News

Is Fusion a cockroach?

By Daniel Swann
29th January 2016

In my last blog, I discussed the importance of “focus” in Fusion’s strategy. Another element of our strategy has been to consistently make a profit and I am reminded of this reading an article about The age of the cockroach in the IT market. https://www.linkedin.com/pulse/age-cockroach-caterina-fake. We have certainly survived, even thrived, over a number of cycles in the IT economy, so maybe we are a cockroach?

Making a profit many seem strange as an element of strategy but Fusion became an independent company at the end of the technology boom in 2002, when many technology companies had been focused on revenue growth, rather than making a profit and valuations were based on revenue growth and a “price-to-sales” ratio. Indeed, our then parent company was quoted on the stock market, and that’s where all the focus was from analysts and investors. When many of these companies ran out of the cash needed to fund revenue growth and had no sustainable profit basis, they went bust. So it is not surprising that Fusion started with a strategy to make a profit every month and every quarter.

But of course the stability and sustainability that comes from consistent profitability are very important to customers, suppliers and employees. It is quite subtle to manage as costs are often fixed in the short term, where revenue can fluctuate from month to month. That is why a conservative approach is needed, aligning costs with conservative revenue estimates and only making decisions to increase hiring or investing, when the underlying revenue is sustained. Employees like this approach as it increases certainly of employment and the same applies to customers and suppliers. We are often surprised how many customers return to us because we are still here, at the same address and telephone number after 15 years.

At times too we have made bigger investment decisions that affect profits in the short term, but never “betting the business” and always assuming we would continuing making money if the investment did not work out. As when the cycle turns downwards we quickly adjust to the new environment…. just like a cockroach.

 

Mark Lyttle
Executive Chairman

By Daniel Swann