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January 27, 1987


By CBR Staff Writer

Sleepy Rolfe & Nolan Plc is in for a shake-up with the arrival of Mike Warburg as deputy chairman and chief executive of the company. Warburg comes from Extel Computer Services, a business he set up for the Extel group in the late 1960s and built up in the 1970s, and he comes in as long time associate of co-founder Malcolm Rolfe as well as long time customer of the company when he was at Extel. So he knows Rolfe & Nolan’s business very well. The news of his arrival was enough to firm the company’s price up around 10 pence. Last year we pointed out that Warburg had taken a significant stake in the company – now 20% – and suggested some such move might follow soon. Rolfe & Nolan provides a bureau service for futures and options traders in the City, but has had varied fortunes. Although the business is a steady one, pre-tax profits fell away from UKP571,000 in 1984 to UKP360,000 in 1985 and for the year 28 February 1986, a wafer-thin UKP51,000 profit was all the company could record. Warburg feels that many of Rolfe & Nolan’s problems have arisen from a lack of any well thought out competitive strategy, and from a general lack of direction. Whenever competition has got hot the main instrument of defence has simply been to drop prices, explains Warburg. He feels that this needs to be changed, that Rolfe & Nolan must take its expertise to the market and sell a highly professional service. That will mean a number of long term changes, not least of which will be a re-think of the sort of customers the company pitches for, as well as the formation of a more coherent marketing policy, and the presentation of a good front. We want to approach the type of users who understand information technology and understand that good service costs money, he explains. The future lies in providing a high quality service to large, professional users based on longer-term agreements offering better service, more security and better pricing. One other element to the business that Warburg feels has to change is Rolfe & Nolan’s approach to in-house users – people who do not use the bureau, instead preferring to buy the software.

Software rental

Warburg is eager to change that and put an end to the outright sale of potentially revenue-generating software, and instead to introduce software rental and to engender a long-term relationship with such users, which would encapsulate support, maintenance and software enhancements, but most importantly from a financial point of view, would introduce the recurring revenue element from software. Warburg’s plans go further though, and as well as wishing to change the presentation of the company, the service it gives, to whom and at what price, he also envisages a move into related activities. The way he can see the company going most easily is in facilities management, something being undertaken already but on a small scale by Rolfe & Nolan. Facilities management has been slow to grow in the UK, compared with the US where houses like Hoskyns and Electronic Data Systems have grown strong on just such fodder, but Warburg believes that there is a growing and important market for these services and that Rolfe & Nolan is in a strong position to take advantage of it. With this three-pronged attack, Warburg sees a long-term metamorphosis from a rather indifferently-run computer bureau to a high quality specialist bureau service, facilities management operator, and packaged software supplier for the finance markets. The core philosophy behind this strategy, which Warburg admits is still in its infancy, his belief in the future of the bureau service sector: It is the flight from the bureau business at Rolfe & Nolan that I want to arrest. The belief that the computer bureau is obsolescent was beginning to work its way into the company and I just don’t agree. The idea that the bureau business is dead is nonsense. – Adam Page.

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