In the last 18 months, any company selling itself as an e-business expert could have expected at best a frosty reception in the marketplace and at worst find itself the subject of sneering references to snake oil salesmen and the like. This never happened to Mentec, perhaps because the Dun Laoghaire-based e-business systems provider was never a dotcom per se. But things did go a bit quiet for a while, recalls managing director Kevin Haverty (pictured).
“There was a dotcom backlash, there’s no doubt about that,” he explains. “It was partly to do with a feeling that the whole Y2K thing was over-hyped — which I don’t believe it was because the work had to be done — and also the millions invested and lost in dotcom ventures. Companies did take a breather and who can blame them? They invested heavily in Y2K one year and then two years later they invested in euro compliance. It’s not surprising that they sat back for a couple of years before getting involved in projects to do with e-business.”
Haverty feels that Mentec’s unswerving attachment to the concept of e-business is finally ready to pay dividends now the market is showing clear signs of recovery. He reckons the public sector in general is showing considerable leadership in this area (Mentec is currently developing e-procurement systems within a number of local authorities) while the supply chain and fulfilment area is another early adopter of e-business systems. In general, he senses a fast maturing attitude towards e-business among Ireland’s business community.
“Nowadays, companies are much more focused on achieving specific objectives whereas a few years ago they were panicking that they would get left behind,” he says.
While the outlook for the tech sector may be better now than for several years, the optimism is tinged with nagging doubts. Most of the concern has centred on two issues: skills and funding. While Haverty sees these both as important issues, he offers a refreshing perspective, particularly with regard to the funding issue, his argument being that there is too much emphasis on young firms and not enough on mid-size organisations.
“There is a huge number of small companies in the sector that are looking for support and in many cases well deserving of it. My concern is that there are very few companies building scale. It seems that as soon as a company gets to a certain size they get gobbled up, taken out or shut down. It doesn’t just apply to Ireland; even in the UK there are very few IT firms that you could say are real market leaders compared to countries like the US or Germany,” he adds.
Haverty seems to have a point. Ireland has no equivalent of Nokia, a global telecoms giant that has emerged from a country of similar size to Ireland. He is unsure whether a company the size of Nokia could have arisen here.
“Compare our industry to the foods business, for example, where there is Kerry Foods and so on. You don’t have that in IT and that worries me. And very few of the Irish tech firms that were around 10 or 15 years ago are still here today,” he points out.
Celebrating its 25th anniversary this year, Mentec is one such firm, perhaps. Developing IT systems based on Oracle, Microsoft, Agresso and Citrix technology, it has built a strong client base that today includes the Courts Service (computerised accounting system), Au Logistics (supply chain system), several local authorities (financial and business information/e-procurement) and the Institute of Public Administration.
The funding issue is close to Haverty’s heart because with 140 employees in Ireland plus 10-15 in the UK, Mentec has grown to a certain size and now faces the challenge of financing an expansion strategy that includes making a number of acquisitions in the UK market next year and moving to bigger offices there.
As a mature business, Haverty points out that Mentec holds little appeal for venture capitalists, which generally prefer to invest in high growth early-stage firms. He says the company is in the fortunate position of not having to go to market because it can finance the acquisitions through operating profits, but not all companies are so lucky. “There’s probably a feeling that when you get to a certain stage you should be self-sufficient but I’d like to see more support for more mature companies,” he says.
Haverty believes that one of the things that will help Irish companies achieve scale is a greater focus on the creation of intellectual property and he welcomes the introduction of tax credits for research and development in the recent Budget for this reason. Mentec itself, though primarily an implementer of other people’s technology, is putting more resources into product development.
“We feel we need to increase our own intellectual property,” explains Haverty. “Our strategy is that we do work with market-leading products but we build products around them. We see that as the future for companies like ourselves.”
By Brian Skelly