When Jim Donovan took over as CEO at Synergy last June, it was only a matter of weeks before changes in company direction became apparent, with the departure of three executives. Donovan has since refocused the company, moving away from generalist IT services, and honing in on business transaction and payment solutions.
“We are the largest player in New Zealand in the things we do and my intention is to get a lot larger – not just in New Zealand,” he says. “That will either be organically or by acquisition.”
Donovan was brought into the company to provide a new level of strategic thinking, taking over from co-founder and then CEO David Irving, who said at the time a fresh perspective was needed. Irving and the late Chris Comber founded the company in 1992. It has since grown to more than 200 staff with turnover in its most recent financial year of $32.9 million.
Donovan brings some particular business strengths to Synergy. He is a regular speaker about business strategy development and implementation, marketing and performance improvement.
A former strategy consultant and partner at Ernst & Young, he co-founded and ran the Deltec Communications Group from 1998 to 2001, selling advanced base station antenna systems for mobile phone networks. When he sold Deltec, he established a private investment company, Isambard, to invest in early-stage companies, including SubSea and Compudigm.
But his grounding is in the IT business. After being funded through university in the UK by ICL, Donovan worked for the company for 11 years, latterly in New Zealand.
“I’ve really come home in many ways,” he says of the move to Synergy.
The job offer came about after he had a cup of coffee with Irving, who outlined his plans to move on from Synergy.
“I spent the first three months talking to clients, competitors and consultants,” Donovan says. “That led to me deciding how to take the company forward. Synergy was carrying too much overhead and needed reorganising to put the new strategy in place.
“I looked at it from the point of view of what the client buys, rather than technology. Did that change the way we do things?
“How you measure things is important: revenue and profit by client and how much of the overall client spend are we getting.
“So the client account has become the primary method of measuring our business. At one level, the thinking is about being organised around client service. Our teams now have a mix of skills, which provides an advantage in terms of longevity of information.
“The balance is around why people work in professional services. For example, they like variety and they like developing deeper relationships.
“The feedback from our clients has been that our people are really good at working with the clients’ business people.”
Donovan says Synergy won’t now compete with contractors. “All you’re doing is comparing hourly rates. Any good CIO will know a good person will generate much more productivity.
“Probably one of the biggest shifts for us is shifting away from hourly rates. We’re not in the body-shopping business any more. We’re aligning ourselves with sectors and looking for sector knowledge.”
This will mean playing to the business level in a client rather than the IT manager. “No CEO buys a Java developer,” he says. “They buy a working business process.”
The kinds of development Synergy intends to concentrate on it future will be transaction-oriented, typically complex and innovative and usually involve multiple parties and “connectivity to the outside world” typified by the bank customer, motorist or, increasingly the citizen dealing with e-government services. In the near future, there will be few “major government agencies” that don’t have some kind of transactional interface with the public, says transaction services director Caroline Dewe.
Donovan does not believe that by narrowing its field of operations, Synergy is increasing business risk; in fact the reverse, he says. It was much more difficult to do business on several fronts competing against companies who specialised in each of those areas.
Donovan says he has chosen to focus on transaction of payments because “it’s about what makes clients different, how they connect to the outside world rather than about what sits around the middle.
“It’s the complicated things we are good at.
“One of our clients saw us as a general IT company, a ‘me too’. That’s what led
us to focus on the transaction space. Three-quarters of our work was already
in that area.”
The three major business lines for Synergy are now: design and build; managed services (hosting, supporting and maintaining live systems) and transaction service solutions.
Synergy is involved in two substantial transaction projects in the UK, one of which involves a massive 22 billion transactions a month.
The company has 50 people working offshore, with teams in Singapore and Seattle.
Donovan says that in any given month between 20% and 40% of the company’s revenue is derived offshore.
He says mobile payment solutions are also very important to the company’s expansion. “Industrial strength is a key flavour.”
The company has set up a brand for its transaction services offshore because Synergy is a common name worldwide that is difficult to differentiate.
Fronde is the brand name, derived internally after a search of 800 names. It came from a staff member, an ex-Rumanian chess champion, who pointed out it represented popular culture in Europe.
It also had the happy connotation of the New Zealand fern.
Fortunately, another suggestion, an anagram of Synergy went no further. It turned out to be a granny porn site.