Mandator AB, the Stockholm, Sweden based IT consulting and systems integrator, has never tasted the low-hanging fruit presented by Y2K; it’s always preferred instead to develop expertise in emerging technologies. The Y2K buck has been seen by many vendors as an easy route into the lucrative IT services market, for others it has provided a means of bolstering poor performance. With the gravy train almost running out, most are now struggling to shake-off dependency.
Mandator has positioned itself for the post-Y2K world. Gunilla Rudebjer, chief financial officer with the company, says the decision not to get involved in Y2K was based on the desire to maintain the relevance of its consultant’s skills. We didn’t want our highly trained and experienced consultants working on out-of-date systems, especially when it is so difficult to find them in the first place, said Rudebjar.
Mandator was formed in 1993 and now has a presence in Norway, Denmark and Estonia. Rudebjar states that the company has a growth target that will see revenue double every three years through both acquisitions and organic growth. In the year ending December 1998, about 33% of growth was attributable to the acquisitions in April, of JC Data & Management AS and the purchase that same month of 51% of Assert shares. This Estonian consulting and system solutions company had sales of $3.4m last year and a staff of 52 and pushes Mandator into the Baltic region. Danish based IT consulting company, JC Data & Management AS, was also bought, a company that had revenues of $90m last year and some 850 people. Mandator also purchased the remaining 49% of outstanding shares in Mandator Interactive AB (formerly DSU AB), completing the acquisition a company that develops interactive training solutions.
Further acquisitions are on the agenda. Rudebjar reports that Mandator is on the lookout for companies that will take Mandator into new geographic territories or expand upon its portfolio of competencies. For the quarter ending March 31, Mandator reported revenue of 226.3 million Swedish krona ($26.65m) representing a 40% increase on revenue for the same period 1998. Head count increased over the quarter by 27% to 835 with a consultant turnover rate that has reportedly improved year-over-year to stand at around 10 -12% for the quarter ending March 1999.
Pre-tax margins were squeezed over the quarter to 10.6% down from 12.1% for the same quarter 1998. This drop in margins is put down to costs associated with setting up new operations and a temporary drop in demand. In part this is due to the slowdown in the oil industry with sales to Statoil being one of Mandator’s largest contracts.
A highlight of the quarter may well be the signing of a three-year contract with Swedish car manufacturer Volvo. The car maker is said currently to buy IT-services from as many as 140 different consulting companies. In a drastic re-assessment of this approach it intends cutting back to just four. Volvo believes the move will reduce the collected cost of using external IT-services. Mandator should see an increase in the volume of business and more importantly an increased share of development projects within new technology areas.
Mandator’s services are split between four divisions, business support, systems integration, systems solutions and systems services. Business support includes consulting assignments in IT, including operations, project and process management, strategy planning, advisory services and/or preliminary studies. The system integration division focuses on applications, systems and platforms in heterogeneous environments. Systems solutions services include systems design, systems construction, testing and implementation of customised solutions. The systems services division develops customer systems and refines the administration of existing customer systems.
