DIGITAL INITIATIVE PROVIDES STRONG PLATFORM FOR GROWTH, AN INTERVIEW WITH CEO ZORAN COVIC.
Bigger assignments. More satisfied consultants. Better matching. And above all, a future-proofing of the business. These were some of the goals we set a few years ago, when we made decisions on wide-ranging investments in a new digital platform. The systems were to offer clients a totally new way of managing consultant procurement, make life easier for our consultants and at the same time streamline our internal processes. Looking back, this development process has taken longer and cost more than we had anticipated. But now the launch has started, and we’re already starting to see the positive effects of the initiative. We’re continuing to enhance our market position with new business. We’re winning several new, interesting framework agreements. And we’re continuing to increase the proportion of deals signed, our so-called hit rate. Digitalisation has played an important role in all of this.
Five years ago we started to talk about the gig economy, how it would affect the labour market and what potential it would create for us in realising our goal to become a leader in Northern Europe in the provision of consultancy services. At the time we had only seen the very first effects of the fourth industrial revolution on the labour market and the system shift taking place as industry and society are transformed with the aid of technological developments.
We can now confirm that we have not only made use of this potential – we have driven developments by listening to our clients and consultants, and with one ear tuned to the future have continuously researched new opportunities to increase value for both groups. The company has grown strongly over the past six years, from net sales of just under SEK 4 billion to a level of SEK 12.6 billion in 2019, a threefold increase. But in line with our culture of thinking outside the box and always looking ahead, we realised back in 2015 that it was necessary for Ework too to undergo a revolutionary digital transformation if it was to be able to continue to be attractive to both customers and consultants in the future.
Digitalisation takes consultant matching to a new level
The initiative we decided to implement at that time was based on the notion of combining all our knowledge of the consultancy market with the opportunities offered by digital technology. The aim was to become even better at quickly identifying the best consultant for a given assignment by developing a system with an enhanced search capacity, speed and functionality. The outcome was our new, revolutionary consultant portal. The launch of the portal means that consultants can more easily access those assignments that best suit them. They also have access to additional services that facilitate administration, for example an online banking service. During the first quarter of 2020 the portal is being launched in Poland and Finland – and in the second quarter of 2020 in Sweden and Norway. In parallel with this we have developed a procurement system, VMS (Vendor Management System), which facilitates the clients’ development of processes for consultant management. The newly launched system has attracted much attention in the market and already resulted in over ten new contracts and new, interesting assignments and clients for Ework. These include the broadband provider IP-Only, to which we supply both the digital platform and consultants.
THE MAIN WAY OF CREATING VALUE FOR OUR CUSTOMERS IS TO DELIVER PRECISELY THE COMPETENCE THEY NEED, WHEN, WHERE AND IN THE WAY IT IS NEEDED.
We have at the same time developed and streamlined our internal administrative flows. Here too, the work has now been largely completed. The systems are now on the way to being implemented in all Ework offices and the new way of working have resulted in our already seeing a higher hit rate, i.e. a higher proportion of deals concluded per enquiry.
The main way of creating value for our customers is to deliver precisely the competence they need, when, where and in the way it is needed. By working closely with our clients, we get to know their businesses and become even better at predicting future needs – so we can exceed their expectations. Being independent gives us the freedom to work with the whole market and select the very best consultant for each assignment. Furthermore, our new digital systems enable us to streamline this process even more and become even more attractive as a business partner.
Our digital investments have swallowed up more resources in terms of both time and money than we had expected, which has impacted our profit. But we can now see that these expenses have peaked, and as of the second quarter in 2020 they are expected to slow down, while we are seeing more and more positive effects.
Market and geographical growth
The financial goals we set at the beginning of 2016 of an annual increase in net sales and earnings per share of 20 per cent until 2020 were ambitious. These were based on our view of how the market would develop over the years to come, and also our own ability to enhance our position. We are now approaching the end of this period and can confirm that we have been successful when it comes to approaching the financial goals – but perhaps above all in the form of a stronger position in the market. Net sales grew by 14 per cent in 2019, while earnings were affected by the expensive investments.
We have at the same time seen a weakening of the economy for more and more companies and sectors, resulting in a drop in the total number of enquiries about assignments. This means that we are continuing to review our costs.
Of the markets in which Ework operates, Norway and Poland in particular stood out during the year with strong growth. Sweden continued to grow, but at a slower rate and with a reduced operating profit. Income fell slightly in Finland and Denmark and was unable to continue to grow in the prevailing market situation. We are adopting a long-term approach here to reinforce our market position and acquire new clients, but during the period we prioritised measures for profitability and the profit improved in both markets.
Important to continue acting like a small company
Ework has grown rapidly over a number of years. One of the challenges we face today is that we must continue to act like a small company, with all of the boldness and the hunger that have taken us to our current position, and all the professionalism that we have come to be associated with. We must also make sure that we have a level of profitability that gives us the freedom to continuously search for new ways to improve our client and consultant offering.
The shock wave that the coronavirus pandemic has sent through the world’s financial markets is of course also affecting us. But we also see opportunities when markets get back to normal. New market conditions and the necessity to work remotely have highlighted the importance of digitalisation, remote working aids and creating flexibility in all kinds of businesses. We are now grateful that we have been through this process ourselves – and that we can also offer expert consultants within the area when the market starts moving again.
The new strategic software services are one outstanding example of our innovative force and the way we work constantly to create good potential for Ework for the future. Even if this has involved bigger investments than we had estimated, we now see that it has started to produce clear results, which will enhance our position and our offering, even in a declining market. I therefore take a positive view of our prospects for continued, positive growth in the long term.
I would like to thank our clients, consultants, employees and shareholders for your contribution to our development towards becoming the leader in Northern Europe – a key player in the ongoing transformation of the skills supply of the future and the way in which professionals engage.