Eight-year old Lexel Project Services (LPS) is a 120-strong project management (PM) firm that is proudly Kiwi-owned, with operations and clients across Auckland, Wellington and other parts of New Zealand.
In the beginning though, there was just the one.
“The central idea behind the firm was to provide independent, agnostic PM capabilities to enterprises. There was a gap in the market, where most PM delivery was aligned to the top-end of the IT supply chain – the big vendors. That just didn’t sit right with us. Big IT companies are probably aligned, in hardware or software terms, and their independence can be questionable. So we created this boutique delivery capability that was centric to PM,” says Paul Alexander, GM of the firm.
Started as a joint venture with Lexel and functioning as a subsidiary of the group, the firm went after the top-end of clients right from day one.
“When we first started we went after and got the big blue chip clients that could afford to invest in having an independent external project management capability. In the past, if organisations had an outsourced capability with a partner or big vendor, stuff like PM gets given away as a gratis or a sweetener. Plucking it out, taking it out of the big vendor landscape and asking someone to pay for it makes it an investment decision for clients,” says Alexander.
Alexander believes they had a strong business case and luck on their side in bringing in top clients. Over time, the firm has worked for the likes of Air New Zealand and NZ’s Defence Force (NZDF), even as it has expanded its line of services to cover everything in the PM lifecycle.
“We do project management, programme management, business analysis, testing- anything that touches the PM lifecycle. We have taken a marker and drawn a big thick line around what we do, so we don’t lose our focus. We don’t want to become a master of everything. We are sticking to being masters of just project delivery,” says Alexander.
According to him, this has been a key strength of the firm and has enabled it to enjoy profits from its first year of operation.
Though LPS started with large enterprise clients, over time the client profile has changed to include smaller businesses as well.
“We are developing a proposition, especially with our consulting capability, where we are able to go in and help with a project, or post implementation review, or it might be project risk. These are just little avenues that have opened up into smaller companies. We have always had a footprint in larger companies and predominantly on an IT basis. Suddenly, we are being provisioned for mechanical equipment and building, because it is all project management,” says David Jones, head of service delivery at LPS.
We have taken a marker and drawn a big thick line around what we do, so we don’t lose our focus. We don’t want to become a master of everything. We are sticking to being masters of just project delivery
Alexander and Jones, along with Doug Clarke, head of operations at LPS, make up the “top table” and look across the firm in everything from long-term strategy to day-to-day operations.
Tools of success
Most of the challenges that the firm faced involved enabling growth or managing it astutely. While it was initially about having sufficient bandwidth in efficiencies, later it was about having the right backend systems to support growth spurts.
According to Alexander, during the global financial crisis, the firm actually grew.
“We actually grew through the period. The reason we did that was because we changed our approach. We used that opportunity. Lot of organisations were turning staff out. We found that we were being engaged at the vacuum of not having the right headcount in an organisation.
“Post-recession we have changed again. We are looking at where we can grow through partnerships with customers. At the NZDF, for example, we are looking at the ten year vision. We are looking at how we can align with them for the next decade, as opposed to next six months, where we are just helping out an organisation as they go through some bumps. That has been a challenge and an opportunity – how do you adapt your business model to the different challenges that your economy is going through,” he adds.
Central to the growth that the firm has enjoyed is the staunch effort that it has put into its biggest asset – people.
“People for us is crucial. Without them we aren’t anything. We have put so much effort into our sourcing and selection process and most importantly, our attraction and retention policies. Once we find a rock star we will try to never let them go. It is a lot less effort to retain the right people, than it is to have a 25 per cent attrition rate and constantly recruiting new people.
“Eight years ago when we started, the key to this success was understanding the right people and roles, and joining them up. Eight years on, there are a whole bunch of other pretty things - add-ons and tools and whizz-bang-pop stuff - but the core hasn’t changed. It is about getting the right people and making sure roles fit for the right opportunity,” says Alexander.
Understanding well how people are the ‘default foot in the door’, and the expectations that come with working on client premises most days of the week, the firm has invested in its people, not only training them on the latest PM tools and techniques, but also trying to foster a connected workplace that is supportive of employee needs and wants.
Jones points to the firm’s value-based remuneration system (VBRS) as an example of that effort.
