"Abuzz with good news"
Giant rivals no deterrent to NewSys team
Christopher Guly
The Ottawa Citizen - December 13, 1999
Julie Oliver, The Ottawa Citizen / Mark Quigg, New Sys Solutions' co-founder and president, says going public was the right choice.
In the information technology consulting space it occupies, Ottawa-based NewSys Solutions Inc. faces major competition from the likes of Cognicase Inc., CGI Group Inc. and LGS Group Inc.
The three public companies, all with headquarters in Montreal, generate higher revenues than NewSys. And share prices for each competitor have been trading at higher values on bigger stock exchanges than the one where NewSys is listed.
Based on such comparisons, it's easy to dismiss NewSys as a midget among giants.
But the 10-year-old IT services firm, which generates nearly half of its sales from helping corporate clients with their business intelligence systems, has been demonstrating that it has considerable business intelligence of its own.
For the past three years, Toronto-based business magazine Profit has ranked NewSys as one of Canada's 100 fastest-growing companies.
Late last month, when the company released its second-quarter fiscal 2000 results for the period ended Oct. 31, NewSys posted a 26-per-cent increase in year-over-year revenues of $5.1 million. Sales for the first six months also jumped by 30 per cent from 1998 to reach nearly $10 million.
NewSys also made more money for the recent three months, increasing its year-over-year net profit by 91.3 per cent to $122,841 from $64,190.
Perhaps most interesting, the firm reached a milestone with its impressive financial showing, giving NewSys its 26th consecutive year-over-year quarter of revenue growth and profitability.
Meantime, the IT consulting firm, which went public in March 1998 and trades on the Venture exchange in Vancouver, plans to pursue a listing on the Toronto Stock Exchange early next year.
NewSys shares have risen since September when they dipped to 70 cents -- just two cents more than the 52-week low reached on Dec. 17, 1998.
The shares began their recovery over the autumn and rose to a new high of $2.15 last Wednesday. They closed Friday at $1.90.
All the good news has cheered the company's 175 employees -- chief among them the firm's co-founder and president Mark Quigg, who largely credits the positive performance to the decision he, and his childhood pal, founding partner and chief information officer Frank Post, made to transform the firm into a public entity.
"It allowed us to cut our teeth in terms of how to be a public company -- how to talk to the press, how to do investor and public relations, how to operate the company internally," explains 39-year-old, Aylmer-born Mr. Quigg, who also serves as NewSys' chairman and chief executive officer.
He says NewSys' listing on the Alberta exchange -- now the Canadian Venture Exchange (CDNX) -- brought "discipline" to the firm.
"You have to be squeaky clean and do things right, or else you're not an attractive company to invest in," says Mr. Quigg, a certified management accountant who holds an undergraduate commerce degree from the University of Ottawa.
When looking to become an "attractive" company, it also helps to have major business allies and customers, both of which NewSys has.
About 40 per cent of the firm's revenues come from the private sector, where NewSys has such clients as Canadian Blood Services and high-tech titans like Nortel Networks Corp., Newbridge Networks Corp. and Mitel Corp.
The rest of NewSys' sales derive from the public sector, where the firm claims a Who's Who of federal government departments and Crown corporations -- from National Defence to Canada Post Corp. Sales come also from other levels of government, such as the Region of Ottawa-Carleton.
NewSys also has forged two important partnerships, including one with IBM Canada Ltd. of Toronto, for which NewSys sells some of IBM's business intelligence (BI) software.
The more important alliance involves Ottawa-based Cognos Inc.
As a world-leading BI software developer with a global base of more than one million product users, Cognos could use a hand when it comes to installing the software.
That's where NewSys figures, helping Cognos install, run and implement its BI products at client sites.
As well, the two companies exchange ideas on product marketing and service opportunities, says Mr. Quigg.
He adds that the partnership with Cognos has helped forge new business possibilities for NewSys outside the Ottawa region.
Fifteen per cent of NewSys' revenues originate in the United States, another five per cent from the rest of Canada. Most involve Cognos's BI software, mainly in financial systems, such as accounting and general ledger reporting applications.
Meantime, NewSys recently announced that it would pay about $800,000 to acquire Crystalline Data Structures (CDS) Inc., an Ottawa-based private firm that specializes in the implementation and systems integration of Oracle Financials and Oracle applications.
By combining CDS's Oracle expertise with its own existing Oracle contracts, NewSys hopes to generate nearly $6 million in annual revenues through its new Oracle Business Practice headed by CDS president Peter Evans.
Mr. Quigg sees "enormous opportunity" for NewSys -- and not just from the BI systems space, in which the firm prominently figures with its expertise in data warehousing, mining and reporting.
NewSys has also become a player in the ever-growing Internet market, advertising itself as a developer of Web-based reporting applications.
"While we've been doing a lot of business intelligence applications in the client-server environment, we're now migrating our clients and their BI applications into an Internet space," Mr. Quigg says.
At the request of Bell Canada, the firm has built a remote, Web-based internal videoconferencing application for Human Resources Development Canada, which books time and space for departmental staff and monitors the site on Bell's behalf.
While NewSys diversifies its business portfolio, its focus on service helps give the firm a competitive advantage, says Mr. Quigg.
"The traditional product companies -- the hardware manufacturers and some of the biggest systems integrators like an Oracle or an IBM from the products' group perspective -- are probably feeling more boxed in these days than they have in the past," he explains.
"Their market growth potential for products is not merely the same as it is for services. A lot of these people are formulating game plans to attack the services market because they see the growth and opportunity there continuing to be very healthy."
In other words, fewer corporate customers are thinking about replacing databases, software and computers. These days, if it's not topping the list of corporate budget items, IT services expenditures are a close second, says Mr. Quigg.
Along those lines, NewSys is ideally suited to capture considerable business. Already, it's drawing attention from financial quarters.
In early September, Montreal-based brokerage firm Groome Capital Inc. recommended NewSys as a "buy" and declared the firm was a great takeover candidate.
Not the case, says Mr. Quigg, who says there's a "buzz" travelling through NewSys's office in light of the firm's recent good-news second-quarter results and stock performance.
"There's a lot of electricity -- people are really starting to believe that we can go somewhere with this and do some exciting things." |
