Just outside Stratford-upon-Avon, nestling among the sheep and the Shakespeare souvenirs, is the headquarters of the enigmatic and ever expanding Misys Plc group, run by Kevin Lomax. Misys has seen pre-tax profit rise from UKP170,000 in 1985 to UKP2.2m in 1988, and since going public in March 1987 the company’s earnings per share have grown from 4.2 pence then, to 14.9 pence by the end of 1988 – the fastest growing earnings per share of any quoted UK company in the computer services sector. At the same time the share price of Misys has continued to rise from a placing price of 95 pence in March 1987 to 265 pence in December 1987 and 319 pence in December 1988. Its market capitilisation today stands at nearly UKP70m compared with UKP8m at the time of its flotation. Indeed, the rise and rise of Misys has made it a finalist for the USM Company of the Year Award, and its managing director, Kevin Lomax, a finalist for the USM Entrepreneur of the Year Award. Anywhere in the UK So what, if anything, does the Worcestershire countryside surrounding the company’s headquarters contribute to this success story? Indirectly, the locality of the group’s headquarters does reflect Lomax’s management policy, as well as Misys’ deliberately fostered corporate anonymity. For Lomax intends to retain a low profile for Misys, concentrating instead upon building up the reputation of each individual subsidiary in its own market sector, rather than pushing the amorphous identity of a holding company on a bemused public. Consequently, in terms of market perceptions, Misys could be located anywhere in the UK. This management strategy has been described by Lomax as the Hanson style of management, and this is appropriate coming from a man who has worked at the head office of what was then Hanson Trust. The Misys chairman is, perhaps, justified in his faith in his own entrepreneurial expertise within the computer industry, for this expertise comes from his background in engineering and electronics managing divisions of CMT and STC. Reflecting this entrepreneurial side, Lomax, during the development of Misys, put aside his interest in the computer-aided design market (the market on which Misys was formed to focus) in the knowledge that his partner, Roger Morgan’s, interest in the insurance broking market offered more lucrative opportunities for a small company. For it is a little-known fact that Misys (an abbreviation of mini system) was established initially to market a computer-aided drafting system developed at Cambridge University, and was not originally intended to be an insurance systems house. When the company, which had been backed purely by private finance, began to make a profit within a year, Lomax resigned from STC, bought a larger shareholding and started in earnest to build a computer services company aimed at the financial sector. After going public, the company has, over the past year, pursued an aggressive acquisition policy. At present, the Misys group comprises Dataller Computer Services, BOS Group, CP Programming Services, Zygal Dynamics, and the Independent Computer Company. Misys Dataller is the Misys group’s core business, supplying insurance administration systems, and claims a market penetration of about 25%. The insurance packages run under the company’s own operating system, Tripos, developed at Cambridge University, which is tailored to Misys’ proprietary Motorola 68020-based Megamicros. The Megamicros are assembled by the company, being subcontracted out at the chip level. With this background, the acquisition of BOS Group in June of last year seemed a reasonable move for Misys, although it also offered its own operating environments along with the Global 2000 range of accounting and office automation software. This buyout was followed by the acquisition in July of CP Programming Services, an IBM mid-range agent supplying off-the-shelf software for accounting, office automation, process control, and distribution. Again, this company appeared to have a synergy with Misys’ markets and products. More perplexing to the onlooke
r, however, were Misys’ two further bids in December for Zygal Dynamics and Independent Computer Company, both of which were successful. The Zygal package contained Coulson Heron Associates, CHA, a DEC distributor and systems house specialising in writing custom software for the DEC VAX line; CHA Networks, and Modular Technology, together offering a strong portfolio of turnkey and local area network products; CHA Installations, a division that fits computer suites; Base-Sys offering an on-line database of motor insurance quotes called Motorscreen that is accessed by proprietary software running on IBM Personals; and, finally, Zygal Dynamics itself, which is a supplier of dot matrix and laser printers, along with consumables. To this apparent hotch potch of companies was added the Independent Computer Company, an IBM mid-range agent supplying Travelpack, a travel agency administration system. The Hanson way Knowing that Lomax is keen to promote the Hanson management style, one might, at first, think that Misys is speculatively buying disparate companies in order to sell parts of them off when the market can offer a better price for them. According to Lomax, however, this is not part of the grand plan. For, by doing it the Hanson way, Lomax simply means that Misys will have separate line management roles focussed around the discrete subsidiaries, which will exercise a strong financial control over the highly cash-generative software houses that the company is buying. Although the Misys group is interested in new areas of core business, the chairman was not prepared to express any particular interest in specific markets, saying that he was more interested in the potential of individual businesses. He feels that the Misys group can offer certain small technically skilled in-formation services and software houses an aggressive sales and marketing team to accelerate their growth. This is a tactic he is adopting with the net-working side of the business he acquired with Zygal Dynamics. It is also the way he intends to build up the businesses in the DEC and IBM market sectors he has acquired.
