Fronde CEO Steps Down. Plus; Fronde files a $3.5m loss for the year. Staying competitive in a brutal Cloud world.

fronde-logoHot off the press this afternoon Ian Clarke, Fronde CEO, is stepping down. After two years of losses and no end in sight, the CEO has gone, though the press release does not connect the two.

Additional: Fronde Staff Reviews on Glassdoor (1.6)

After an interim loss of $1.3 million last year that was described by the Chairman as “very disappointing”, Fronde has one-upped itself and jumped to a $3.35 million tax loss, which the Chairman describes as “extremely disappointing.” They’d better start making money soon as I am not sure what comes after “extremely disappointing”, “epic fail?”

Any prospect of Wellington information technology services firm Fronde listing on the NZX appear to have dimmed after it reported an interim loss of $1.3 million.

Chairman Jon Mayson described the result, achieved on a 4 per cent drop in sales to $31.6m, as “very disappointing” in a release to the Unlisted securities market. It compared with a profit of $707,000 during the six months to the end of September last year. – Source (December 2014)

And then;

Fronde chairman Jon Mayson described a NZ$3.35 million before tax loss just reported by the Wellington-based company as “extremely disappointing”.

Despite doubling sales in Australia and improving by 61 percent in Auckland, sales in Fronde’s core Wellington market fell to 76 percent of the number achieved in 2014. Overall revenue for the year to 31 March 2015 was NZ$59.5 million, down NZ$3.1 million year-on-year. – Source (July 2014)

Finally today;

Today Fronde announced that Ian Clarke will step down from his role as Chief Executive, a role he has held for the last seven years. – Source

We’ve been following Fronde for the life of the blog and in the early days thought that they had stolen a march on the Cloud Broker Model. You can draw your own conclusion on the link between the two.

We also have one local Cloud broker making a good living out of managing Cloud services from planning to delivery that have a direct relationship with Amazon. Fronde has been doing it for a while and its a solid service. Which, AWS need, because its interface is raw, it is not SaaS with its glossy front-end, it is absolute raw computing power that you need engineers to configure and manage. – Source (August 2013)

At that point in the game Fronde was front-ending a number of different Cloud services and had a very capable and skilled sales team. Some things have changed of course. Those capable and skilled sales people I was in regular contact with left. All around the same time.

Second, other suppliers have risen up and got on the Cloud Broker bandwagon and may have leapfrogged Fronde and her early capability. The excuses didn’t seem to match up in my mind either.

He said high levels of investment compounded by weak trading in Wellington, where revenues fell 20 per cent, were to blame for the loss and the company had responded by cutting costs.

Fronde employed 350 staff and contractors as of February and that number had now fallen to 320, Clarke said.

The downturn was caused by turnover within its sales team, clients coming to the end of investment cycles and a slowdown in investment decisions by government agencies, he said.

These may have been Fronde specific because for the rest of the ICT shops around town, business was increasing in general. Unfortunately, restructuring can take six to twelve months to see any benefit, and that may have compounded the issue.

For the shareholders of Fronde, including a sizeable chunk owned by Chameleon Trust, this is going to be hurting.

The CE isn’t going anywhere in a hurry, because Fronde don’t have a replacement.

Mayson says Clarke will step down later this year once the board has completed a search and appointment of a replacement chief executive, with a suitable transition period.

Fronde has played Phoenix before, let’s not forget the demise of Synergy, and they may struggle their way back to the top of the pack, unfortunately though, their competitive advantage may have been undermined by new players in the market in the meantime. It’s damn hard to get back to the top once you’ve slipped off the pile, especially in a market that is increasingly competitive.

Couple that with the fact that customers are leap frogging IaaS and PaaS to land straight with SaaS and again, that end of the broker market is looking a bit stuffed for everyone, including integrators and security. Managed services are likely to suffer as well, as they tend to cover the automated bottom end of the market, again being decommissioned by SaaS.

Fronde aren’t the only company grappling with this. There are a handful of one-shot local companies with single product sales lines that are going to get their lunch handed to them if they don’t diversify. You can’t be a one-trick pony these days. In the time it takes to embed a product into their sales processes someone else has invented a better product and got out there before you.

Strategy by large companies and agencies is becoming simple. If it is something that I do that is common, such as finance or HR, I buy it as SaaS. It is something that I do that is truly unique, I build it.

There is plenty of work surrounding that strategy as ICT economic and job indicators clearly show.

Couple that with the rising tech bubble again, companies that have zero assets, no revenue, and are worth billions of dollars, and we are in for an interesting ride as we approach 2017, when the traditional ten-year tech slump is likely to occur again.

All eyes on Fronde to see if she can reinvent herself and rise from the ashes. It would be a damn shame to see such an iconic local ICT company on the rocks.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: