Growing Wisdom's a pearl in hard-hit IT sector

THE technology graveyard is littered with companies who thought they were on to the next big thing.

In too many cases, however, their unceremonious demise has been hastened by a simple failure to read the market.

It’s all very well developing some cutting-edge software tool or IT solution, but if nobody is willing to cough up the cash you’ll find yourself pushing up the daisies sooner than you think.

With ten years and a hi-tech downturn under its belt, Wisdom IT is living proof that the greatest asset for any company aspiring to be the next IBM or Microsoft is a keen understanding of what the customer really needs.

As a result, the Livingston-based IT services firm is bucking the trend for downsizing recently seen elsewhere in the sector. Its proactive stance and ability to identify a client’s requirements and react swiftly has fuelled a sharp rise in turnover, which this year is set to breach the £3 million mark for the first time.

The firm - which employs around 40 people - has already made a move south of the Border, establishing an office in the heart of Newcastle’s rejuvenated city centre.

In addition, it is launching its services into the Irish market after signing a partnership agreement with Dublin-based SureSkills.

Last month’s deal, described by the two firms as a "natural fit", will also see Wisdom’s Celtic cousin bring its range of training services to the Scots company’s client base.

According to Wisdom sales director David McConachie, further geographic expansion could be on the cards if the Irish arrangement proves a success. He says: "Looking at expansion in the short term, we would probably do it through strategic partnerships like the one with SureSkills.

"We can then do complementary work so the cost of acquisition of clients is less. Forming a partnership eliminates the need to put in an office and employ sales people directly.

"A partnering arrangement enables both firms to broaden the range of services they can provide to their respective clients while avoiding the considerable overheads traditionally associated with establishing a new service in a new territory." Referring to the new tie-up, he adds: "It’s still early days to gauge the results from the Irish deal, but there are certain firms that we’ve got on the books that SureSkills can provide services to - for example, training, which we don’t do."

The West Lothian business targets what is describes as "middle-sized enterprises" - companies with around 100 employees upwards.

As well as a plethora of private sector firms, Wisdom provides a range of IT services to colleges, universities, health trusts and councils.

Projects tend to centre on issues such as security, data management, the provision of helpdesk assistance and corporate IT strategy.

"We perform something called business improvement strategy," explains Mr McConachie. "Our staff will go into a firm or organisation, with the blessing of an IT manager or someone on the executive board, and undertake a due diligence exercise - looking at the business and determining where there are potential improvements through the targeted use of information technology.

"We are providing a business solution not a black box," adds Wisdom’s sales guru. "At the end of day, it’s all about improving efficiency and making a business more profitable."

Although Wisdom has an element of the technology trouble-shooter about it, keeping abreast of IT developments - no mean task in itself - and assessing how they are likely to impact different sectors is central to the local firm’s enduring success.

"We’ve got a lot of people in the business who are very good at looking at what’s next on the horizon," says Mr McConachie. "That can be important, not only from a product point of view, but also from assessing the bigger issues affecting the business world, and determining if there is an appropriate IT solution out there."

New contracts, such as those with the Scottish Police College and distiller William Grant & Sons, should help fuel a rise in sales of at least 20 per cent this year, taking annual turnover at Wisdom to more than £3m.

Opportunities in the public sector have helped boost the bottom line during the current economic squeeze, which forced many firms to slash IT budgets in an attempt to stay afloat.

Wisdom has also benefited from an increased focus on data management and security, brought about, in part, by tighter legislation.

Mr McConachie describes the storage and recovery of computer data as a "big area" of concern, and predicts the trend continuing for a further 18 months or so. "Security is something that is always at the forefront of business directors’ minds," he adds. "Particularly in terms of the use of the internet and who’s doing what - so-called ‘acceptable use’ policies.

"New legislation can be a key factor, determining what companies can and cannot do when it comes to accessing the internet and e-mail."

In the past, Wisdom has been aligned with a possible flotation, and of late Edinburgh-based chip developer Wolfson Microelectronics and intellectual property specialist IP2IPO have proved there is still a healthy appetite among technology and media companies for going public, despite continued stock market volatility.

Mr McConachie says the firm is "not actively pursuing" a flotation plan at this point in time, but adds that an initial public offering is "something we’d never dismiss".

He continues: "Our growth has been underpinned by the efforts of our staff. We have good quality people who are very enthusiastic about the company and what they do there, and it’s a great tribute to them that we’re where we are now."

Wisdom is talking about growing in a controlled manner while doing its utmost to retain clients in a fast-moving, highly-competitive marketplace. As Mr McConachie stresses: "The lifeblood of any business is new clients but retaining your existing ones is extremely important."

Much of the credit for Wisdom’s longevity must go to founder Dave McDougall, who announced this spring he would be stepping down as managing director to "pursue other interests". The reshuffle has seen technical director Tom Mitchell take the controls, assuming the post of chief executive. Mr McDougall will retain his stake in the firm, and continue to sit on the board of directors.

At the time of the announcement, he made it clear he was not leaving Wisdom due to any acrimony.

"To start up a company and drive its growth has been for me a great personal achievement," he said. "I have no doubt in Wisdom’s continued momentum and in view of this it is a good time for me to hand over the reins."

Last month, the company co-sponsored this year’s West Lothian College lecture, which featured the well-known Edinburgh financier Sir Angus Grossart as guest speaker.

Mr McConachie says the firm was delighted to be associated with the event, adding: "The lecture has quickly established itself as an important networking opportunity, and is highly valued by local companies."

Technology outfit a top tip for flotation

WISDOM IT was based in Edinburgh when it was founded by Dave McDougall ten years ago.

A second director, Tom Mitchell, joined in 1996, and sales director Dave McConachie joined two years later, by which time the firm had undertaken the move to Livingston. The IT services outfit has frequently been tipped as one of Scotland’s brightest float prospects.

From its modest beginnings, the company developed rapidly, and turnover grew to £500,000 in 1997, reaching £1 million in 1998, £1.5m in 1999 but slipped to about £1.4m a year later. In the current financial year, sales are on track to break the £3m barrier.

Mr McConachie, who has more than 17 years’ experience in IT sales, and the two other directors collectively own around 60 per cent of the business, with seven per cent set aside for an employee share scheme and the remainder owned by an institutional investor.

Originally a teacher, Mr McDougall honed his entrepreneurial skills running another small business before turning his attention to Wisdom in 1993. His career in IT stretches back to the early 80s. Recently, the West Lothian firm announced that its founder was stepping down from his role as managing director, to be replaced by technical director Mr Mitchell.

Trained in electronics, Wisdom’s new boss entered the PC industry as a field service engineer, working for various blue-chip clients.

According to the Wisdom website, "what Tom doesn’t know about IT probably isn’t worth knowing".