Business in focus: MCSA Group
IT infrastructure specialist MCSA Group has been putting customers first for almost 40 years. Finance Director Peter Darraugh explains how the business can continue acting as a disruptor as it helps SMEs meet their IT infrastructure needs.
MCSA Group is a corporate level IT infrastructure services and support company. “We design, supply, install and support corporate level data centres,” Peter Darraugh explains. “Everything we do is around infrastructure – servers, storage and networking.” Small and medium-sized entities (SMEs) are the target clients – organisations employing between 250 and 2,500 people, with the sweet spot in the 500 to 1,500 range. Around 60% of MCSA’s revenue derives from public sector clients including NHS bodies, emergency services, central and local government departments, police authorities, schools and colleges. Commercial clients can come from any sector and include manufacturers, retailers, boutique banks and all kinds of support services.
MCSA was set up in 1979, so will be 40 years old in 2019. The business now employs around 140 people, with roughly 80 based in its Buckinghamshire head office and the rest spread across another six offices stretching from Scotland to Bristol. Some staff working on managed service contracts are based permanently on clients’ sites.
Disruptor or at risk of disruption?
Darraugh believes MCSA is both a disruptor and at risk of disruption. “The group’s history is as a disruptor,” he explains. “Our original services could be bought direct from manufacturers, but we were smaller, more cost effective and could respond more quickly. So the fact we could provide a better level of service at a more competitive price means we have always disrupted the larger players and manufacturers. That’s our heritage.”
However, MCSA’s success means it is now an established business.
"There are some smaller, very aggressive organisations that will no doubt look to take market share from us,” Darraugh says. “That’s when we look to the quality of our service. The ethos of the company is that the client comes first. We believe that if we constantly provide a high quality service, clients will stay with us. We have to be cognisant of prices in the market, but we also need to look at the value of the services we offer. So we are a disruptor and we always have been. We were a disruptor before disruption was popular. But everyone is at risk of disruption.”
MCSA’s management is taking steps to future-proof the business. “We work closely with our clients to understand how their business is evolving – and we adapt our services in line with that,” Darraugh says. “So we have regular meetings with key clients and we also look at what’s happening in the marketplace from a technology development point of view. What’s the big new thing coming over the horizon? Our original client from May 1979 is still a client. Their business is fundamentally the same, but the deployment of technology now compared to what they were using 39 years ago is massively different. We have had to work with the client over that time to understand what’s happening in their business and the market. We try to stay one step ahead and be a one-stop-shop. We aim to be a trusted adviser.” MCSA has also aligned itself with just a few key leading vendors, including Hewlett Packard and Huawei and works with them on IT infrastructure development.
Digital technology is deployed in MCSA’s own business when it will generate a return. “We have been deploying some digital technology and smart devices in the field since the turn of the millennium – to capture the work done on a job and to get client sign off,” Darraugh says. “More recently, we’ve moved over to Office 365 – rather than everyone having a copy of Microsoft Office on their desktop, it’s all in the cloud. We have been using Skype in the business for a year or two and are now rolling that out more aggressively. Then at the turn of this year we began using Yammer for social networking in the business. There’s a messaging service and we can put news up there – for example, if someone has closed a new piece of business or we have begun a new partnership with an organisation. It should improve the quality and frequency of our internal communications.”
Goals and challenges
MCSA is looking to grow in the medium to long term, building revenues on the back of high quality client services. “The bedrock of our business is annuity services, so we want to grow that – provide more support services and managed services to our clients,” Darraugh says.
"Our client retention rate is 90% plus – so we are relatively confident that once we have got a client, we can keep them.”
