MICHAEL O’HARA describes his technology distribution company, Data Solutions, as a “venture capitalist distributor”. By seeking out nascent American technologies and investing his own resources to introduce them to the Irish market, he has built a multimillion-euro business.
O’Hara, who is 51, is one of 10 siblings from a farm in Granard, Co Longford. He earned a crust at a young age buying piglets, feeding them up with spoilt bread collected from the local bakery before school, then selling them. “We all had a good work ethic,” he said.
After school he studied business at what is now Athlone Institute of Technology and went on to qualify as an accountant. Working with Farrell Grant Sparks in Dublin, he was seconded to work with a number of small businesses — including the then fledgling radio station FM104 — as financial controller, often filling in for someone on maternity leave.
One such posting, in 1989, was for an Irish company that manufactured modems — at a time when modems were decidedly cutting-edge.
“It was a great product, handmade with a metal case and so well put together that you could drive an 18-wheel truck over one without breaking it,” he recalled.
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The product was faultless, yet the growth of the internet meant modems were increasingly better suited to mass production. The Irish modem maker inevitably closed but, with some former colleagues from that company, including Francis O’Haire, his current director of technology and strategy, O’Hara set up Data Solutions in 1991.
“I could see that from a manufacturing point of view the previous business was not going to work, but that the technology behind it, which enabled large companies, such as for example Musgraves in Cork, to transfer reports to Dublin, or branches of a Dunnes Stores to send files to its head office, was good,” he said. “The magic was the modem: it allowed the IT to communicate together. This was back in the heady days where you needed two of the same kind of modem for it to work.”
Data Solutions was set up as a distributor for companies such as US Robotics. “The internet had just taken off and we were the most modern people in Ireland,” he said. “Within a couple of years we were doing IR£2m–IR£3m (€2.5m-€3.8m) in revenue. Modems became a volume product and, as a result, the margins were cut as the equipment became cheaper.”
O’Hara and O’Haire began travelling to technology shows abroad, looking for new products to distribute.
“We had established ourselves as a specialist business-to-business distributor selling to the IT industry,” he said. “We weren’t built to sell commodity items. One thing I had learnt in business was that where there is mystery, there is margin. And there is no mystery in a commodity.”
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In 1995, at CeBit, an annual international technology trade show held in Hanover in Germany, the duo came across a small US company with a turnover of $16m (€12m) and zero sales in Europe. It was called Citrix and it specialised in remote access solutions. These offered IT managers a means of connecting workers in a cost-effective way, using “green screen” dumb terminals to mainframes rather than more expensive PCs.
“It was a natural fit for us,” he said. Having built up its sales in Ireland, Data Solutions began distributing allied products too, such as Dell Wyse terminals, which it could sell alongside Citrix’s suite of products.
“Landing Citrix was, for us, the equivalent of landing the rights to distribute Red Bull — it was huge,” said O’Hara. “But in the first couple of years it was a really hard slog. We had to create a market for it.”
American technology companies tend to focus their initial sales push on the UK, and then use specialist distributors to build markets for their products in Europe. “Typically these vendors are hoping to IPO in a few years, so they really need to show they have a global presence,” he said. “But they also tend to have limited resources. They put all they have into the UK, so there tends to be very little left for Ireland — and that is the opportunity for us.”
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The key to success for Data Solutions has been its ability to assess coming technology trends and the vendors to match, he said.
Conditions have to be just right.“We identify technologies that don’t really sell themselves, ones that need high levels of support, including sales and marketing support,” said O’Hara. “We identify vendors that are good in a particular sector and take them on. Using the very strong sales and marketing team we have built up here, we then create demand for their products. We are ‘venture capital distributors’.”
Citrix is now a $3bn-a-year company, “and we grew our business on the back of it”, said O’Hara. Data Solutions also subsequently took on other global IT businesses such as security solutions providers RSA, Symantec and Check Point, all of which met its selection criteria.
The company has doubled its business in the past five years, despite the downturn, thanks largely to sales of these security products, which now account for 40% of its revenues. This year it will have a turnover of €20m, with 17 staff.
O’Hara is busy scouting out similar vendor opportunities in the coming area of the “internet of things”, the anticipated next wave of the web which will see a wide range of electronic devices sending and receiving data.
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“By 2020, it is expected that 26bn devices will be connected to the internet, creating €7 trillion in revenues,” he said. “That’s going to create huge opportunities, so we are now looking for technologies to support the infrastructure that will need to be built around that.”
“That’s what we do,” he added, “we identify great technology and we take a punt on it and, thankfully, so far we’re up more than we’re down.”