Businessman Mteto Nyati has made his first acquisition since buying a controlling stake in local technology and consulting firm Business Systems Group (BSG).
BSG has taken advantage of the large-scale job retrenchments announced by software giant Microsoft earlier this year, to acquire its local digital advisory services team made up of 11 professionals.
Nyati, who previously served as Microsoft South Africa MD, snapped up a 40% shareholding in BSG in November.
The home-grown BSG competes with multinationals, such as Deloitte, Accenture and KPMG, in the South African and African consultancy space.
With the addition of Microsoft SA’s digital advisory services team, BSG now has a staff complement of over 200 and it has secured new offices in Johannesburg.
In January, Microsoft, like many other global technology companies, announced it was looking to let go of as many as 10 000 employees amid an uncertain worldwide economy.
Its digital advisory services unit is one of the departments impacted by the restructuring, and Microsoft SA’s digital advisory services team has been looking for a new home since the process started. The team received many offers before settling for BSG.
Spreading wings
Nyati told ITWeb in an interview that with the acquisition of this team, BSG is looking to expand into telecommunications and media, energy, consumer packaged goods, resources and the public sector.
“The nature of the transaction is not based on money. It’s a team that we acquired and from now on, we are going to be responsible for paying their salaries. That’s the investment. It’s not us, for example, paying R100 million for the business,” said Nyati.
“One of the things that have been a challenge for Microsoft globally is that it is a partner-centric company, which means it depends largely on its partners to drive revenue. Those partners come in different shapes and sizes.”
He noted that some of the partners, like Accenture, Deloitte and Ernst & Young, have got Microsoft practices, and within Microsoft, it also had digital advisory services.
“Basically, they ended up having a Microsoft that was competing, to some extent, with its partners. That created some tension in the relationships. So, as a strategy, Microsoft made a decision that they would not want to continue with that friction within themselves and their partners, and decided to let go of all of their digital transformation teams globally.”
According to Nyati, the reason these teams were creating pain for competitors is that they are so good at what they do and BSG had to convince them to come and join the firm.
“Of course, we were not alone. Everybody sees the value of this team; so, it has been that process of trying to put together a value proposition to the team that made them remain as a team because they were not forced to remain as a team. They could have gone separate ways, but that’s what we offered them, and, of course, careers within BSG.
“I don’t know how many offers they got but they ended up choosing to come to BSG.”
Business realignment
Also speaking during the interview, Kim Schulze, former customer transformation lead at Microsoft Middle East and Africa, said the company is doing some business realignment in certain elements. There are certain areas of the business that it was decided not to continue with, as it felt those capabilities are better off in the partner environment.
“The department that I was part of no longer exists. The digital advisory services is a functional capability that Microsoft no longer requires to offer to their customers.
“Microsoft probably had about 400 to 450 advisors across the globe at its peak. In our market, we had a significantly-sized team compared to the US market.
“It’s quite a niche and unique capability, and within the South African context, it services the top 40 of the FTSE – the enterprise blue-chip kind of companies. It was focused on big enterprises,” noted Schulze.
“We come in with about 250 collective years of experience to BSG across a variety of industries, ranging from financial services, to telecoms, media, mining, health and public sector. We have a great breadth of skill and capability.”
Added Nyati: “You may remember, when I bought into this business, one of the first things that I indicated that we will do was to grow and to move into other sectors because BSG, traditionally, is strong in financial services and healthcare.
“We felt that going forward, we needed to go into other sectors. This is because BSG today is known as a company that helps clients to implement – it’s very much an implementation business. This is the important part because in SA, we are so weak when it comes to implementation.”
With the new digital advisory team from Microsoft, he believes BSG will be able to offer digital formulation strategies to organisations.
“They are filling a gap that was not here within BSG. They are coming to give clients a roadmap of maybe the next 10 years about what they should be doing. While they do that, the rest of BSG will implement that strategy and that’s how the team fits into what we are doing.”
Graduate growth
Nyati said the new team will bolster BSG’s graduate programme after it recruited 29 graduates earlier this year.
“This is an important part of our growth agenda – bringing in young people into our organisation and training them to make sure they have their careers in the consulting space. To have highly-specialised people like this in our organisation, who many of our young people can learn from, is something that is so important.
“These are people that are so passionate about giving back, training, guiding and coaching. The benefits for our organisations are huge because there is so much need in our country to build digital skills.”
Nyati noted BSG’s acquisitive strategy will continue.
“For us, we have defined some key areas where we feel we need to be growing as a company. The first one is advisory services and now we’ve just closed that gap. The other area that we see as a strong area for growth is data and analytics. The last area is what I call technology development, which used to be called software development, but most of the development is now done in the cloud.
“Although we have a team responsible for that, we feel there is a huge demand for software development, and to grow that area through just organic growth will take us forever. We are certainly looking for companies that will have cultural fit with our organisation. Kim is going to be part of the team that will help us identify those companies as we grow as BSG.”
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