However, there are challenges in running the business successfully. One stems from the very fact that staff are interested in cutting-edge technology. “That’s great for us, but we can’t always see how we can deploy some new tech to our clients’ benefit,” Darraugh says. “So the key challenge is around resisting the urge to evaluate every new thing that comes along. It’s about having disciplines – looking at what we sell and what we use. We have to look at how we run the business and what would benefit our clients, rather than looking at new tech for tech’s sake. There are several different new technologies we could deploy for proactive system monitoring – we use only one. There are a number of different technologies you can supply for automating systems back-ups – we supply one. We focus on two or three business solutions. We try to focus on the benefits of the business solution rather than get caught in up in the tech.”
Industry: Information Technology
Company size: 51-200 employees
Ownership: Privately held
Looking at how the IT services sector could evolve in the next few years, Darraugh anticipates more migration of applications into the cloud. “There’s a big push towards the big public cloud providers, like Microsoft Azure or AWS,” he says. “We’re seeing increasing demand from our clients in the SME space for better physical infrastructure – so that could mean more things in the cloud or it could be some hybrid offering where the less business critical offerings are migrated to the cloud, because there are some cost advantages of that, but the critical business systems remain on client premises.”
Darraugh also expects to see more demand for consumption-based models, where clients pay for IT infrastructure services based on usage. “Software as a service has been in place for many years,” he says. “Now we are seeing moves towards infrastructure as a service where you just turn the tap on or off: there’s a small fixed element to the charging, then as you consume more you will be charged more. It’s something a number of organisations are looking at and we have some examples of NHS clients wanting to move towards a consumption model.”
Predicting sector developments further ahead is difficult, however.
"The big issue on the horizon is Brexit,” Darraugh says. “What are the trading conditions going to be? It will be disruptive and difficult for four or five years, but we will get through it. Anything that sows uncertainty is not going to help capital investment and we are concerned about IT spend. But change is a fact of life. In the IT industry, everything will get quicker, smaller and more portable.”
Other sectors that could feel the impact of disruptive tech include any with rules-based activities where those rules could be codified and artificial intelligence, machine learning and predictive analytics applied. As an example, Darraugh sees potential disruption in the accountancy sector affecting the “low to mid-level work” performed by the Big 4 accountancy firms – things like audit or the preparation of tax computations. “In 10 years’ time, those jobs are going to disappear and the price [of services] will fall, because that’s what happens when you automate things,” he says. “So much has already happened with automated trading in financial services. This is the next step.”
Becoming more digital
Perhaps surprisingly, Darraugh doesn’t think all businesses should necessarily become more digital. “Doing anything for its own sake is pointless,” he says. Should a business become digital when it’s well established, has a good business model and is making lots of money? What would you want to digitalise? You need to look at each business on its own merits and what it wants to achieve from digitisation. But I do think by working with the right business partners you can go a long way to drive efficiencies in your business and automate certain tasks.”
What makes the right partner?There are barriers impeding UK businesses that seek to become more digital, Darraugh believes. “For us it’s skills and the price of those skills,” he says. “Experienced IT folk are very expensive. So we have put a lot of effort into developing our own talent. We have invested in taking people straight from school onto an apprenticeship programme. We also need to keep refreshing our skills. We have an ongoing programme of up-skilling and refreshing the IT skills of all our IT professionals.”
"It’s someone you trust to give you the right advice and guidance,” Darraugh says. “Investment decisions boil down to price and service: what you are paying, what service is going to be delivered and what are the benefits accruing from that? You peel decisions back to those first principles.”
The lack of a high speed IT infrastructure network nationwide is an “ongoing issue” and should be a priority for government action, Darraugh adds. “It needs to be of world-class standard and consistent nationwide – otherwise pockets of the country will get left behind.”
We asked: Away from MCSA, what disruptive tech has most impressed you…
“Tesla is a great example of disruptive technology, but there is an issue about the extent of the battery-charging infrastructure,” Darraugh says. “I bought a hybrid BMW car a few months ago, but I think it’s interim technology. The manual says I will be able to do 31 miles on a full battery charge – but when it’s cold and hilly and I can only do 15 miles. A hybrid car where I could do 200 to 300 miles on a battery and still have petrol back-up would be great. I think that will come.”