Softcat CEO Graeme Watt’s vision to double in size in 5 years
Wednesday, March 13, 2019
When Graeme Watt took over at reseller juggernaut Softcat, the main question targeted at him from those he knew, was why would he want to go to a company that is already successful. Afterall, most CEOs like to inflict change on an organisation and turnaround fortunes. But Watt says that despite the company’s success, it was impossible to turn down a role at such a big IT firm. Watt spoke to TBT about his plans to double in size within five years.
Since he has joined, Softcat’s fortunes have continued to rise – the company’s full-year revenues, announced in October, rose 30 per cent to £1.08bn, with operating profits rising £18m year-on-year and net profit rising £15m year-on-year to £55m. Growth came from all three of the reseller’s key areas: software was up 35.9%, hardware 27.7% and services growing 16%. Much of the growth was fuelled by demand for a Windows 10 refresh and exceptional growth in its server business where growth was close to 50%.
The future looks bright too; the company saw its share price surge by 20% this month after it said it was “materially ahead” of where it expected to be for this stage of the year.
Watt believes the company will once again profit from companies migrating to Windows 10, and the associated hardware that goes with that, as well as migrations to hyperconverged and hybrid cloud environments.
“Keeping with the hardware theme, we’re delivering some nice growth in the managed print arena and we’re also seeing devices and services demand rise,” he says.
The Internet of Things (IoT) space is an odd one, he admits, as despite believing it was a big market opportunity, it hasn’t made a huge impact at Softcat.
“I’ve personally not seen a lot of projects we’ve done that are specifically IoT related – some are, but it’s not driving a ton of business. Often, we’re not putting in sensors or devices, but are upgrading the technology in terms of analytics, security and storage that are part of the overall IoT solution – so I’m a big believer it will generate growth but more indirectly than directly,” he says.
“That doesn’t mean we’ll decrease our focus on hardware, but if the software and services opportunity grows then we’ll be following that.
“We’re very customer driven and want to understand what they want, so we’re not going to see business today around AI, machine learning, robotics and drone technology for example, but we’re keeping a close eye on those things – and it’ll be our customers that dictate how quickly we need to adopt expertise in those areas, or use our partner ecosystem to take a solution to our customer,” he states.
Watt’s aspiration is to double the size of Softcat over the next five years. In order to do this, he says the company has to keep its culture intact.
“Culture is not something you can turn on or off – our founder Peter Kelly put this in place right from the beginning, recognising that people and customers came first, we’re focused on what they’re looking for and not jamming something we’re focusing on towards them. A lot of customers said the way we operate is the single biggest differentiation we have,” he says.
One thing that could affect the company’s growth is Brexit. However, Watt believes the main concern is out of Softcat’s hands.
“If there is any impact, it will be on hardware and a lot of that isn’t coming from the EU. However, if there are boarder disruptions then it could have an impact, but manufacturers and distributors are saying they’ll stock up to create a four to six week buffer in order to stop that,” he says, adding that tariffs might be adjusted, but these are more likely to affect customers.
“From our growth last year, a third was coming from the market and two thirds was coming from us so if people make slowdown decisions on tech because of Brexit – which I don’t think they will – then I think we’re well placed to continue growing,” he adds.