“VBRS allows us to electronically capture time from our people, on any device at any time. More importantly, you cannot submit time inside Lexel unless you give an indication of how you are feeling. Every second of every week, I see that stuff flow through. And that’s just another way for me to remain connected to 120 people,” he says.
Ultimately, LPS wants happy employees to connect and work with customers in a true partnership format.
“VBRS can also be applied to client organisations. When you reach a critical mass you can set up KPIs for our team. So we agree those with the client. The client gets the chance to see how our people are rating themselves and they can rate them. Where we see this very successfully implemented is when we put our risks on billing. So if it is not right by the end of the month, then we will put our risks on money. We will go and fix it too. So it is a real trust proposition with clients. We put profit at risk if we haven’t done exactly what we promised to do. We are pretty proud of that system,” says Jones.
“We are very careful about that word - partnership. We tend to lean towards our clients being partners. We are conscious of that independent agnostic label.
“It is hard to partner with big vendors when we might be running a project for Air NZ, and they might be putting in big vendor hardware, and we might have to have some hard conversations with the vendor because they are stuck on a plan that lets us down. We tend to make friends among clients, and not too many in the wider IT world,” says Alexander.
The company enables its people and clients with tools and processes that it has developed on its own, with an investment upwards of $300,000 over the last few years.
“Our preference is our own ideas, capabilities and tool sets. We favour them. Where we use other tools and other tool sets is when it makes logical sense for the customer, or if they have a commercial agreement for a certain number of licences. That is where we need to be effective, and roll in from day one and work with the solution. But our preference is our own processes, tools and our own concepts.
“Our exercise in our preferences is an exercise in trust and growth. As you mature with a client then you move towards a partnership relationship and then it makes sense to approach some potentially good business case savings. We can look to turning off hundreds-of-thousands dollars worth of licencing costs and replace it with something that we can grow with overtime and with the clients,” says Alexander.
Our business model in Australia and also further abroad will involve shipping Kiwis to other areas leveraging exchange rate, the brand that comes with the NZ workforce and again leveraging NZ economy and payroll.
Up ahead on the horizon
With adequate client support, and certain critical moves, the firm hopes to achieve exponential growth in the next few years.
“Our focus is to increase and maintain the path within NZ, while we are looking at perhaps Australia. We want to take this exact model and ratio that we have now, and either doubling or tripling that in NZ. Our plan is to get to 450 staff by 2018, and by that time we should achieve a tripling of revenue as well,” says Alexander.
Within NZ, LPS sees Wellington being the growth driver for the firm in the near future.
“We are looking at a revenue split of 75 per cent from New Zealand and 25 per cent from Australia. That’s the target between this calendar year and next calendar year. We have done projects in Australia for the last year and a half. Yet it is a relatively new market for us and we need to go into that with eyes wide open. We are looking at other regions as well. We are in very much high level exploratory phases of that. We are looking at another area abroad,” says Alexander.
Workloads abroad will be taken on with certain Kiwi-based benchmarks, according to Alexander.
“Our business model in Australia and also further abroad will involve shipping Kiwis to other areas leveraging exchange rate, the brand that comes with the NZ workforce and again leveraging NZ economy and payroll. We will use these to give our people genuine career opportunities – a jump up in job, a new country to experience, a new assignment. It is another way of retaining the team but also making the most of overseas opportunities, and making it a win for everyone,” says Alexander.
Jones asserts that the main challenge as the firm prepares for this growth spurt is ensuring that personal connections with employees continue to exist and that the essence of the firm is not lost.
“The other side of it is that we are investing time and energy in continuously reviewing the systems and processes that support us in the background. It is not just about adding more and more people to the project management side, but also investing in the right tools and systems to allow us to grow,” says Jones.
Alexander adds, “We would prefer to have NZ tools and systems to add. Currently we are looking at how we can integrate Xero into our back office. We are such huge fans of what those guys have done and what they have as a NZ capability that is truly global. It is important to our brand as well that we are not looking for the cheapest way to do something, but looking for the right solutions to help us grow.”
The team indicates that there might even be a branding change on the way. Nothing though, seems to deter them from pursuing the ‘scary, ugly’ goal of tripled revenue by 2018.
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Kiwi Story is where we profile interesting and fast-growing tech firms from New Zealand. If you know of an innovative firm from anywhere in the country that you think should be covered in this section, please email sathya_ashok@idg.co.nz with details.