Building a sustainable legacy: How Per Werngren and Idenet created a valuable business built to last

Download case study

Transitioning to a new business model

Idenet is a successful hosting company, recently acquired by the Dustin Group, one of Microsoft’s oldest partners in the Nordic countries. While the Dustin Group is known for its large selection of products, Idenet is focused on something very different–services.

Idenet focuses on providing distinguished hosting services for their customers. Originally specialists in IT and Support services, Idenet shifted its focus to managed services in the early 2000’s and were able to interact with people remotely, increasing the company’s overall success. But what made them attractive to the Dustin Group has been in the works for several years.

By shifting Idenet’s services to hosting in the cloud, Werngren was able to set up a successful recurring revenue model.

According to The Modern Microsoft Partner Series ebook1, IDC research shows that more and more businesses are adopting a cloud first procurement strategy. This is considered a factor that can drive significant, often double-digit, cloud growth in all geographies, particularly important for companies looking to be viewed as global partners.

The leaders at Idenet were very intentional about building a strong leadership team, establishing recurring revenue, and generating efficient and sustainable leads via digital marketing in order to make it an attractive and valuable commodity to other companies looking to make an acquisition. Werngren knew that having a consistent source of revenue was key to making their company an enticing asset. However, success didn’t happen overnight.

Building the right environment

Werngren identified that Idenet needed structure and clearly defined processes. “You need to build processes so that what you’re doing doesn’t depend on who is doing it to be successful,” Werngren says.

Werngren also emphasizes the need to continue building structure, not just in well-documented processes, but with the leaders of the company. “The leaders need to report in the right way, so that they have a chain of command in the workplace,” he says. “Building structure means, that as an owner, I become more and more redundant. Less important to the overall, ongoing, everyday processes. The company needs to be at least as successful when the founder leaves as the business was when it was founded.”

These structural improvements not only allowed Idenet to enter a new market successfully, but also made them an attractive company to The Dustin Group. Werngren didn’t look at an acquisition lightly. When it came time to choosing a bidder, Werngren ensured that there was shared leadership and values that would allow Idenet’s leadership to continue their success even after the acquisition.

Finding their place in the market

Idenet knew that in order to stake a claim in this new market, they needed to differentiate themselves. One of the ways Werngren helped shape Idenet was to simplify–especially when it came to working with vendors.

Choosing to only use Microsoft products was only one of the ways they distinguished their business. Being part of the Microsoft Partner Network (MPN) and being a Gold Partner in Hosting was crucial in order to show their customers their strength and deep knowledge of the industry. MPN helped Idenet gain much of that knowledge over the course of their partnership and fostered relationships with Microsoft WPG, and the Western Europe and Swedish subsidiaries.

By minimizing the number of vendors they relied on, Idenet grew their revenue and profit year-over-year. Idenet’s partnership with Microsoft enabled them to focus their time on business decisions that had a positive impact on their customers.

Success in the marketplace

To ensure that Idenet was successful in both the short-term and long-term, Werngren and his team made some major adjustments to their sales team, compensation model, and marketing strategies.

After moving from selling projects to a recurring revenue model, Idenet had to change their thinking as it pertained to their sales team. They found that people that were great at selling projects and products were not inherently great at selling subscriptions and driving recurring revenue. “Over the years, we’ve brought in people with different skill sets to sell recurring revenue,” Werngren says. “Some of your people will not be as successful as you expected them to be. This means that you need to be open to bringing in new and different types of people to do the job.” For instance, in this business model, the sales team should focus more on the economic value rather than technical capabilities.

As they assembled the best possible team, they also adjusted their sales compensation model. When working with a recurring revenue model, Werngren found that it is imperative to align compensation with the company’s key initiatives. “In the case of Idenet, we adjusted commissions to be upfront and based on the long-term value of the deal,” Werngren says.

By adjusting compensation in this way, Werngren ensured that his sales force was incented to work in concert with Idenet’s priorities–selling long-term services to their customers.

Finally, Idenet addressed their marketing strategy by taking advantage of all the digital tools at their disposal, embodying one of the four MPN pillars–Modernizing Sales and Marketing. Werngren says “it was extremely important to us that our website was attractive, that our customers could easily access relevant information, and that we could track behavior on the website to generate reliable leads.” With today’s data, Idenet is able to analyze behavior to generate leads and direct people to the appropriate content.

Due to all of the changes and updates made to their business model, Idenet has consistently had the highest margins among hosting service providers in the Nordic region, year-over-year. Their margins are also expected to increase this year as well.

For entrepreneurs looking to build equity in their firm and create a sustainable legacy that can add value to a larger organization, Idenet’s model represents a structured and successful model to pursue.