“Our niche is our strength”

February’s Oxygen IT Solutions Provider of the Month wants to be “synonymous with data transfer in the way that Cisco is with networking equipment”.

With a laser focus on managed file transfer, Christchurch-based Pro2col is certainly the most specialised company this regular feature has highlighted to date.

Strategic Alliances and Technical Director Chris Payne runs us through why he believes its niche is its strength.

How large is Pro2col?

We currently have 31 members of the team, servicing around 500 active customers and will finish the year north of £5m revenue. In the space of just three years, we have doubled our headcount, acquired a rival reseller business and – if we hit our targets in the coming quarter – will have grown our gross profit by 67%.

You have a laser focus on managed file transfer. How would you summarise the market opportunity around this technology area?

File transfer is a maturing market but one which remains vibrant through vendor/solution consolidation, specialised skills shortages and security concerns whether it be legislative or reactive. In addition, file transfer is synonymous with automation, which is rapidly becoming the primary driver of the market. Pro2col has been growing at 30% CAGR for the past eight years and we see no reason why this trend won’t continue. In fact, we believe that some of our planned endeavours will see this increase in the short to medium term.

We currently resell 15 different file transfer solutions via ten different vendor partnerships – which we believe gives us an unrivalled view of the market landscape.

What are your ambitions for the company?

Our longer-term plan is that Pro2col becomes the primary recognisable brand and authority in the file transfer market. We want the Pro2col brand to be synonymous with data transfer in the way that Cisco is to networking equipment or what Microsoft is to Office Productivity software.

Ambitious as this may seem, as there are tangible signs of this today. We know from working closely with our prospects and customers that Pro2col’s online presence is already viewed as the leading source of file transfer knowledge. We’ll often spot our own content in customer market research decks.

In addition, our vendors often consult with us on the direction their product development roadmaps are taking and how they can better service the needs of the marketplace; and our vendor-agnostic online training course, Certified File Transfer Professional, is being recognised as the de-facto standard for file transfer skills with both vendors and customers requiring their staff become accredited as part of their onboarding programmes.

Given our growing dominance in this space and the opportunities we are consistently uncovering, in the next three-five years we do believe revenues of £10-£15m+ are attainable.

Who do you compete against?

Competition is a complex topic in specialised markets. I don’t believe we have any competition in the traditional sense, as there is no one out there who offers the sole specialism we have. There are smaller resellers who resell many of the same solutions we do, but their portfolios diversify into other areas like cybersecurity.

When we work with prospects who have a budgeted project, we are usually the only reseller, but we often are positioning a number of suitable solutions. On the odd occasion, there may be solutions positioned from direct sales vendors who we do not work with, but this is quite rare.

We also work with a number of other resellers in the UK, of which some exclusively use us as a distributor for file transfer opportunities. They see this as advantageous given they lack the skillsets required to sell such solutions and that working with us increases the chances of a successful sale. Building our own channel is a focus for us in the coming years, with it being central to our ability to scale. We have a dedicated Channel Manager tasked with breaking into or fostering closer relations with the top 25 of Oxygen 250.

In truth, our biggest competitor is often the prospect’s procurement teams themselves.

Do you ever fear you’re leaving business on the table just selling this one technology?

Not at all. I always like to remind people that if you want to cook a really nice dinner for someone, you’ll pop down to your local butcher and greengrocer. Sure, you could pick up similar ingredients at a supermarket, but we understand the link between specialism and the quality you receive. Our niche is our strength.

Having said that, there is some narrow diversification in our offering. Where there is a clear link between a technology and file transfer, we do have a foothold. An example of this would be DLP. Most file transfer solutions support interoperability with DLP solutions given the nature of the types of data being exchanged – we sell one such solution offered by one of our file transfer vendors. We have also, in recent times, started to look at “adjacent markets” to file transfer such as EFSS (enterprise sync and share), EDI (electronic data exchange) and EAI (enterprise application integration). However, there always remains a link to our file transfer specialism.

Besides the MFT focus, what else do you feel Pro2col does differently from other companies in the sector?

