Magazine article Management Today

Making It Big

Magazine article Management Today

Making It Big

Article excerpt

The UK has a wealth of expertise in computer networking and programming skills. But companies need to look to the US in order to focus their expertise, get finance and capitalise on sales and marketing.

It's been a good year for Madge Networks -- the computer networking company set up in a Buckinghamshire farm-building 10 years ago. Sales are running at around $400 million, some 85% of which are outside the UK, and profits are expected to be $17.2 million. In the past year, the company, which now has 1,400 staff, has completed a $400 million acquisition of a data communications company in Israel and launched a range of pioneering products. Robert Madge, chairman and founder, is in buoyant mood: `We are on track to become the world's number one supplier of the next generation of networking technology for large corporations.'

Madge is a good role model for anyone wanting to start up a high-tech venture in the UK. Its success is built on offering a specialised product range to a fast-growing worldwide market. From the beginning, the company focused on exports; it places as much importance on sales and marketing as on product development, and it floated on the US stock exchange rather than in the UK. Having a tight focus is essential in today's computer business -- there is no point in launching a head-on attack on IBM or Microsoft. Yet focus is something that UK companies often find hard to achieve because of the small size of the domestic market. 'In small markets, companies Often become too complex too early,' says Madge. 'If you are selling in a large market like the US, you can have a very narrow product range and use outside subcontractors for all non-core activities, so you can build a very tight organisation yet generate a large amount of sales.' In a small market, the temptation is to become too vertically integrated, he says.

However, computer networking has proved an ideal niche for UK companies including Madge, Firefox, and, more recently, Advanced Telecommunications Modules (ATM). With some 70% of the world's 100 million PCs now linked in networks, there is vast potential. The UK is particularly well-endowed with networking skills partly because of the early liberalisation of the telecoms market, and partly because in the past many companies ran their own telecoms networks and PBXs. This provides a rich pool of talent from which to recruit staff. In the US, on the otherhand, such tasks have generally been subcontracted to telecoms suppliers.

Networking is not the only area of opportunity. The UK also has a wealth of programming skills and UK software houses are building successful international businesses by focusing on specific sectors of the market. Harrogate-based Coda, for example, focuses on accountancy applications. It had sales of 30 million [pounds] last year, 65% of which was exports. `Much of our success is because we recognised that every country has different needs from financial software,' says Robert Brown, Coda's CEO. `Our advantage in coming from the UK is that we are used to dealing with different cultures and currencies, whereas US products tend to be designed to cope with dollars and are ill-adapted to modification for, say, the French or German markets.'

In September 1995, Coda won the software industry's annual award for the world's best corporate financial systems, beating the industry giants SAP of Germany and US-based Oracle. 'It is the age-old adage that the Jack of all trades is master of none,' says Brown. Nowadays, customers can reasonably expect to be able to pick and choose the best applications for all their needs, he reckons. `The idea that one company can be best in every area is a fallacy.' Open computer systems, that run software which conforms to industry standards, will create many more such opportunities.

Much of the software of the future will focus on the development of specialised applications for complex tasks, according to Professor Bill O'Riordan, chief scientist fit ICL, the UK-based computer company. …

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