How to turn around a “failed” company

EOH recently reported a 214% leap in headline earnings and an operating profit of R167-million. This was all the more remarkable in that the company appeared headed for collapse back in 2018, when Stephen van Coller was appointed CEO.

Mired in scandal and allegations of tender fixing and irregular payments, the company all but cleared out its previous executive suite, sold off various subsidiaries, and came clean about the extent of fraud, conflict of interest and plain theft in the Organisation. It reported massive losses, and was in debt to the tune of R4-billion when Van Coller took over.

Van Coller was tasked not only with turning the company around, but also with cleaning up its reputation. Four years later, there is a bright light in the abyss. EOH had a cash balance of R625 million at the end of January 2022 and undrawn overdraft facilities of R250-million available as at 12 April 2022.

We asked him how he did it. These are highlights of the discussion (the full interview can be viewed here): 

Arthur Goldstuck: For anyone watching the process over the last couple of years and watching it critically, this doesn’t really come as a surprise because it was the trajectory that you set and that you stuck to over the last few years. But for those sceptics and those who didn’t imagine if (EOH) can be rescued, what did it take?

Stephen van Coller:  It’s a huge effort. You have to deal with the sceptics, and in the world of social media, people don’t have to do any work or have any research and they can say what they like. So while you trying to get the team together, keep the customers together and improve, and time is the great healer you need, those people can rubbish you. The reports about me are very personal, but this isn’t my company, it’s not my business. I’ve just got a role. You have to just put your head down and carry on and results talk rather than people’s preferences. So it is it’s very tough, but it’s more tough for the staff. I’m old enough to not worry about those things, but the staff don’t know all the detail. They don’t know where it all comes from. So it makes it more difficult for them because they take it personally because someone’s taking a swipe at their business that they’re very proud of.”

 Now I think everyone’s pretty proud of what they’ve done and where they’ve got to and how we led the way and the transparency and the crime-busting and being open about how this corruption can happen. We have a lot of good feedback from a lot of corporates and some of them have asked us to come and help and that means you are on the right track. 

AG:  What was the strategy that you put in place when you arrived?

SvC: There are things you find out as you go but the first thing was, without my customers and the support of government, there was no chance. We sell services, so they can theoretically get them from somewhere else. In a big developed market, we might have found it more difficult. When you’re a smaller market it’s less competitive. First, we had a chat with all the customers to say, “Well, this is what we found. This is what I’m going to do about it. If I do that, will you be satisfied that we are a credible service provider?” It’s quite a standard process and National Treasury have got the steps. If you go and have a look at the SEC, DOJ, they’ve got the steps. It’s not rocket science. I got a lot of advice from people. You have to be open and honest, you have to be transparent, you have to deal with the issue.

The first thing we had to do was sifting through millions of emails, putting together an understanding what went on, and understanding where the weaknesses were, and what we had to change. And then once you’ve done that, and reported that, you had to go and execute. And then the last thing you had to do was make sure that you made the business profitable again. It was just a matter of time and now we’ve done the strategy, reorganised the businesses, consolidated a lot, to make it efficient. That’s the short version.

AG: Let’s get down to the technology that you actually use, implement and provide as a service to organizations. 

SvC: If you think about any IT stack, it starts with the hardware. That hardware has to be connected to an internet, and that hardware can be servers, data storage, modems. To make that work for your business, you’ve got to then put your software on and then make it user-friendly and accessible to your customers and your staff and your stakeholders. You’ve got to put something on top, you’ve got to do some application development, you do some data analytics, etc. We do all of that, but I’ve now divided it largely into three main businesses:  the infrastructure service, software as a service, and platform as a service. I can run that whole thing for you, so you can focus on your business. Those are the three main businesses. The systems integrator is 75% of the turnovers, R5-billion of the 7.

AG: Digital transformation is essentially what you’re offering your customers. Are you yourselves fully digitally transformed? 

SvC: It’s like the cobbler’s son. He doesn’t get the shoes. We are busy in that process. We’ve done a lot of it. We’ve done our CRM, we’ve done all our GRC services; there’s more to be done on GRC. We’ve done all our learning and development. So we’ve built our own platforms to do that. The last bit we have to do is ERP, and we’re hoping to go live, because we’ve got quite an old system that was very bespoke, not upgradeable, and really not fit for purpose. We should go live towards the end of June, July, which will then give us a unified system across the whole business, a single source of data. Then we will really be able to manage the business much more efficiently. 

• To watch the full interview, click here.