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CPI: What are the main challenges facing Atea's business today?
Sønsteby: We see a few problems with partner programmes changing. Microsoft changed their incentive model three years ago which really hurt us. VMware did it two years ago, and then changed it back again to fix the problem a little bit. Cisco is changing their model which hasn't influenced us much yet, but it will.
Are these rational changes for you, or do you think they're hurting the channel in some ways?
The changes are rational and understandable but in some cases they come too quick. Microsoft, for example, wanted change fast. Microsoft is a company that believes in KPIs, so they believe that if they change the KPI, then the world will also change. But it doesn't; you can't influence it. The customer doesn't go to Azure just because the sales people in Microsoft earn more from selling Azure. It's a dramatic change going to Azure if you're on-premises today, so when you then start to take away incentives from the channel, you're actually hurting yourself. I have to say that we have worked this out with Microsoft, because Microsoft has gone in and invested heavily in the 10 biggest channel partners in the world. And we are one of them.
I think they need to be a little careful, because if not they'll destroy a part of their sales force, which is really what we are. I think Cisco on the other hand is actually doing a pretty good job right now. They don't want to make the same mistake that at least some of the other vendors have done. They're trying, but it's going to be an interesting six months from now when incentives do start moving around with Cisco, and I'm sure that some of the others are going to start changing stuff too.
It looks like there's still more work to do in Denmark, with sales and profits down in your recent Q1. What's the strategy to build the business back up?
We need to get back to what I would call an ordinary state of mind in Denmark. It's still not 100 per cent back to where I wanted it to be.
It has nothing to do with technology trends or the market; it's a self-inflicted wound. Our expectation is that it will be better in Q2, but not where it should be. It will be even better in Q3 and close to where we want it to be in Q4. Hopefully it will be very, very close.
You acquired Sherpa Consulting last year. How does the new business fit into the Atea model?
First of all when you buy a consulting company the first question you ask is: can you keep the people? We have turned over about 10 per cent of the people in a year, which is less than most companies so we're very happy with that. We are the same number of people in that business today, so we replaced the people who left. Now it is 50 people in Oslo.
We've been successful in integrating the company and we've been successful in approaching some customers that are not Sherpa customers, with the Sherpa knowledge. And now we have made a plan where we're going to double the company from 50 to 100 before the end of this year. We'll take away the Sherpa name, so it'll be merged into Atea within the next three months, but it will remain a division. It will be clearly measured and developed almost like a separate company, then we will move about 30 Atea employees into them and we'll hire 20 people.
Going from 50 to 100 people in a company like Atea, which has more than 7,000 employees, doesn't sound significant. But if you're 100 people in analytics in Norway you're clearly the biggest. So through that acquisition, and through what we've done over the last 12 months, we will be the market leader in this field.
Then, of course, the next step is to use the fact that we're 100 people in Norway to do the same thing in Sweden and Denmark and so on.
One of Atea's aims is to grow market share to 20 per cent across the group, up from 18 per cent currently. What will you need to do to gain that extra two per cent?
I think that we're on track right now to be 19 per cent at the end of this year. We're just outgrowing the market right now. We will grow organically, but also through small acquisitions, probably adding one per cent. Then we of course need Denmark to start growing. Denmark hasn't grown for three years, so it's difficult to go from 18 per cent to 20 per cent in the Nordics if 25 per cent of your business is actually losing market share. So my real answer to your question is that we don't have to do more than what we're already doing. Other than getting Denmark back onto the same type of growth as the rest of Atea.
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