects the best options to meet their needs. However, it is crucial that it understands the evolving technology market, and to do so it participates in a number of vendor-led consulting liaison programmes. Mason Advisory also embraces strategic partnerships where they support its aim of building the business, while ensuring clients receive the best possible service.

    Outlook

    In the year ahead, the division’s units will continue to focus on targeted business development activities, proposition enhancement and talent development.

    Analysys Mason is experiencing a slow start to the year in terms of new demand. A good backlog is partly compensating for this and the outlook (based on customer interactions) appears to indicate an improving picture throughout Q1 and into Q2.

    Mason Advisory is looking to build on the strong growth in the second half of FY16 in order to consolidate a profitable and sustainable long-term business to meet the demands of its clients and offer a rewarding environment for its staff.