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By Steve Morrison, Managing Director – Sheffield Haworth Technology
A true Technology Sector veteran, Martin Hess began his career in sales for IBM in 1985. He went on to achieve great success leading HP’s sales across the UK and Ireland, with a team of over 600 people and annual sales targets of $5 billion. This was the UK’s largest IT sales team at the time.
Yet, when speaking to Martin, it’s the entrepreneurial side of the sector he seems to have valued most. After 10 years at IBM, he moved to Mantix Systems, a much smaller software company. He has alternated between corporates and smaller startup or scale-up businesses ever since. As he puts it: “I learned a lot from the big corporates, but I’ve always been attracted to the dynamism and agility of the smaller businesses.”
This combination of skills and experiences came in particularly useful in recent years, when Martin led the transformation of IT reseller OCSL into an IT services business and then led a series of mergers and acquisitions that culminated in an exit to Telefonica Tech in 2021.
Experience at IBM and HP
IBM gave him a great grounding in the industry. “At IBM, we never really sold hardware per se. We were selling the transformational power of IT to a business. And I was surrounded by some really talented people,” he says. “The IBM salesperson back in the 80s was taught that every resource in the company from the CEO down was there to help with business and help customers. It was a great culture.”
“The wrong sort of leaders just keep weighing the pig, expecting it to change. But really, you have to work out what aspects you can influence and then focus on them.”
At HP, Martin developed his leadership style. “I never asked the team to do anything I wasn’t prepared to do myself, and I always put the customer first,” he says.
When asked how he dealt with annual sales targets of $5 billion, his response is pragmatic: “With such a huge target, as a leader you’re only going to have an impact at the margin. The wrong sort of leaders just keep weighing the pig, expecting it to change,” he adds, “But really, you have to work out what aspects you can influence and then focus on them.”
It’s clear that results are more important to Martin than working up the corporate ladder. Indeed, he never had much time for corporate politics.
“Be true to yourself. I could have played the game, but I spent more time looking downwards and outwards than upwards.”
“I turned down my first VP job offer at HP. It was too internally focused and wouldn’t have played to my strengths. Not long after that, the right job came along: five years running the biggest UK sales operation in IT. It was perfect. Be true to yourself. I could have played the game, but I spent more time looking downwards and outwards than upwards.”
Growing a small IT services business into a prime acquisition target
After 11 years at HP, Martin became Executive Chair at small IT reseller company OCSL, growing the business to the point where it was acquired by Cancom in 2018. Martin then became CEO Cancom UK&I, leading the mergers of Cancom, OCSL, and Novosco, and growing the new business culminating in a successful exit to Telefonica Tech for €400M in 2021. He then became CEO of Telefonica Tech UK&I before going on to acquire Glasgow-based Incremental Group in March 2022.
Running this business was a very different experience to running large sales teams at HP. It’s important for managers to be aware of the significance of these differences if they want to be successful, Martin believes.
“If you come in with the wrong attitude you won’t get people to come along with you.”
“You have to be adaptable,” he says. “OCSL was a very entrepreneurial environment with little structure, but that worked because of their size. The worst thing I could have done was to be critical of what they were doing differently from how I’d been doing things at HP. You must seek to understand before being understood. If you come in with the wrong attitude you won’t get people to come along with you.”
Martin began by understanding what had made OCSL a good company before making the changes he thought necessary to evolve the business from a product reseller to a more services-based business.
“It’s about not thinking you’ve got all the answers. And whatever you do, don’t come in with a cookie cutter approach! You have to be very careful about making changes.”
How Martin evolved a reseller into an IT services business
Put frankly, Martin says, “changing a reseller into a services-centric business is bloody hard!” Because of this, it was essential to be clear on his strategy and what he could offer the market before going ahead and productising OSCL’s offerings.
“Generally speaking, the IT services industry hasn’t been very good at doing this,” Martin says. “There’s a sense that services are more glamourous or high profile than product re-sales, but actually you can learn from the productising that takes place in the product world and try to apply that. Salespeople are most effective when they’re clear about what they’re selling, so it can be dangerous when you transition from a clearly defined product world to an undefined services world.
“You can’t be overly ambitious about what you’re selling in the services space and you have to get very good technical people in those services areas. Also, while you still need your great rainmakers on the sales team, in our cloud-based world with its subscription-based model you also need customer care execs and customer service execs, because you’re not getting all your revenue upfront anymore. Your commission and reward structure must reflect that.”
“Don’t tell the world what you do; tell the world what you want to do.”
This was a significant internal change at OCSL, but how did they go about changing clients’ perceptions of the business?
“We completely rebranded the business nine months after I joined, changing everything from mission, vision, and values to the brand look and feel. We completely revamped the brand, because up until that point, OCSL had been essentially an arm of HP. This had enabled OCSL to grow to £60m – £70m turnover, but as HP’s position in the market changed, it was a risky place to be.”
From revamping the brand, Martin and his team went on to remove the products they had sold from the website and refused to talk about them. Instead, they emphasised what they wanted to become – a managed services company.
As Martin says: “Don’t tell the world what you do; tell the world what you want to do.”
Tips on acquiring and integrating businesses
Part of OCSL’s evolution into a managed services business was acquiring other businesses in areas where OCSL wanted to add expertise they didn’t yet have. As Martin puts it, he pivoted the OCSL business three times since 2016:
- From product reseller to traditional managed services
- From traditional managed services to cloud-based managed services as CEO of Cancom UK&I
- From cloud-based services to data and business apps as CEO of Telefonica Tech
“You’ve got to constantly look at where your market is shifting to and anticipate that shift. But it’s hard to do that organically, which is where I feel you almost have to acquire.”
“Don’t be afraid to let the founders of an acquired company go if they are not going to help you on your transformation journey.”
What other tips on acquisitions does Martin have to offer?
- Don’t be afraid to let the founders of an acquired company go if they are not going to help on your transformation journey. Often, founders are happy to leave and do other things, so let them go.
- The team you want running the integrated business needs to be looking forward to the future, not where they came from.
- You’ll often spot the key talent you need in the tier below the founder level. Make sure those people are motivated to stay.
- To be successful you’ve got to have a cultural foundation on which to assimilate and integrate the new companies.
- Be clear on the type of company you are because that’s what you’re trying to attract these people into. That requires strong leadership around your vision and journey.
- The really hard bit of integration is having systems. Be clear about what the target platforms are. Know it, but don’t rush it.
- Be very clear about where you’re taking the business and why you bought those companies. “In our case, we bought them to drive growth, not to consolidate and take cost out.”
- Make sure your integration strategy is consistent with why you bought each business – and remember that you often have different reasons why you acquire different businesses. “We bought some to scale up, one to move into adjacent markets and optimize our cross-selling potential, and it was vital to keep those goals clear and consistent all the way through.”
You must take your people with you
Ultimately, for Martin, where you’re acquiring and integrating businesses or focusing on organic growth, it’s vital to take your people with you. “That requires strong and clear leadership,” he says, adding that one of the key reasons he has been able to stay ahead of where the market’s going was due to having a great CTO.
“Yes, I’m always talking to customers and spending time with people like Megabuyte and Gartner,” Martin says, “but I also talked to the CTO. This is another example of why you need to bring on good people and keep them motivated, because they’re the ones who will take you where you need to go.”
