The market’s fears about the growth potential of the ERP market and SAP AG in particular, which has led to a 50% fall in SAP’s share price since August 1998, does not appear to have affected the confidence of Druid, the Staines, UK-based management consultancy and SAP specialist. Druid floated back in November 1996 on the strength of demand for support services from SAP R/3 users and derives 70% of its revenues from providing SAP implementation services, although this percentage is expected to fall by about 10% in the coming year. For the last available full-year net income increased up 70.4% to 5.4m pounds on revenues up 84% at 40.6m pounds and Druid says it’s targeting similar growth in the coming year. Accepting what it calls a temporary slow down in SAP’s growth the company has, according to Duncan Prior, Druid’s Commercial Operations Group Manager, factored in to its plans various short term preventive measures. Druid is currently involved in at least three projects with Siebel providing customer relationship management services; and is working with some of its major clients in support of supply chain management services. This takes it into another tough and highly competitive market sector, which already has its fair share of specialist service providers and has already drawn the attentions of the big five accountancy firms. In its core market in the UK and South East Asia, although not in the US, there are also a host of local rivals offering SAP support, such as Diagonal Plc in the UK and (Magnus) in SEA. Druid provides a range of consultancy services to its customers from configuration and change management, to process and organizational design, training and education. It also concentrates on development of project-based, e-commerce, data warehousing and workflow management solutions. Prior sees its workflow services as a key service and one that helps Druid differentiate itself in a crowded market. The industries Druid works in range from aerospace and defense, automobiles, hi-tech, chemicals and pharmaceuticals, and fast moving consumer products. Since its flotation in November 1996, Druid has expanded its international operations and says it’s worked in 27 countries on 120 projects. Its offices in Singapore and Malaysia are growing, though they contribute less than 10% of revenues, while its teams of consultants in the US, generate around 30% of revenues. For work in countries outside these established territories, Druid will normally design and develop a project in the UK and then get a local services firm to roll out the project. Alternatively, the project is handled by its well-traveled UK consulting staff. Interestingly, a latest survey carried out by Druid has shown business process re-engineering is being replaced by industry globalization and emerging IT as triggers for the consultancy business. Presumably then a good many of Druid’s future prospects will be looking for a services company with a global presence. For the moment Druid will play to its strengths and leave its lack of geographical spread to consortium partners, which generate between 10% and 50% of its contracts. The company is decidedly project-based, it will go anywhere a project will take it if necessary; but will it be enough to convince potential clients to entrust global roll-outs of SAP with it? Probably, not until its revenues grows and it offers more services. Its profitability is aided by its success in recruiting new consultants, up 92% to 556 in the last full year, and in maintaining its high (9:1) ratio of chargeable to non-chargeable staff.
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