6pm moves into applications

6pm plc, the Naxxar-headquartered international IT solutions company, is to diversify its product portfolio by venturing into the consumer application sector, chief executive officer Ivan Bartolo told The Sunday Times.

6pm is currently in discussions to acquire a group of companies

The company is to move into the high-volume, low-margin consumer segment with a range of downloadable and cloud consumer Agile-based applications that will see 6pm target a new market to sit alongside its established healthcare solutions development.

“Today it is all about consumables and mobility,” Mr Bartolo explained. “Mobility is the most important aspect of IT. With mobility you can become interactive with your users. Many of the top 10 software houses in the world, including Microsoft, Adobe, SAP, and Oracle, are going down the path of consumer applications.”

6pm is currently designing a suite of products named ‘Quick’ that will feature a range of application software for personal use. The products are based on the 6pm Agile framework and will include ‘bolt-ons’ that can be implemented to popular branded software packages from names like Microsoft.

They will be downloadable from the online Quick Store or be made available to consumers through the 6pm Private Cloud. The first product is a personal assistant application called Quick PA which will be rolled out next year.

6pm’s diversification strategy has been designed as a way to unlock the potential of its human capital and meet the demands of consumer trends.

The specialist in information management, business intelligence and document management still counts the UK’s National Health Service and major international blue-chip organisations among its key customers, but the current world order has forced it to remodel its long-term business plan.

At the end of 2010, it had its eye on a number of firms for an ambitious equity exchange programme that would see it expand and diversify into new markets.

Last April, Vassallo Group was named as the key investor in 6pm’s €3.1 million rights issue to speed up the company’s growth.

Mr Bartolo explained that the acquisition of Compunet earlier this year reaped considerable results as the operation focused on developing its corporate infrastructure and services business which has also sold well in the UK.

Although its retail arm is still a significant contributor to group revenues, Compunet is currently “reinventing” itself in the services area as it seeks more profitability through better margins.

Meanwhile, 6pm and Vassallo Group have fused their capabilities – Vassallo Group most particularly in elderly health care – to develop Emcare360, a technology-based virtual clinic platform.

Alongside its 25 per cent shareholding in this venture, 6pm is also the lead software developer within this electronic and mobile health solution company which will be offering services in Malta and overseas. Its offering will focus on solutions to monitor healthcare environments and personal health.

The equity exchange programme is still on the cards, although the timeframe has been widened to at least five years. 6pm is currently in discussions to acquire a group of companies which will bring a range of capabilities under its umbrella.

But with rising operating costs and shrinking margins on its low-volume products, 6pm sought to identify ways to cut costs.

At a networking conference last February, Mr Bartolo joined a conversation discussing the advantages of doing business in Eastern Europe. He decided to tour the region on a fact-finding mission and found that not only were costs significantly lower than central Europe, but highly-skilled human resources were available for immediate engagement.

6pm opened a development centre in a central location in the Macedonian capital Skopje with a team of seven in early September. The operation has since grown to 20. The 16-person production team works alongside a group of four which has been tasked with designing and delivering the solutions in line with 6pm’s new business strategy.

Mr Bartolo, who is a 20 per cent shareholder in 6pm, admitted he has had to take some difficult decisions over the past few months, especially after the challenges in 2010 when UK orders slowed, and the chief executive and some officials waived their salaries to tide the company over.

Internally, 6pm has had a positive year this year and sales have increased. Mr Bartolo said the company chose to wait to take orders when its cost base was more favourable and margins were higher.

His unpopular proposal to be patient and continue to make a loss until the Macedonia operation was up and running paid off. 6pm began to see its profitability improve soon after the Skopje team got to work.

In October, the company was faced with a cash flow challenge as debtors in the UK fell behind on invoices. The situation was resolved quickly and payments resumed.

“6pm has a culture of transparency and we informed our local suppliers about the situation, but we are no different to any other business,” Mr Bartolo said.

“We are constantly chasing our debtors like everyone else. The UK trend of setting up financing companies to process payments has lengthened payment periods so it takes longer for debtors to settle our invoices. We have now resolved to foster closer relations with our debtors.”

He added that concerns that the UK could go into mild recession next year could translate into the government putting more money into the economy as a stimulus and a business opportunity could arise.

“It is a buyers’ market these days,” he said. “If we raise our rates, we will not win business. The Macedonia operation will significantly contribute to keeping our pricing attractive and containing costs.

“Last week the board unanimously approved the business plan for 2012. Next year will be about monitoring our cost base and increasing our flexibility as a business.”