Advantage Group’s Greg Cross on the Webmasters deal

Advantage Group has again increased its stake in the Internet and e-commerce sphere by buying pioneering corporate Internet developer WebMasters in an $8m stock-and-cash deal. Advantage bought another leading developer, Glazier Systems, early this year and now has a force of more than 100 developers to call on. Russell Brown asked Advantage CEO Greg Cross how the latest deal came to be, where it fits in and where the rapidly-expanding company is headed.

Advantage Group has again increased its stake in the Internet and e-commerce sphere by buying pioneering corporate Internet developer WebMasters in an $8m stock-and-cash deal. Advantage bought another leading developer, Glazier Systems, early this year and now has a force of more than 100 developers to call on. Russell Brown asked Advantage CEO Greg Cross how the latest deal came to be, where it fits in and where the rapidly-expanding company is headed. What are you going to do with 100 Web developers? Well, right at the moment we have more work than we can cope with. We've got huge demand. We've also got a massive recruitment drive, so you'll see advertisements for even more developers over the next few days. To what extent will Webmasters become an in-house facility for you as opposed to going out and seeking its own business? The intention is certainly to integrate Glaziers and Webmasters and the other e-commerce businesses we've got into a single trading entity. I won't describe it as an in-house facility, but we'll be taking their sales and marketing people and merging them with ours and getting out there in the marketplace. At the same time, we'll leverage the synergies and the knowledge and skills of the different development teams. It's no secret that there are international interests looking to acquire local developers - why do you think Webmasters chose to go with Advantage, a local firm? Frank van der Velden is probably the best one to answer that, but I think they saw the strength that we have in our organisation in terms of our vision and our aspirations to grow. So what, in turn, attracted you to them? How important, for example, was access to WebMasters' existing client base? Obviously when you're buying Internet service companies and software development companies, you're buying the intellectual property - and comes down to the people within the organisation, the customers and they partners they have relationships with. They were also a perfect complement to our acquisition of Glaziers - in that Glaziers, while they're represented in Auckland, are very much larger in Wellington - Webmasters are the opposite. Glaziers are specialists in the Microsoft world, Webmasters have great skills in the Java area. Is Webmasters' Ad Network business part of the deal? No. We haven't acquired that business, although we see some synergy to work with it. You're signalling business-to-business e-commerce as the hot growth area for New Zealand. Do you think that'll be led by certain sectors, or will it just be individual companies in those sectors? I think really just because we are so far behind the US, for example, initially it's going to be led by individual companies, and CEOs in those companies who have grasped what this revolution is all about and are determined to show the way. To what extent do you think the New Zealand business community as a whole "gets it"? Not nearly enough at the moment. Right now we're still dipping toes into the water rather than taking the plunge. We're going to absolutely have to take that plunge quickly or some of our business are going to see a whole new range of competitors threatening them with completely new business models. We've now got both Labour and National talking about a government role in e-commerce development - principally as a model user. How important do you think government's going to be in all this? From our point of view, it potentially makes government a larger customer for us. But apart from that I think it's largely up to the companies to understand what's going on and deploy resources to seize the opportunity. What about things like the use of digital signatures? Is there a regulatory gap there at the moment? I guess I don't really see one. Those standards will all be set internationally by our major trading partners and we'll follow. Advantage now has quite a few facets to it. Can you give me a snapshot of the company? We operate in three business divisions. There's our e-commerce business, which will employ 110 people by the time we conclude the transaction with Webmasters. Our focus there is very much on Internet solutions and transaction process. The original Advantage business was the point of sale equipment division, which is responsible for the distribution of the majority of Eft-Pos terminals in this country. Through a recent acquisition it also distributes portable data entry devices and wireless devices through our agreement with Symbol. That employees about 35 people There's obviously an enormous overlap there between than and our Internet business as we start to see more and more of our retailers go online. With new technology coming out in the Eft-Pos world, the opportunities to effectively integrate customers relationships from an Internet perspective and a bricks-and-mortar perspective. The last of our three division is our retail solutions business. That provides retail point of sale solutions to the oil industry. We're one of New Zealand's largest software exporters with that business, with 130 people supporting three of the world's major oil companies - BP, Caltex and Shell - in Australia, South East, South Africa and South America. What's Strathmore's role going to be? We took a 20% stake in Strathmore recently. It was a very strategic investment for us. As we've repositioned ourselves and become very aggressive in the e-commerce space, we've attracted a lot of entrepreneurs with companies in need of capital, people with great ideas and business plans. Up until recently we had nowhere to direct them and we don't ourselves want to be directly involved in the venture capital business. Strathmore gives us a place to direct those companies and to potentially assist them with technology and services - and obviously to participate in the upside as some of those ventures go on to be successful in their own right. You have an international business in the retail solutions division. How important do you think Australia and South East Asia in particular are going to be for the rest of your business? For our Internet business, potentially very important. We already have clients who operate on both sides of the Tasman and who we'll need to work with increasingly in Australia. And everything I see leads me to believe that in New Zealand we're developing some of the best Internet applications and solutions and we have the ability to deliver those right up to world standard.

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