1. 21| businessnews.com.auFebruary 29, 2016
With many professional services firms chasing diversification
opportunities, Business News profiles four businesses pursuing very
different strategies.
H
OW does a tech
start-up in North-
bridge backed
by a mining con-
sultancy in West
Perth manage to secure work
on the world’s largest privately
funded infrastructure project, in
Nicaragua?
The answer lies in the diversi-
fication strategy pursued by CSA
Global, which has found novel
ways of employing its expertise
during the mining downturn.
CSA has secured clients in vit-
iculture, broadacre farming and
most notably on the $US50 bil-
lion Nicaragua Grand Canal and
Development Project.
5-PAGE FEATURE
Mark Beyer
mark.beyer@businessnews.com.au
@AMarkBeyer
Novel strategies for growth
WELL STOCKED: Jeff Elliott says CSA Global has no need to go into ‘hibernation’. Photo: Attila Csaszar
“The minerals industry is doing
it tough but business goes on,”
managing director Jeff Elliott told
Business News.
“We’vegotgoodpeopleandwe’ve
got the financial resources, we
don’t need to go into hibernation.”
Its recent initiatives have
included applying the mineral
industry’sapproachtoprospectiv-
ity mapping for the wine industry.
At Swinney Vineyards in Vic-
toria, CSA built a 3D soil model
showing all of the main soil types,
overlayed with the viticulturist’s
fruit quality maps to find which
soil types coincided with the best
fruit.
The results can be used to help
identify the best areas for new
vines.
The company took a similarly
lateralapproachtothefarmsector.
Just as miners blend ore from
multiple pits to get the best mix
for clients, the same approach is
being applied to hay.
“We took a mining optimisa-
tion solution and applied that
to hay blending,” Mr Elliott said.
He said the work in Nicaragua
came from a discussion about
aerial photography.
“We told them about the tech-
nology that’s available and the
benefits of that, and how it
could help them locate the build-
ing materials they need for the
canal, the sand, gravel, stone,
cement, etc,” Mr Elliott said.
“If you know where the indus-
trial minerals are, you could
start optimising your canal
route economically based on
load and haul distances.”
ToMrElliott’ssurprise,CSAwas
FEATURE
FEATURE
• Diversification
a key goal for
many businesses
• New revenue
helps offset
mining
slowdown
• Acquisitions
can speed up
diversification
• Integration a
major challenge
Key takeaways
That was
something we
developed for the
minerals industry
but we’ve been
able to apply it
to agriculture
and we’re now
applying it to
infrastructure
- Jeff Elliott
employed former Leighton boss
Bill Wild as chief project adviser.
“We thought we didn’t stand a
chance because they were going
global,” he said.
Despite these doubts, CSA was
contracted last year to conduct an
aerialgeologicalsurveyofthepro-
posed 276-kilometre canal route
and the Lake Nicaragua shoreline.
“They were pleased to have
exposure to international experi-
ence and diverse experience, and
bringing in technology and ideas
from other industries,” Mr Elliott
said.
CSA recently won its second
contract on the canal pro-
ject, to supply an information
management system for the
archaeological, environmental,
Continued on page 22
Professional services
invited to pitch for the work by
Hong Kong-based project devel-
oper HKND Group, which has

2. FEATURE PROFESSIONAL SERVICES
22 businessnews.com.au | February 29, 2016
geological and engineering data
being collected.
It’s using a cloud-based solution
thatwasdevelopedin-houseandis
now housed in Northbridge-based
technology startup Spring Tech.
“That was something we devel-
opedforthemineralsindustrybut
we’ve been able to apply it to agri-
culture and we’re now applying it
AMBITION: Otoc wants to secure around 5 per cent of the national survey market,
according to Simon Thomas.
Firms’ novel business strategies
From page 21 to infrastructure,” Mr Elliott said.
Innovation history
Mr Elliott said CSA had been
pursuing innovative solutions
sinceIrishgeologistRupertCrowe
founded the business in 1984.
