Be sensible to survive, Martin Mutch tells tech rivals

SCOTTISH IT firms are looking to broaden the range of services they offer to cope with cost pressures on private- and public-sector clients, according to a senior industry figure.

Martin Mutch, chief executive of Edinburgh-based Rocela, said all sensible firms would be listening to their clients' needs and would be adjusting their services and products accordingly.

His comments came as Mutch revealed that Rocela is revamping its business, which will see the firm shift from solely offering advice on Oracle software and hardware to broader IT consultancy.

Mutch and business partner Kenny Wilson, who are both former Oracle executives, founded Rocela in 2001 to carry out project work for both public- and private-sector customers.

The company's clients include Edinburgh-based oil and gas explorer Cairn Energy and banking giants Lloyds Banking Group and Royal Bank of Scotland.

Mutch said: "The switch will reduce our turnover but will increase our profits in the long term because we will move from project work to more regularly annuity-style payments.

"We carried out extensive market research and our clients - many of whom have used us since we started - said they liked our people and wanted to use our expertise in other areas as well as Oracle."

Last month Rocela posted record revenue growth, with turnover rising by 45 per cent in the year to 30 November to 29.1 million. The rise led to pre-tax profits jumping to 547,000 from 222,000.

Other Scottish IT companies have already been reporting on the success of diversifying their business models.

Earlier this month, Glasgow-based website hosting outfit Iomart posted a 600 per cent rise in pre-tax profits to 2.8m in the year to 31 March as it offered more cloud computing services using its network of data centres. Turnover rose by 38 per cent to 25.3m and - because the company has spare capacity in its data centres - increases in revenue filter straight to its bottom line.