FRONTIER BUSINESS SYSTEMS: In The Big League

Quite a few distinctions come the way of this Bangalore-based SI. Not only
does Frontier Business Systems appear in the Silver Club for the first time, it
also crossed the Rs 100 crore-landmark for revenues and became one of the few
solution providers capable of boasting the same.

Posting a strong 28% growth, Frontier Business Systems became a strong player
to reckon with in South India. There were times when the company managed to
snatch orders away from much stronger players like Wipro Infotech as well. More
interestingly, it was also able to attract employees from large SIs like Accel
ICIM.

One of the biggest reasons for the healthy revenue growth witnessed by the
company was impressive performances by its Chennai and Hyderabad branches, which
brought in nearly 40% of the overall business. It also got its Coimbatore and
Mangalore branch operational last fiscal, indicating an obvious need for it to
spread the business over wider geographies.

Conventionally a strong player in export-oriented units (EOU) vertical, last
year was no different. Around 55% business happened from these outfits, where
the order size were not huge, but pretty regular through the year.

However, its biggest customers last year, were ONGC and ING Vysya, which gave
Rs 7 crore and Rs 5 crore worth of orders, respectively. Both these orders
involved large amount of PC and server deployments, which is where it has always
been strong in.

A decade ago, Frontier's entire revenue came from IBM sales, but it
decreased its dependency on the vendor gradually. However, IBM continues to
bring in 50% revenue, with Sun contributing 12%, Cisco and Avaya together
pooling in 15%, while Emerson sales added another 10% to the topline.

Service revenues, though, are still a cause for concern as only 14% comes
through it. While it's a decent increase as compared to the 8% share in
2002-03, given the fact that most of this revenue comes from AMC, profitability
continued to be under pressure.

Being heavily focused on computing products, Frontier sold over 15,000 PC
units and 2,000 notebooks last fiscal. Another logical step it took was to add
storage to its solution bouquet and also set up an IBM SAN demo center. Now it
has a separate division looking at opportunities in the storage space alone.