Client Solutions’ vision of the future
Teddy McCarthy led an MBO at the ambitious company and is enjoying the fruits of an independent existence, writes Fearghal O’Connor
IT is not unusual for visitors to the offices of Client Solutions to arrive expecting a vision of the future.
The ambitious Cork company — which its CEO Teddy McCarthy says aims to double turnover to €50m by 2024 — specialises in everything from digital transformations to data analytics, giving often bigger and better-known corporates a helping hand into the world of cloud computing.
But with coronavirus cases mounting by the day, it is Client Solutions’ new visitor protocol that underscores sudden and unsettling new challenges for it — and for every other business — in the face of a potential pandemic.
A standard visitor book at the firm’s Park West office reception desk seeks the usual information about name, company and car registration but is now supplemented with an extra coronavirus form. The new tick-box form demands further information from the visitor about recent travel history and any potential symptoms displayed by them or their family members.
“Would you like to sanitise?” says the receptionist, pointing to a bottle of hand sanitiser once the visitor book and coronavirus forms are filled out.
Tick the wrong box on what McCarthy later describes as a “coronavirus fitness test” and guests to the office or staff returning from foreign travel will be immediately turned away.
The company is taking a no-nonsense attitude to the virus — a rigorous approach perhaps learned from its previous 17-year-long stint as part of much bigger international organisations before a management buy-out set it on a new path two years ago.
“We just have to do it,” says McCarthy of the new visitor policy. “Our suppliers are now asking us about our policies and procedures around coronavirus because we go out to visit their sites. As part of my role I meet a lot of customers.”
Indeed, he was supposed to be spending this weekend in Marbella with his family but decided to cancel the trip.
“It’s a low-risk area, but I would have been flying through different airports and I want to have zero risk for my customers. I’m not paranoid, just cautious.”
McCarthy says that Client Solutions is, perhaps not surprisingly, fully geared up to shut any or all of its four offices in Cork, Dublin, Poland or Spain and for the entire team of more than 150 to work remotely for an extended period if required.
Client Solutions specialises in putting other company’s systems into the cloud and plugging them into a data-driven world that can power and even automate decision making.
Its customer base includes a range of household names across banking, retail, telecoms, insurance and manufacturing.
“A lot of Irish businesses would not be ready for large-scale remote working, they’re not designed for it,” says McCarthy. “A long shutdown would be really bad for most companies because it is a level of disaster recovery that they just haven’t thought about.”
But the current disruption is likely to only further drive the move towards digital transformation using cloud technologies that potentially creates the technical flexibility for much greater adoption of remote working.
“We are helping customers make that journey. We have the people, the skills, the knowledge and we’ve learnt all the lessons so our goal is to make that journey smoother and more cost effective.”
He points out that 20 years ago a business would typically run a server room in a corner of the office.
“Ten years ago I would put my server in a data centre where it would be backed up and secured. But now companies don’t need to buy any of this equipment — you simply go online, take out a contract with someone like Microsoft and rent software and services in their cloud. You can be up and running immediately although that is just the beginning of the journey.”
For some companies — for example, those handling very sensitive medical or financial information — the cloud may be for now a step too far.
“There is a degree of ‘we have done it this way for a long time and we like the security net of keeping everything inside our own gates’. Are they right? It’s their decision and you respect their decision. The future is the cloud, but it won’t be for everybody,” says McCarthy.
As well as helping companies into the cloud, Client Solutions also helps to streamline systems using integrated SAP products across an organisation’s departments. “Take one of our clients as an example, Lakeland Dairies. It is a very ambitious dairy company in the north of Ireland that has gone through multiple acquisitions over the years. Each company they’ve acquired has had different systems from the production line, to warehouse management, to distribution… they could have up to 10 different systems. So we engaged in a project with them last year to replace all of those systems with one system, SAP. It’s a business transformation journey and will revolutionise how they grow their business.”
Since the project began, Lakeland has announced another big acquisition and the transformation project has made assimilating this easier, he says. Capturing the data in the range of systems used by large companies and then organising and analysing it is also a key part of the Client Solutions business.
“In a telecoms company, for example, we’ll take feeds of data of all calls, text and data. We can then give the business a total view of activity allowing them to highlight their high-value customers, ensuring that when they get a caller with an issue that they are automatically routed to a premium call centre team to ensure they don’t leave, helping to combat ‘churn’.”
