The boss of a successful and growing North East IT company says businesses need to view broadband as the fourth utility and be prepared to pay accordingly.
Dan Kitchen, managing director of Razorblue Group, believes the region’s entrepreneurs can use broadband to drive forward the economy in the same way the potential of coal and steel was harnessed by industrialists in the nineteenth century. But he says the expectation that broadband should be virtually free is stifling that advance because Openreach – the BT company which provides the infrastructure for virtually all broadband services – is unable to invest properly to improve its services.
“Businesses are prepared to pay perhaps £200 per month for their electricity but not their broadband,” said Dan. “It all starts at home where you might pay £20 a month for 80Mb of internet. It sets an expectation: if I can get that in my house why should I pay ten times that for my business?”
The problem, he said, stems from a lack of competition for Openreach and the reduction of broadband costs which was enforced by the regulator Ofcom. “As a result BT, perhaps understandably has said: What’s in it for us? Why should we make it any better unless someone else funds it?”
That, says Dan, explains – but not excuses – the concerns over the quality of Openreach’s service. In one instance Razorblue had to wait 18 months for fibre to be connected from one building to another.
It is also the reason behind the backlash against the regulator’s decision this summer to allow BT to maintain control of major investments such as upgrades to full fibre-optic networks. Dan - alongside providers of internet and telecommunications such as TalkTalk, Sky and Vodafone - had hoped BT’s virtual monopoly, through Openreach, would be ended.
He believes such a move would ultimately have improved broadband performance to the level of other countries, such as Norway, Sweden and the Netherlands.
“The rest of the world is starting to outperform us now, but again businesses and consumers there are paying a bit more for the service. We have some of the lowest broadband pricing in the world for a well-developed country. And, of course, there’s a lot more competition in the US & Europe.
“Over here you’ve got BT and you’ve got BT – in the US you’ve got five or six key providers, competing against each other. They’ve all got their own infrastructure. The only sort of near competitor you’ve got over here is Virgin and its coverage is nigh on nothing compared to the size of the country,” he says.
With Sky and Vodafone, Talk Talk is one of the driving forces behind a recently-launched campaign called Fix Britain’s Internet. Despite Ofcom’s decision not to overhaul Openreach’s role, Fix Britain’s Internet is calling on mass public support to bring about a break up of BT and Openreach.
For Dan, though – speaking from his new office in Wynyard Park – “it is, what it is.” After 10 years of building the company from scratch, he is used to the volatility of the sector in which Razorblue operates. The business has become expert in providing ways around the gaps exposed by Openreach’s apparent under-investment and the constant evolution of IT.
“It’s what you have to do,” says Dan. “Unfortunately we do not live and work in an ideal world. We all know that IT is the first function to get the blame and the last to get credit.
Our role is so important to businesses that we have to find solutions for them.
“In fact, this is what we’re specialists at doing – and we’ve got a bit of a name for ourselves. There are countless business parks and rural locations across the country where we’ve brought super-fast connectivity to businesses at an affordable price, by being innovative and using our own technology”.
Razorblue began as a cloud hosting business – and still works with some of its early clients – but has gradually evolved. Now it offers expertise in managed IT support, cloud, superfast connectivity, telecoms and bespoke business software.
“We became an Internet Service Provider (ISP) in 2009 and built our own network,” said Dan. “We also wholly own our cloud infrastructure and the knowledge behind that goes back more than 10 years. Very few of our competitors in this region have that in-depth level of knowledge or control, and that results in a better more joined up service for our clients.”
Razorblue’s steady growth – it has just posted record results with turnover at £3.5m - has
been built on its technical excellence, repeat business, recommendations and market intelligence. Its success has come amid dramatic change in the IT sector, but – says Dan– that will continue to be the case.
“If new technology comes to the market you’ve got to embrace it. We’ve got to move with the market and keep up with the times – that’s what we’ve done for the past 10 years,” he adds.
Keeping up with the times also requires the ability to act and react to major political and economic events. The vote for Brexit – and the sudden collapse of the pound’s value against the dollar – had major implications for the UK’s IT businesses, because nearly all of the key technology companies are based in the United States (Intel, Microsoft, Apple and Dell) and sales are made in dollars.
“It was all a bit strange. For us nothing really happened on day one. Everything carried on as normal. But on the day after the vote we couldn’t buy anything because the dollar rate was going up and down, so nobody could decide what the exchange rate was,” says Dan.
