“I started with a blank piece of paper and started drawing,” he said. “I looked at companies and courses and gradually pieced together a three-year program to help develop my staff.”
Citing The Business Model Canvas, a strategic management and lean start-up template for developing new or documenting existing business models, Reilly remains true to his Hewlett-Packard upbringing, drip feeding his team new pieces of information and advice at regular intervals of their career.
“Every reseller should use this to get out of the Valley of Death,” he advised. “It’s crystal clear advice.”
In essence, The Business Model Canvas is an entrepreneurial tool which allows companies to describe, design, challenge, invent and pivot according to changing market conditions, a philosophy Reilly is applying to Logicalis as it enters its next phase of growth in Australia.
But if Reilly is to hit his numbers , and effectively negotiate the Valley of Death, it’ll take a shift in market perception.
Alone, Logicalis can leverage its list of customers to drive traditional networking business revenue, drawing on recent deals with Brisbane Airport, Crown Entertainment and Toyota.
But to expand into new markets together with Thomas Duryea, and hit those elusive larger accounts, change is required.
“I have to stretch the brand into new business models and fight hard to even be allowed the same level playing field,” Reilly said. “When we walk in and say ‘we’re here because you have a tender for outsourcing’, it’s because we can deliver.”
Although both companies have enjoyed success in chosen fields, together, Reilly recognises the transition will take time. But with the acquisition over the line and employees refining skills by the day, the direction of travel remains clear.
“There’s a little light flickering at the end of the tunnel,” added Reilly, speaking two years after lighting the blue touch paper.
Sizing up Thomas Duryea
Laughing at the thought in hindsight, Reilly initially hoped his first acquisition would take three months, rather than the eventual two year process that ensued.
In drawing on previous acquisition experience during his time at UXC Connect, the former Hewlett-Packard consultant understands the cycle is long, at times arduous, and always complex.
“But there’s an attitude that goes with buying a company,” he added. “You’ll never make a purchase if you have an exhaustive list of criteria. You might like two things but could do without another seven parts of the business.
“If that’s the case, you must make a call and assess whether it’s worth pursuing to get what you need.”
With an overriding ambition to grow exponentially, reaching $300 million in revenue, Reilly assessed the market from a services perspective, driven by the need to shift market approach.
“The big guys in the market were losing money and to see those big 600 pound Gorillas under pressure was a big shock to me,” he said. “But I know why they did, because I was in the same boat. Everyone is in the same boat and we’re all trying to move away from products to services.”
Alluding to the Valley of Death, Reilly said channel partners in Australia remain plagued by the need to realign big product numbers to services.
“We’re all in this valley because our services revenue haven’t yet caught up with our product revenue,” he added. “Resellers are switching entire businesses but it’s ridiculous to think they all can, so many have hit the wall.
“A lot are realising that this is too hard, and they are happy to bow out while they can. In the past, we all woke up and made money, it was just about getting out of bed, but that’s no longer the case.”
Filling a gap
“Previously, I’d walk up to a CIO and say, ‘Hi, I’m from Logicalis and we do network and security,” recalled Reilly, acknowledging the limited scope of his company’s abilities.
“Now I walk in and say, ‘Hi, I’m from Logicalis and I can provide you everything from consulting and advisory, service desk to the datacentre to the Cloud.”
Through utilising the expanded IT infrastructure and managed services capabilities of Thomas Duryea, Reilly said Logicalis can grow large accounts, chasing the entire IT budget rather than previous networking allocations.
“Our goal is to grow ten $5 million accounts, becoming strategically relevant and a trusted partner,” he said. “It’s a better approach than having thousands of $100,000 a year accounts because you can’t make money that way.
“But you must understand fully what gap you’re trying to fill. Are you doing it because you’re trying to take your competitor out? Are you doing it for market share? Are you doing it for capability?”
This article was originally published in the June issue of ARN Magazine.