Mike Morgan (Insight Enterprises)
Credit: Supplied
Insight Enterprises is investing in the lesser-known side of its business, professional and managed services, in New Zealand and globally.
Asia Pacific senior vice president Mike Morgan said the solutions business was largely focused on enterprises and the public sector, delivering expert services to projects across domains including data and artificial intelligence, cloud migration, core systems implementation and software development.
Around 350 of Insight’s 600 staff across the region were in the services side with the rest on the product side.
As reported last month, Insight promoted Evette Thorp to replace Dean Graham as country manager after he took on the role of A/NZ sales director in February.
Graham now leads the company’s technology value added reselling business stream across the region after over a decade as New Zealand country manager, with Thorp as a direct report.
Graham said while Insight was closely associated with Microsoft in the market, it was also delivering products and services from 260-odd other vendors. Where many clients engaged through the Microsoft relationship, they typically then looked to Insight to supply beyond the Microsoft stack as well.
“We’ve actually landed six heads in five months into the professional services side of our business in New Zealand to add to the three we landed in the back end of last year,” he said. “When you are talking a team that has 25, I think, on the ground here that’s a pretty rapid headcount shift.”
Credit: Foundry Data and AI and cloud migration to Azure in particular were the main points of focus for the team.
Where the technology side of the business runs on lower margins, it was all about scale, Morgan said. The services business offered higher margins, but could only scale as quickly as Insight could hire and retain smart people.
Talking about bespoke development, application modernisation and how to use technology to support growth was a very different conversation from from talking about a licence renewal, Graham said.
“Our goal is to be an industry recognised solutions integrator,” Morgan added. “We’ll know we’ve achieved that when the market starts talking about us relative to Deloitte, Capgemini and Accenture because we are increasingly coming up into that space.”
Nasdaq-listed Insight had made roughly eight acquisitions over the last eight years, he said, and all but one were pure-play services businesses. Last week, the company bought US-based Microsoft partner Hanu Software to complement its existing transformation capabilities and to expand its global footprint through Hanu’s offices in India.
“That helps us build out our global centres of excellence which create capability we can bring into Australia and New Zealand that we can’t ever get the scale to do locally,” Morgan said. “It gives us a bit of differentiation compared with the purely local providers as well.”
Graham said Insight’s growing ability to front with people on the ground and augment that capability globally was an exciting proposition.
Insight is strongly associated with supplying Microsoft products and licenses, especially in New Zealand, he acknowledged. Within that, however, it was demand for increased cyber security that was now moving the local market, often as a direct result of changed work patterns during the pandemic.
“What caught me by surprise was the rate to which we’ve seen clients picking up the Microsoft security suites, going from the classic E3 online services packaging to E5, which has their full security offering in it,” he said.
And it was not alone in Insight’s portfolio. Any vendor touching information security was seeing big growth, Graham said.
“We are just finding ourselves in those conversations more and more.”
The first quarter last year saw 28 per cent growth locally year on year, Graham said, while this year the same quarter’s top line was up 38 per cent. That momentum was continuing into the second quarter.
“Q2 is always big because it is Microsoft’s end of financial year, so there is a lot of energy and effort out of them as they are scrambling to close out their year,” he said. “We often ride on the shirt-tails of that.”
Insight filed its local accounts to the end of December 2021 with the Companies Office last month, showing revenue grew from $23.3 million in 2020 to $26.6 million.
All the talk of a recession was not being evidenced within Insight’s business, Graham said, but he was concerned the market could “talk itself into trouble”.
New Zealand was the most software-centric market for Insight in the region, Morgan said.
“It’s been an issue for us we have tried to address over the years, selling more hardware, but it has ironically put us in a strong position because software is the most recession-proof of the categories,” he added.
“It is less discretionary for most customers who have a commitment to their software and still require it whereas we’ve seen in some of our other markets hardware is hard to get. We’ve had strong demand and a strong backlog we can’t fulfil because we are dependent on supply.”
Demand for services was also strong despite being more discretionary.
“We’ve got way more demand than we can supply to in all markets including in New Zealand,” Morgan said.
“We’ve hired a bucket load of people in the last 12 months on the ground in New Zealand. We are fulfilling a lot of demand also out of Australia where we have the scale to be able to support that.”
New Zealand is a very Microsoft-oriented country, with high levels of market penetration. That presented problems and opportunities for Insight, Morgan said.
“When we get global direction as Microsoft’s’ biggest reseller and they tell us they want us to grow from our strength in things like Microsoft 365, once you are in a market that is arguably 95 per cent to 98 per cent penetrated there is not a lot of new sales to have in New Zealand because every customer has already got it.”
That is where the upsell opportunities come in, particularly in security. Microsoft’s Surface devices had also starred in the hardware category.
“That’s really gone from being an interesting product to a mainstream product,” Morgan said. “Even in a region where we are not particularly hardware-centric that’s been an easy one for us to get behind. We’ve had a lot of success and momentum there.”
Microsoft and AWS both committing to local data centre developments in New Zealand was exciting and helped create a tension that would also be good for customers, he said.
Microsoft New Zealand re-joining Australia as a group after reporting into Singapore for a time was another positive for Insight, allowing it to better deploy its Australian scale.
“That’s opened up a world of opportunity for us,” Morgan said. “As we go into the first of July, Microsoft’s new financial year, we fully expect to see that momentum kick into gear because all the things we have baked in programmatically to the Australian go to market immediately become available to New Zealand.”