Firstly, customer centricity. We have an account management structure in our sales team paired with a “buddy system” in our technical team. This means that every customer has a dedicated commercial and technical expert on hand for all things file transfer. Both the general IT skills shortage and the pandemic has left many of our customers without the expertise they previously had; and they have come to rely on us to support them with what is a business-critical application.

Secondly, valuing our team. Over the past three years, we have taken a hard look at the type of business we want to create and how to stimulate the right environment to foster growth and long-term success. Each quarter we measure our ENPS (Employee Net Promoter Score) through an anonymous survey and constantly make adjustments based on the findings. Today our staff enjoy increased holiday allowances, a yearly performance-based bonus, hybrid working from home, subsidised parking, free refreshments, private medical cash plan and vouchers for work anniversaries and birthdays to name just a few of the perks. We also invest in our team with some being funded for accreditations such as Prince2 and Lean Six Sigma.

And lastly, being a true value-added-reseller. At Pro2col, we offer a full suite of services from pre-sales, installation, consultancy, technical support (we resolve 82% of all tickets in-house, reducing the burden on our vendors), managed services, cloud hosting, training bootcamps and our vendor-agnostic training programme. This has dramatically increased our average transaction size, with services revenue growing 122% between 2021/2022 and 2022/2023.

You describe charitable giving as a key focus on your website. What’s the daftest thing you’ve done in the name of charity?

There is probably some debate on the daftest but each year we take part in our local four-team pancake race (pictured above), which is presided over by the Mayor of Christchurch. Pro2col is the current reigning champions, but the event is jovially competitive with injuries, broken equipment, accusations of professionals being entered into teams and adverse weather conditions affecting performance.

This year we hope to retain our title and the “winner’s frying pan”, which we use in-office as a klaxon to announce closed sales by banging it with a wooden spoon.

Name a market trend not enough people are talking about?

Vendor consolidation causing disruption to customers and the channel.

Investors are rightly very interested in the IT solutions space and particularly anything that is related cybersecurity. In my career I have often witnessed small innovative solution vendors being acquired by large or VC backed vendors in short succession leaving uncertainty and disruption in their wake.

I don’t dispute the longer-term benefits to customers but certainly in the shorter term we see disruption with the absorption of the acquired into the acquirers business. This ranges from a problem with the retention key staff both technical and others; time-consuming migrations into new CRM systems and other supporting software; changes in channel models or the introduction of competing direct teams; and not being able to maintain the momentum of product development.

These changes can be very painful to distribution and resale channels, who tend to be made up of smaller players. For customers, it can result in significant frustrations.

Do you have any predictions for the 12 months ahead?

Further vendor consolidation but specifically in the file transfer space. File transfer has been a segmented marketplace which services automation, EFSS, cloud application interoperability, EDI and middleware for a considerable amount of time. We are now starting to see vendors in those spaces looking at how they can offer more through consolidation.

A drive from customers for better governance over file transfer workflows. Our industry has been beset by two major vulnerabilities in the past 12 months which for some has revealed a weak spot in their visibility of key operational systems. We are already seeing security and BAU teams becoming a larger feature of file transfer projects and conversations.

Further scrutiny of supplier chains. We’ve already seen increases in supplier questionnaires, but these are unlikely to stem the issues we have seen with supply chain attacks. Customers are going to want further guarantees from vendors about the quality of code and mitigations steps taken to reduce bugs. Vendors are going to have to be more open with their IP and use code review services or gain third-party accreditations to placate the concerns of customers.

Reduction in consumption-based cloud licensing. In our industry, in which we move large quantities of data, procurement teams are realising that the general cost efficiencies of IT in the cloud may not always apply. We see smaller and some medium sized customers wanting to use cloud services but enterprises remaining in-house due to concerns about the controllability of cost.

Further polarisation of resellers between specialists and broad resellers.

What metrics or benchmarks would make it a successful 2024 for Pro2col?

Continued growth of 30% or more, in-line with the previous eight years.

Another 100%+ growth in services.

Maintaining our high ENPS results.

Retaining our renewal rate of more than 95%. We do not have a sole focus on new business as is the case with much of the reseller industry. Growth requires a stable platform to grow on top of. We are very proud of the fact that our attrition rate is very low.

Win the Christchurch Pancake race – of course.