In a bid to grow beyond its sugar-centric client base, cash-flush InfoWave, a niche software developer from Durban, seeks out like-minded niche software developers WHILE REVENUE from its staple client, the sugar industry, may be sweet, Durban-based niche software supplier InfoWave is looking to further diversify its offering.

Following the announcement of some solid results for the year ended 28 February 2006, with revenues up 8% on last year to R34.4 million, CEO Tiffany Dunsdon indicates that the company is now sitting on a cash pile of some R7 million.

And, while InfoWave is still bedding down its March acquisition of ApplyIT, itself a niche process software supplier and a Microsoft-certified partner, it is already in exploratory discussions with one or two acquisition targets.

"It is possible that we will announce another acquisition this year, but it isn`t probable - we`re very selective when it comes to acquisitions," elaborates Dunsdon.

While there are no specific `gaps` in its offering, so to speak, the company values niche software providers bringing a well-established client base, annuity income and a high degree of differentiation from similar commodity products to the table, above all else when considering potential acquisitions, she reveals.

"Generally we consider smaller IT companies which have grown to a certain point and don`t know what to do next. Their offering must be `productised`, and their management experienced such that they fit in well as part of a JSE-listed group, like ourselves," explains Dunsdon.

SUGAR DRIVE

The lion`s share of InfoWave`s revenue is currently accounted for by the implementation and support of its Tranquillity financial applications and CaneLab, tailor-made for the sugar processing industry both at home and abroad.

Dunsdon indicates that the solutions are so unique that the company has no head-on competition from any other niche industry solution, either local or global, although there are ERP solutions that have been customised for sugar producers.

InfoWave supplies its software and services to the Illovo group and all its foreign operations, including those in Malawi, Mozambique, Swaziland, Tanzania and Zambia; the SA Cane Growers` Association, the SA Sugar Association, the Swaziland Sugar Association and the Royal Swazi Sugar Corporation (Mhlume), both in Swaziland; Hippo Valley Estate in Zimbabwe; and US client Raceland Raw Sugar Corporation.

Incidentally, the Illovo group this year renewed its application and integration outsource service contract with InfoWave for a further six years.

Although revenue from the sugar division, as it is known, fluctuates depending on projects undertaken within a given period, it accounts for the "significant majority" of InfoWave`s revenue, says Dunsdon.

Other divisions provide custom-built software services and general IT support services.

InfoWave also recently formed InfraSoft with black partner Senzokuhle Investments. The new company focuses on the marketing of DevMan property management software, for the delivery of housing and infrastructure projects in the public sector.

CLIENT BASE SYNERGY

Meanwhile, the acquisition of ApplyIT provides InfoWave with a new range of products to manage safety, health, the environment and quality (SHEQ), plant maintenance and operations in the manufacturing sector. The blue-chip customers ApplyIT brings with it include Samancor Manganese (BHP Billiton group), Mondi Shanduka Newsprint, AECI, Clover and Blendcor.

"In addition to the obvious synergy between our client bases, other benefits of the acquisition include added annuity income. We aim for long-term customer relationships which allows us to apply a long-term support model, and the same goes for ApplyIT," she explains.

Moreover, the acquisition allows InfoWave, which has traditionally built its offerings on Oracle and Java technology, to broaden its technology platforms to include Microsoft.

"One month into the acquisition, ApplyIT had a near record performance," says Dunsdon. "This proves that the acquisition was a positive move for both companies," she maintains.

Worth noting is that InfoWave originally bought 73.8% of ApplyIT, and immediately on-sold 10% of this stake on to black shareholders. As a result, ApplyIT is currently 26% black owned, while InfoWave as a group is 25% black-owned.

Dunsdon cites employee share participation as a significant success factor for the group. "55% of our business is held by employees and directors, resulting in greater employee retention, buy-in and performance," she notes.

"Our employee equity ratio is also a significant achievement considering the skills level of our IT specialists." More than 60% of its employees, many of whom are programmers and technical specialists, are black.

"There is currently a very buoyant labour market, and we`re not immune to it - we lose qualified staff all the time, but judging by what we`ve achieved so far, we`re a good place for equity employees to be," maintains Dunsdon.