Business Leader Interview - Mike Peplow, SVP EMEA of BancTec
25 January 2010 
Welcome Mike,
Can we start with an introduction of yourself, your role and an overview of your company.
Sure, I would be happy to. As President of EMEA , I am also on BancTec’s corporate Executive team and am responsible for driving growth of the business in Europe, Africa & The Middle East. I have been with BancTec for 11 years, previously holding sales and marketing positions and have an MBA from Manchester Business School, in banking and finance. This has been very useful, given BancTec’s core focus in these sectors. BancTec has been established for over 30 years in both North America & Europe, with roots in cheque & payments processing. This has been expanded in recent years to include business solutions and business process outsourcing(BPO) services, focused on document intensive transaction processing and payment applications.
What are the primary products /services you offer, how do you position yourselves in the market and what business applications do you primarily address?
Our primary offerings are BPO services and in-house business solutions to automate the physical and financial supply chain processes for our customers in such areas as order processing and proof of delivery, credit card processing, remittance and invoice processing and other areas such as mortgage loan and tax return processing. Such applications, while mission critical to our customers, are not core to their business and are very capital intensive. In delivering these services and solutions, we leverage our three decades of domain expertise along with our intellectual property(IP), specifically, in high speed document scanners, capture and workflow software.
As BancTec has grown in size with an established brand, solid financial backing and an international reach, our credibility has risen and we have been able to close larger BPO deals. Longevity in the market and a reputation for providing consistent and reliable service have enabled us to achieve the necessary trusted partner status with many of our clients.. Also, by having both a solutions and outsourcing service business, we are able to give our clients a clear choice, depending on their specific business needs. Not only are the two sides of our business complementary, they also provide great reference ability for attracting new customers.
What percentage of your business is generated in EMEA and the split of product & solutions versus services?
I can’t comment on our 2009 numbers yet, but BancTec’s revenue in 2008 was approximately $270M and was split 50/50 between our Americas and EMEA operations. What has changed in recent years, is the increasing percentage of revenue coming from our BPO services, which now accounts for around a third of our business.
What countries are you now present in EMEA and where is your greatest presence?
We now have nine processing centres across Europe, including Germany, France, Sweden, Netherlands, Ireland, Estonia and three in the UK. We have also expanded our channel partners in other regions such as the Middle East, Eastern Europe, South Africa and, more recently, in Russia and Pakistan.
Which are the main market sectors you focus on?
Our core sector is still the Banking and Financial Services market, although we have increased our cross industry penetration into other areas, most notably Utilities, Telcos and the Public Sector. On the latter front, government departments are now becoming more professionally managed and there is a greater recognition of the significant cost benefits of streamlining government-to-citizen and citizen-to-government processes and communications.
As an international company how does your business differ in Europe vs North America?
While our go-to-market strategy and value proposition in both North America & Europe is the same, how one approaches each market in Europe obviously differs. For example, in the Telcos sector, unlike in the USA with the dominance of a relative few telecom carriers, there are a myriad of local telecoms providers in each country with their own differences of how they purchase or outsource their IT and business process requirements. So, understanding the local operating environment and having the right skills sets and domain knowledge of people in each location to apply are crucial factors for success.
Being a trusted BPO service provider goes beyond the simple sale and purchase of products and services, being a broader, deeper and more long lasting partnership with clients, involving a sharing of risk and benefits on both sides. In Europe, it can often take longer to grow the business due to the fragmented nature of the market, which requires more and varied sales & marketing and local resources. However, once established, the business can be easier to defend, given the generally strong client loyalty built up over such a long time period.
What are some of the market trends you see in the BPO area and what are some of the drivers that are impacting your business?
A big trend is in the web enabling of business applications and an increasing blurring of the boundaries of where and how companies operate. This is particularly true with outsource services, where it is quite common to capture large volumes of documents in one location, extract the data in another and provide the customer with multi-channel delivery options of information to drive their business processes. Increased broadband speeds, mobile computing and the expectation of 24/7 support means that the customer is less concerned with where the work is done, or who is doing it, than with the resultant value of the process delivered.
I see three main drivers that are having a positive impact on our business:
(1) The current scarcity of capital is making outsourcing an attractive option for many organisations, particularly around transaction based expenditure.
(2) Improvements in customer service and revenue generation. Customer demands and expectations are increasing as to how they want their information processed and delivered. Customers are choosing how and when they wish to communicate and receive information. This could include getting an update on a mortgage loan application via a mobile phone or knowing which invoices to pay and in which sequence, in order to achieve better cash and risk management.
(3) Globalisation and resource management. Given the global nature of many organisations with dispersed technology, manufacturing, sales and delivery locations, cost management is a factor. Most of these organisations are looking to drive out costs in the business without reducing customer service and excellence, across multiple regions. This is a key driver for our kinds of services.
The fourth, of course, would be the need for compliance, but I see that as more a ‘hygiene’ factor and the by-product of getting the end-to-end business process right.
What are your top three priorities for the next 12 months and are you gearing up for any new initiatives or objectives?
There are many areas we are focusing on to grow our business. However, the top priorities would be to
(1) Keep applying and replicating what we do well and provide ongoing value for both our customers and shareholders
(2) Continue to invest in IP that will support our core business and ensure leadership in
our sector of the market
our sector of the market
(3) Focus our efforts in growing our BPO services business
Our most important priority is to offer quality, reliability and timely execution of our clients’ individual requirements and to provide the highest possible customer service.
Are those objectives likely to be achieved through organic growth or will an acquisitions strategy come into play as well?
We will continue to complement our organic growth by making strategic acquisitions when and where they are synergistic with, or incremental to, our core technical capabilities, applications and markets.
With this in mind, what do you consider are the most important elements to look for in a target acquisition company?
There are many factors and obviously it depends on the strategic objectives of both parties. However, I would single out the following elements as being important factors:
- A company that has a unique capability with a compelling proposition, whether a technology, domain expertise, application or market sector focus.
- One that has a strong customer base with solid annual, recurring revenues
- A company with a solid management team and a business model that is able to deliver sustainable profitability and who are prepared to stay with the business for a sufficient period to transition the full value to the new owners, and finally,
- One whose people and business culture is synergistic to the acquiring company
What are the main challenges for you to overcome and management lessons learned?
(1) Customers and markets are changing and, as a result, are attracting new competitors. This will require greater flexibility and focus on servicing our customers’ end-to-end document intensive transaction and payment processing requirements.
(2) We also need to look for new ways to bring increased value to our customers. As an established player in the market, continuity is very important to our business and we need to balance that without becoming stale or complacent, and
(3) We need to continue to attract, recruit and retain quality management and staff who are able to deliver, with passion, the vision and objectives that drive the company
Finally, if you were stranded on a desert island, which one technology toy would you miss?
For me, I have to say, I am somewhat addicted to my i-phone! They finally got it right, with a device with so many built-in features for both business and pleasure that actually work and are very intuitive to use.
Many thanks, Mike for sharing some perspectives on BancTec’s European business and market perspectives, particularly in the BPO sector.