Months later, with the pound looking set to stay low, businesses requiring IT services are facing significantly higher bills – around a 10% to 15% percent increase. “That’s not a major difference if you’re buying one PC, but it is if you’re replacing 100,” says Dan. That aside, he sees a bright future for the company which – even from the age of 16 – he believed would be a success.
“I suppose then I had no commitments and nothing to lose,” he says. “But that’s all changed and I am responsible for the livelihoods of a lot of people. I wouldn’t have it any other way. I’m really proud of the company, the team, and I know how valued we are by our customers.”
Those customers are not deliberately bamboozled by “geek speak” or at the receiving end of a hard sell strategy, says Dan. Razorblue’s approach is to offer a level of support appropriate to a business’s need. “We’re all about solving business problems and we just happen to do that via IT,” he says.
One major customer, for example, recognised the risk to its business of running its operation through one piece of software maintained by a man approaching retirement age. “They’ve taken our whole portfolio of products,” says Dan. “We’ve got three staff who work for us but are totally dedicated to that client. We’ve provided connectivity across all their sites. They don’t have individual servers on their sites or in any of their distribution centres. It’s all in our data centres. We manage the whole thing.”
The staff, whilst still employed by Razorblue but working full-time on behalf of the customer, benefit from still working within a fast-paced technology business, where they can keep fully up-to-speed with innovations.
Dan says the value to the business of outsourcing its IT function has parallels, for example, with the NHS: “It’s similar to managers trying to manage doctors who don’t know anything about healthcare.”
The NHS, by coincidence, was the former employer of Razorblue’s latest recruit. Craig Nicholson, who worked as an operating theatre technician, has become an account manager.
At 6ft 7inches tall, he is set to make an impression - in more ways than one. “We don’t have any set recruitment policy – we just try to get the best person for the job,” says Dan. “We obviously need people with technical knowledge, but that’s not necessarily the most important thing for our account managers.
“It’s more important that they are able to understand what the customer needs to make his or her business better.”
Nathan Young, another account manager, is a former night club manager. “We’ve got people who have worked in different types of businesses who bring a broader real-world experience,” says Dan. The company has also invested in apprentices who have learned how to work in the Razorblue way.
“Five of the people who work here – were or are – apprentices,” he said. “The technical apprentices have been fantastic. They are so engaged and love what they do. We obviously have checks and safeguards but the culture here is to throw them in at the deep end, so they’re learning at a rapid rate yet in a very controlled environment,” he says.
Recruiting young talent will, Razorblue believes, be a major benefit of opening a Teesside office which is accessible to all the local universities and a growing number of emerging businesses.
Having been born in Sunderland, grown up in County Durham and North Yorkshire, the move to Wynyard Park takes 26-year-old Dan just five miles from where he was educated at Red House School Stockton.
“I’m North East born and bred and although we have offices and customers outside the region, this is very much our heartland. For too long too many people here have been too reliant on big industry or local government for jobs. That has had to change and clearly is changing,” says Dan.
“From my point of view – both as the head of an IT company and a proud North Easterner – I recognise that we provide the key to support this new generation of businesses and I take that responsibility very seriously indeed.”
10 years at the cutting edge
Razorblue has just marked its 10th birthday by opening its fourth office. It employs over 40 people in Catterick, Leeds, London – and now Teesside – and has plans to recruit 10 more over the next year.
The business was started by Dan Kitchen when he was just 16. He abandoned his A-level studies after just a few weeks when he realised the potential of his fledgling company.
Over the years Razorblue has acquired a broad client base – currently numbering over 200 – and includes Sports Direct, Wensleydale Creamery and financial advisors Gale & Phillipson amongst its customers. The anniversary of its decade in business and opening of the new office in Wynyard Park has coincided with record results – with a 40% growth in the last financial year.
During that period Razorblue’s turnover was £3.5m and it has ambitions to increase that to £4.5m in the coming 12 months.
“At Catterick we experienced problems with recruitment – and although we will keep recruiting in that area – we feel there are greater opportunities here to find new talent from Teesside and the other local universities,” says Dan.
“This is a new office, but not new territory for us. We already have a large client base in Teesside and having a presence here will open doors to other local businesses.” He adds: “What we have to offer, and the different way in which we do things, I believe, gives us the edge over our competitors.”