US consulting giant Accenture has acquired local Oracle reseller and managed services provider PrimeQ for $31 million, in a rapid rise for the Adelaide-based company that was only founded three years ago.
The deal creates the largest Oracle cloud systems integrator in the country, after PrimeQ had grown to become one of Accenture's biggest rivals for local Oracle deals, alongside Deloitte.
Accenture's Oracle lead for Australia and New Zealand, James Madigan, said the firm was already very strong in the market for managing Oracle on-premise solutions, but that the acquisition would boost Accenture's cloud practice.
PrimeQ chief executive Andrew McAdams with Accenture's Oracle lead for ANZ James Madigan, who says the acquisition will boost Accenture's cloud practice. Matt King
"On premise has been good business for us, but Oracle and our partners have been pivoting a lot to cloud products and we want to increase the speed and growth of our cloud practice and capabilities, so we we had been looking at organic and inorganic ways to do that," Mr Madigan said.
"We started talking to PrimeQ back in May and then fairly quickly and mutually determined that it would be a good transaction for both organisations."
In the last financial year to June 30, PrimeQ recorded $28.2 million in revenue, up from only $9 million the year before. At the same time it grew profits to $481,377, up from a $5.8 million loss in 2017.
The company, which is led by co-founder Andrew McAdams, is predominantly owned by the company's five founders and a handful of wealthy families from Adelaide.
Previous IPO plans
It had previously been planning to list on the ASX in 2018, but when the Accenture deal arose Mr McAdams said he realised it was a good deal for the shareholders and the employees.
"Accenture gives us the great opportunity to grow this thing to the larger end of town and you only have to look at everything going on in the big global companies to see they're all going in the same direction," he said.
"We're going to come straight through the centre of this marketplace and win every Oracle cloud deal possible."
The business already had a range of clients across various industries including government, manufacturing, finance, health and education. Some of its clients included Pacific Brands, Heinz and Moose Toys.
For the first few months the PrimeQ brand will remain, but over time Accenture intends to phase it out.
The acquisition grows Accenture's team by about 160 people and takes it to more than people 500 across Australia and New Zealand.
Mr Madigan said there wasn't a single client the consulting firm works with that isn't discussing how it moves from on premise to the cloud.
"The message from every customer is that it's not a matter of if, but when ... and it's all industry segments," he said.
"For a lot of the clients the question is where to start, and I still find there is a lack of understanding of data information and security ... a lot of customers still seem to think they're more secure behind their own firewall, but my view is the opposite of that. Think of the money that Oracle spends on their data centres and there's no way they could match that."
Globally Accenture has more than 54,000 Oracle consultants and the firm has been working with the tech giant for 25 years.
Mr McAdams said PrimeQ had struggled to provide the change management consulting skills needed to help clients not just move to the cloud, but change their behaviours, and he said Accenture was able to bring this to the table.
"We can configure a system in six weeks' time, we're very agile, but it does require change management at the other end and we haven't been very good at that. They will bring that transformational layer which brings a real difference."
Sourced from Financial Review - written by Yolanda Redrup