Once it gets the go ahead from the US IRS, Chicago, Illinois based Technology Solutions Company plans to spin off its booming customer relationship management services business in readiness for a market sector that’s going to be worth $3.5bn by 2000 and will show 54% CAGR over the next two years. ‘If we get the green light we would expect an IPO to be announced around October of this year,’ reported Arthur Bird, senior VP TSC.
TSC has been around for 11 years and has had an enterprise customer management (ECM) division for the past six. It’s an aspect of the business that’s helped the company double in size every two years. Today TSC’s ECM global business accounts for around $140m of total revenue, $30m of which derives from Europe.
It arrived at the tail end of 1996 when it bought London based Aspen Consultancy Ltd a group that specialized in call center management. By 1997 TSC had also acquired Cologne-based call center consulting firm Geising International. The company has since added to its European presence with offices in Paris, France, Cologne, Germany and Zug in Switzerland. Work is currently underway in the Netherlands, Spain and Scandinavia.
Most recently TSC announced that it has successfully implemented a new $8m customer service center at the Hamburg headquarters of German publishing giant Axel Springer Verlag that integrates multiple customer channels, including voice, mail, fax and email. A second center is planned for Axel Springer’s Berlin office later this month.
The company claims that this is the first time that SAP R/3 has been integrated with the TSC Relationship Cockpit application to create customer support desktop technology. The application functionality provides customer service agents with up-to-date information including customer history, links to web sites and other customer management applications and all from the agent desktop. The implementation also integrates computer telephony integration software from Genesys and a Lucent automatic call distribution system that routes calls to appropriate agents.
Other TSC clients include a good many FTSE 100 and other blue chips such as BBC, Reuters, Axel Springer, ClubMed, Virgin Atlantic, BT and Cable and Wireless. Typically clients will spend between $3m and $10m, TSC claims.
TSC admits that its ERP business is stalling as the market dips. Enterprise solutions business recorded a decrease on the previous years at 8.3% with revenue of $46.2m. ‘It’s as though a moratorium on new implementations has been announced,’ reported Bird. In comparison, the CRM business is healthy. First quarter 1999 revenue for TCS’s ECM business stood at $30.7m, representing an increase of 33.1% on revenue for the first quarter of 1998. Total revenue for FY98 was recorded as $317.5m, an increase of 40% on the previous year’s total. Gross margin for the year stood at 52.6%. Total first quarter 1999 revenues stood at $76.9m, representing a slim increase of 4.7% on the first quarter 1998. Gross margin for the quarter came in at 47.1%.
TSC’s ECM practice currently has around 600 consultants in all and claims to be the largest exclusively CRM consultancy worldwide. Churn rate for the ECM practice is around 12%. TSC’s ERP practice currently has around 1,000 employees globally, and some 600 of these are based in Europe. Here the focus for ERP consultants is exclusively on PeopleSoft and SAP. Staff turnover rates are currently around 17% for its ERP practice although this includes a workforce reduction of 300 due to some recent re-structuring. As part of its re-structuring plan TSC says it intends focusing on those US ERP clients who are active in Europe such as Packard Bell, rather than chase new business.
Bird reports that TSC will seek to grow the business through partnerships in the CRM space. At the moment the company already has partnership with Clarify, Vantive and Quintus. TSC also intends partnering more with outsourcers. Most recently TSC completed a contract with Capita Group who worked alongside TSC during the implementation phase of a CRM system and subsequently took over the day to day running of the system.
