Nathan Aherne and his business partner, Jason Rudolph, were told by industry professionals their plan to build “the perfect IT company” was a joke and would end with them filing for bankruptcy.
Three years later, their IT solutions company, RedDog, is turning over $2 million annually and continues to pick up business despite companies slashing IT budgets in the downturn.
Aherne, who was listed on SmartCompany’s Hot 30 Under 30 list, became frustrated when working as a business analyst. His IT department continually expected him to have in-depth knowledge about technical problems, when he just wanted things fixed straight away.
Aherne says his idea was to “make something really complicated done very, very simply”.
“We found IT solutions just expected you to have technical knowledge. We wanted them to deal with the problem, not have us worry about it. The only analogy I can give is where you say to a lawyer: ‘I’ve done this, now what do I do?’ Yet IT companies do the opposite, they say: ‘What do you need?’ Well how would I know what I need?”
“I’m not an IT person, I’m good at business processes. So I just thought up all the services I thought you needed. IT companies don’t deliver printer cartridges to you, it’s unbelievable. We were constantly calling up 15 different providers to get something fixed or dealt with.”
RedDog initially started as Aherne’s internal IT department. When his colleagues began to take notice of how efficient it was, he then began to develop a viable business model.
“RedDog was launched in its current form three years ago. Personally, I was happy with where it was, but I didn’t do it for the money, I did it as a challenge. People said what we were doing was impossible and wouldn’t work, and we would go broke.”
The company offers fully-managed IT solutions from hardware, software, maintenance and support to billing solutions for your telco provider.
Aherne says the company’s origins as an internal IT department were not forgotten when RedDog first offered itself as a commercial service.
“We literally become the entire whole IT department for a company. We do anything you can think of, except service TVs, list your mobile phone or landline bills, we don’t pay for landline rental and we don’t pay for printer toners. We provide everything else.”
The company provides hardware and software support, handles upgrades and technical glitches and performs like any internal IT department.
Competitors – and even the odd mentor – has criticised Aherne for relying on a business model that provides “everything”, and works with several different software and hardware manufacturers, rather than relying on one supplier.
But Aherne says the company avoids providing one type of software to ensure flexibility when new technologies emerge on the market.
“If something really great comes on the market, the Google Android phone for instance, we can just move to it, because all our mail servers are compatible. Most IT companies don’t do that, but it makes things much simpler.”
“Of course, there are challenges with this model. Spending a lot of time in research and development happens because we analyse all the different pieces of computer hardware we can use. Having all these different products work together with our servers becomes difficult.”
While companies have slashed their IT budgets in the downturn, Aherne says RedDog is surviving by picking up business from competitors that are going under.
“The traditional model for IT is that you sell hardware at a low margin, and then make all your money from services. But that’s a big mistake if clients don’t want their service from you, which is why we decided on the all-in-one solution.”
“We’ve taken some clients from people who have moved from companies which have gone under, and a lot of people are worried and want more insurance. Because we provide an end-to-end solution they don’t have to worry about it.”
The company offers its services for a flat fee, rather than on a variable cost basis. But this has proved a problem for the company, as it is especially vulnerable to changes in the Australian dollar.
“It’s very difficult to maintain that flat fee without hurting your business. When the Aussie dollar was down 30% against the US, literally in two weeks, all of our prices went up. Maintaining that flat fee and not having a jump is difficult.”
Aherne says another problem the company faces is keeping its original structure within growth. The company prides itself as offering an IT-department style business, but Aherne says watching other companies grow and lose touch with clients makes him worried RedDog will do the same.
“Scaling as quickly as we have is a problem. We grew 600% and we’re on track for 200% this year. It’s really hard to keep really high quality service and make things simple.
“I’m worried about us becoming complacent. We’re always trying to introduce new things and new technology, but we just have to keep that initial feel the company had when we started the whole way along.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
