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The Business Solutions Group at Hitachi Solutions America, a part of the Hitachi Group, is responsible for Microsoft Dynamics and related business for the company. The Microsoft Dynamics Business unit was acquired by Hitachi Solutions on April 1, 2012, from Hitachi Consulting. Hitachi Consulting entered the Microsoft Dynamics market by acquiring Iteration2, a firm started in 2004. Mike Gillis, who was the co-founder of Iteration2, is currently the President and Global Chief Operating Officer of the Business Solutions Group. He is responsible for overall global growth, strategic direction, client satisfaction, employee deployment and welfare for all Microsoft global projects. In an interaction with Gireesh Babu, Gillis speaks about the Business Solutions Group's plans to grow through inorganic growth across the globe. Edited Excerpts...
What is the reason for looking at India as a market now?
The Indian economy is strong and growing. It appears that the leadership is very stable and business-friendly. It is an appropriate time for us to address it. Also our business has grown and we feel we can do jobs here in India. Sales and marketing will be our first move.
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What are the targets for the Business Solutions Group?
We have a 2018 target of $680 million. We are doing that through strong organic growth, plus selective acquisitions. We are at around $200 million now. To get to $680 million, it won't come as purely organic growth. But there are good Microsoft Dynamics-related companies that are available to a company like Hitachi.
What is your acquisition strategy?
We have a list of companies. I have told them what our intentions are, I keep them in the loop, but it doesn’t mean that we have started negotiations. I meet them two times a year, and we share the latest on where we are. Through this strategy we have managed a couple of acquisitions already.
And we have a queue. These would be in Asia, in Europe, and some others in Brazil or in the Middle East and Africa. By keeping those relationships up and letting them know that Hitachi can be the best acquirer, that is a good way. And when it is the right time, we call them and ask whether it is the right time for them. And if it is not, we call the next person. So far, anyone that I have had in queue, that I wanted to start the acquisition process, they have been very receptive.
What synergies do you seek in such acquisitions?
When we do an acquisition, we look to accelerate our offerings or our expansion. If someone is very strong in a particular geography, we can accelerate our growth if we acquire him. If someone has intellectual property in a particular industry sector, we can accelerate our growth in that sector. It should be industry or geography and, sometimes, you get both.
What is the desirable size of a target company?
The bigger they are. There are not that many big Microsoft Dynamics-focused companies. So the inventory is limited. If a company is smaller, say $20 million, it would have to have very strategic IP, industry focus or be in a very strategic geography. Otherwise, we want them to be $20 million and above.
How many acquisitions are you looking at?
If we are to get to $680 million, we should have organic growth of 12 per cent. We still would need to get more than half of that money through acquisitions. We may end up meeting $300 million through M&A and if you average $50 million per acquisition, you need six acquisitions between now and 2018. If we do not find that size, we might end up with 8-12 in that period.
How much will you spend on these acquisitions?
If we have to buy $300 million of revenue, and if we are going to do it across 8-12 different transactions, we are likely to spend around $300 million to buy them.