Analytics also can break down the spend profile of customers in great detail. So a telecoms or utility company can start to understand the psychology of spending patterns using analytics, dictating the package that it offers individual customers.
“We take feeds from each one of their systems into a data warehouse and then we provide a set of tools on top of that to analyse and interrogate that data and produce visualisations that allow management teams to have a full 360-degree view,” he says.
For a retail company dealing with suppliers around the world, Client Solutions, for example, can set up online tendering systems that completely automate the ordering, fulfilment and invoicing systems for the retailer.
“When the tenders come back from suppliers for a product they are automatically ranked on a scoring system based on price, quality and value. All of a sudden if you have five or six suppliers bidding on a piece of work they all get more competitive and the whole thing becomes more efficient. The system does it all and then at the end of the day the retailer just has the choice of which one to choose with all the information there in front of them,” he said.
Standing six foot six inches, McCarthy’s early ambitions revolved around the basketball court and he played successfully at the second tier of the sport in Ireland.
“It was a choice between playing serious basketball or having a business career. I didn’t think I could do both. I felt I could have played at the highest level, but my appetite for business was too strong.”
McCarthy’s first job after graduating with a civil engineering degree was with an early-stage software company in Cork called Software Manufacturing Consultants, founded by his now partner in Client Solutions, Shemas Eivers.
When Eivers sold the company in 1992 he decided to pursue his own passion for motor sport and set up a go-karting company. McCarthy decided to travel and headed to work for a year in Saudi Arabia.
“When I came back Shemas had decided to get back into the business and approached me and asked me would I be interested in setting up a business with him. For about six weeks we read up and researched areas of technology that we thought might work. We’re both civil engineers so we are very logically minded.”
The pair jointly funded the new company and focused on offering technology to large corporate clients. When a small article appeared in an Irish technology newsletter it led to a project with Bank of Ireland.
“It was our first big break. We’ve been in business for 26 years since and have established a lot of long-term relationships with customers in retail, telco, health, manufacturing and distribution, and the financial sector.”
In January 2001 the two founders hit what many startups would see as the jackpot when the company was acquired for what was reported at the time to be more than €12m by Horizon, then itself a $100m company.
“We sold late enough in the dotcom cycle and the following year the markets crashed. Myself and Shemas negotiated a deal that allowed us to stay on in the company and take a share in the profit in return for driving growth.”
The pair were, to an extent, handcuffed to the company, he says. But willingly.
“A lot of people who sell a company are gone within two years. Ten or 15 years later we were still there and people would ask why we hadn’t moved on. We enjoyed what we were doing and were rewarded well when we were successful.
But what was really important was that Horizon gave us autonomy. My advice to anybody who is acquiring a company is give the founders autonomy, make it interesting and let them share in the rewards if they stay.”
But that was not the end of the acquisition merry-go-round for the Cork company. Horizon was then bought by a much bigger company, Avnet, which in turn was bought by an even bigger company, global distribution giant Tech Data.
“It was a case that the big fish kept getting eaten by the bigger fish. The important thing for us was to minimise the bigger company feel in Client Solutions.
“Myself and Shemas reported up the line but we kept the culture of the company as entrepreneurial as possible. We knew if we changed that dynamic that the efficiencies, the effectiveness, the innovation, the eagerness, the pride and all that good stuff could start to die.”
In 2018 McCarthy and Eivers agreed with Tech Data that the time was right to go their separate ways and a management buyout for a reported €25m was agreed in June 2018.
“But this time rather than myself and Shemas being the sole owners of the company we brought key members of staff on board,” he says.
There are seven internal investors with McCarthy and Eivers owning 20pc each, while tech company PFH also holds 10pc.
“We wanted to give long-serving employees who have been with us for 20 years a chance to be part of the journey.”
So having set it up, sold it and bought it back again, where does McCarthy think the future lies for Client Solutions? Could another exit be on the cards down the line?
“In our current growth plan we are looking at acquisitions to see who we might target. That’s our priority.”
But, having seen it all before, McCarthy is under no illusions about the consolidation that tends to sweep through the sector in three to five year cycles. He knows that the more they grow the more tempting they will ultimately become to bigger suitors.
“For now our priority is to grow and acquire. But if that situation does arise again then the first thing we’d be looking at, before the money or anything else, would be to ensure there was a cultural fit. If there is no culture fit than there is no point talking about money. We’re not in a rush. We want to build our own story.”