SCC banks on services for growth

SCC has reported a significant bump in services business, which it says now accounts for 27 percent of its total turnover – up from 17 percent in 2013 – and 66 percent of its total margins.

The results reflect a move by the channel giant to replace its low margin, “empty calorie” product resale business with more lucrative service offerings. As such, SCC’s overall turnover showed a decline of one percent in FY16 – with low-margin product revenue reduced by £35m – while its services business delivered growth of 11 percent to £177m.

The firm’s most notable growth in FY16 came from its Cloud Delivered Managed Services (CDMS) business.

SCC’s total investment in CDMS surpassed £60m, with further investments in hosted voice & UCaaS specialist SIPCOM, and mobility business One Point completing its services portfolio, adding to investments made in FY15 in connectivity (Fluidata) and SCC’s third Tier 3+ datacentre in Fareham.

These businesses independently generated £26m of revenue in the year, taking combined services revenues past £200m to £203m.

In FY16, SCC’s overall managed services turnover grew by £22m, driven principally by its Data Centre Services which saw turnover hit £43m, up 67 percent on FY15. This was supported by a number of key wins in the private and public sectors including: Konica Minolta, Next, Clarke Willmott, Ince & Co, Arnold Clarke, and NHS Blood and Transplant.

SCC’s datacentre services closed FY16 with an annualised revenue run rate of £52m, a 51 percent increase from the start of the year, of which 80 percent is repeatable income.

SCC says it is continuing to invest in datacentre and cloud services, including adding 1000 racks to its existing facilities in its Birmingham and Fareham facilities. This will take the total to 3,000 and to full capacity, meaning the IT provider will likely have to look acquire another datacentre.

Although this won’t be for another 18months to two years, SCC chief executive, James Rigby, tells Channel Pro. “We’re just starting to looks,” he says.

Meanwhile, Sentinel, SCC’s secure multi-tenanted cloud platform, saw increased revenues of more than 120 percent in FY16, hitting almost £8m from £3.6m last year. Key customer wins for Sentinel in FY16 included: Sodexo, Oxford City Council, and DWP.

Elsewhere SCC says it is to open a new support centre in Vietnam this summer. It will offer level three & four infrastructure support to customers, and will act as an Offshore Development Centre to accelerate the development of custom applications.

“It’s an exciting time for SCC as we look further East to a location that combines a sufficient time difference with widely-available technical skills. SCC Vietnam will be incorporated by August 2016 and we are aiming for an initial headcount of around 50,” adds Rigby.

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