ContinuitySA geared for growth

ContinuitySA is set to move into a new growth phase, after being unbundled from Dialogue Group, and is moving into offering hosted business continuity services.

The business continuity and disaster recovery company was spun out of Dialogue at the beginning of last month and is now virtually debt free, and has a financial backer to aid its growth ambitions, says CEO Allen Smith.

Dialogue sold its 51% stake in ContinuitySA for R35 million. Private equity firm CoroCapital bought 49% and Continuity Investment Trust, represented by the management and staff of ContinuitySA, bought 2%, taking its stake to 51%.

Smith says the company is now “moving into hosted offerings with a business continuity management focus”. He says this is the third generation of disaster recovery, and has become possible over the past year as bandwidth capacity has increased and become more affordable.

Companies put business recovery on the backburner over the last two years, as costs were cut due to the global recession. However, Smith says, the pipeline of prospective business is picking up again.

ContinuitySA started out in 1989, offering mainframe backup services. At the beginning of the decade, it was bought by the MGX Group. However, management bought the company back in 2003, when MGX ran into financial trouble.

Smith explains ContinuitySA had to raise R85 million to buy itself out. Four years later, it was looking to refinance its debt, which had been paid down to R35 million, but would cost R50 million to refinance.

Dialogue then offered to buy a majority stake in the company for R40 million, and ContinuitySA raised the balance. This allowed the company to pay off its debt, notes Smith. “For us, it solved a huge problem,” says Smith of the buyout.

The company is now moving beyond desktop recovery into what Smith says is the third generation of disaster recovery and business continuity. He has dubbed the hosted business continuity offering as “continuity as a service”.

The hosted offering is a mirroring service that allows real-time backups of business-critical functions. However, this service can be expensive, Smith explains.

As a result, the company also offers services that make best use of the bandwidth, such as off-peak backups of data that is less critical. It can also offer dual mirrors; one that can be used as a business production server, and the secondary one as a backup service, says Smith.

ContinuitySA is also looking at expanding its African presence, reveals Smith. Currently, it has operations in SA, Botswana, Mauritius and Mozambique.

However, explains Smith, the service is viewed as expensive and setup costs could outstrip potential returns if it doesn't sign up enough customers. The company is also looking into expanding into the Middle East, which Smith sees as an underdeveloped market.

ContinuitySA will expand its data centre capacity during the year in order to accommodate more data storage for its cloud offerings, says Smith. Currently, ContinuitySA has data centres totalling 3 000m².

Smith says the company will add another 500m² by the third quarter of the year, and has also built a warehouse in Cape Town, which will initially accommodate a 250m² data centre. This site has the capacity to grow to 1 000m², he explains.