Rising Stars 2020: The acquisitive MSP

Despite being founded less than six years ago, Glasgow-based MSP and ERP provider already has a £16m revenue run rate and featured in CRN's recent Rising Stars report. Founder Tom O’Hara reveals its secret sauce

This Q&A appears in CRN's 2020 Rising Stars report, which highlights some of the most dynamic, profitable and fastest-growing resellers, MSPs and consultancies featured in CRN's recently released VAR 350.

The full Rising Stars report can be viewed here (brief registration process required)

Firm: Kick ICT

Founded: 2014

Key vendors: Infor, Microsoft, SolarWinds, Veeam

VAR 350 ranking: 311

Revenue: £7.1m (+197%)

Net profit margin: 7.8%

Kick ICT was only launched in 2014 but is one of the fastest-growing and most profitable firms we track. What would you attribute that to?

The big differentiator within the business model is that we have a professional services outlook, as opposed to a traditional IT company outlook. There's a focus on on-time and on-budget delivery to customers, as opposed to some other competitors who are just looking to complete the job.

What's the story behind your growth?

I was MD of TSG Scotland and sat on the UK board until 2013. I worked for a charity for a year with the view that I'd always come back and build another IT company. In April 2014, Kick was born when it acquired its first business, Talon, an £800,000 Navision consultancy. Essentially we did an acquisition each year and by the time we did Castle in 2018, the combined Navision business was about £3.5m and Castle was £9m.

The group now has three formal divisions: Infor, which is primarily Sun Systems and Pegasus; Microsoft, which is Dynamics and Business Central; and technical, which is essentially the provision of servers and hosting. There are strategic acquisition plans across all those divisions but primarily technical and Dynamics, as Infor is quite a settled market within the UK. Will we acquire in 2020? It's likely. We did £4m in Q1. All the indications are that we will be £16m-plus and if we layer in one of the two acquisition possibilities we're looking at, it will take us to £20m.

Most firms you compete with are either MSPs or ERP consultancies - not both. Why do both?

If you're going to implement an ERP, or accounting or business systems, you need to understand the platform that it's going to run on. And there are still scenarios where you see people implementing systems but the server environment it's running is either not configured appropriately or too old.

What's the ultimate ambition for the company?

We're not private equity linked, and there is no external finance other than the bank loans to buy Castle, which we've paid back a chunk of already. So there is no real pressure for us to sell. That supports the objective we went into this project with, which is to build a legacy business of scale.

What's the biggest shift you're seeing in how technology is procured?

There is no doubt that more people, certainly in the accounting world, know what they want to buy just by doing their research online. For a lot of our wins, the customer has decided they want to buy Business Central, for example, and then done further research and come to us and said ‘you look like the partner we want to work with in this area'. That is definitely a trend I see continuing, which puts pressure on how good your website is.

I think we can do more work around differentiation. If you look at [CRN's] one to 350 it's probably actually one to 35,000 in the UK. And I think the larger organisations - and I would put us as one that's getting larger - need to invest in ensuring that we're differentiating ourselves.

How will successful firms in your sector need to reshape their businesses for the 2020s?

Reshaping for us means getting bigger. We believe we have a good blueprint for buying businesses and improving the profitability of not only the company, but the group. Everyone's going to have to look at the stack of products and services they are taking to market and have the processes in place to assess them and make sure they are continually evolving. Microsoft is spending billions around Power Platform and Power Apps. And everyone is going to have to go along with the momentum of that, especially if you are in the Dynamics space, so the time of just moseying along isn't going to work.