“He was one of the first people
in the industry to use the original
Apple Macs, to bring the power of
computingtothegeosciencefield,”
he said.
That led to CSA developing
more capability in geographic
information systems.
“He started up a GIS company
that is well-known to this day,
NGIS,”MrElliotttoldBusinessNews.
“It started up inside CSA, the
same way modern startups
happen, it was incubated then
stood on its own two feet.”
CSA originally specialised in
base metals, but under Mr Elliott
broadened its coverage to other
commodities.
Ithasalsodiversifiedbeyondits
geologist roots, to offer services
such as ore body evaluation, mine
planning and mine operations,
and has opened international
offices.
“By adding capability and open-
ing up market opportunities, that
ledtoclientssaying‘whydon’tyou
have an office here’?”
We’re
looking for
principals who
are attracted to
the concept that
we’re building a
large, national
surveying-
related services
business
- Simon Thomas
Mr Elliott said CSA tended to be
countercyclical.
“Listed companies tend to
follow market trends, they tend
to be a bit late adjusting,” he said.
“Private companies can hide
under a cloak and be far more
nimble and dynamic.
“That means when others react
to the market, we react to the
opportunity that presents.”
Mr Elliott said the group also
had a conservative financial
model, to help it deal with the
impact of commodity cycles.
“We put away hay in the good
times; that gives us a reserve if
opportunities come up.”
Diversification was an ongoing
journey, he said.
“You should stick to your
knitting unless you’ve got the
expertise to move into a new
area, and if you move, make sure
it’s a natural extension, not a com-
plete right turn or a big jump into
another industry,” Mr Elliott said.
“It’s not like we were geos who
suddenly said we’re environ-
mental experts or construction
engineers.
“We’re a mining consultancy
witharangeofservices,andavery
strong foundation geologically
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3. PROFESSIONAL SERVICES FEATURE
23| businessnews.com.auFebruary 29, 2016
BASE: Lycopodium remains a resources-focused business, Peter De Leo says.
Photo: Attila Csaszar
There is no
plan to reinvent
the company;
we believe at
our size and
scale, that there
is a sufficient
market across
our existing
sectors
- Peter De Leo
because that’s the heart of our
service.”
Mr Elliott said a recurring
theme during CSA’s growth was
collaboration, which was contin-
uing but in a different way.
“Typically in the past we pooled
resources with others in the
mining industry,” he said.
“Thefutureiscollaborationwith
people outside mining, you get
greater leverage opportunities.”
Tech opportunities
In recent years, CSA has turned
more attention to investing in
innovation.
“What drove us to invest in
innovation was the GFC,” Mr Elli-
ott said.
“Suddenly we had spare capac-
ity and people with good ideas.
“Oneofthelessonswe’velearned
is that you can identify the inno-
vation within, but don’t try to
commercialise it from within.
“In a professional services firm,
the mantra is staff utilisation,
gross profit, hourly charge-out
rates and all that.
“In a startup, if you bash them
with that, they switch off.
“Those natural defence systems
will attack it.
In support of this goal, CSA
recentlyparticipatedina$900,000
capital raising for local big data
company Inhouse Group.
The fundraising was led Mr
Rossdeutscher, who also joined
Inhouse as board chairman.
Mr Elliott said that, like all of
its peers, CSA had been heavily
affected by the mining slowdown.
Its turnover had fallen, while its
head count had dropped to about
80 people.
However, he believes its diversi-
fication has helped.
“We’ve stood against the
weather much better than most
others,” Mr Elliott said.
OTOC’s new focus
Contractor OTOC is taking the
concept of diversification further
than most companies.
It is effectively creating a
second, professional services
business stream through the
acquisition of surveying firms
across Australia, to operate
alongside its contracting arm.
It is hoping those businesses
will deliver steady, reliable earn-
ings, in contrast to the lumpy
income from contracting.
Otoc has owned Perth-based
Whelans since 2010 and has
boughtthreeeastcoastsurveying
firms during the past two years.
Chief executive Simon Thomas
said the group held about 1.5 per
cent of the national market, and
wanted to get bigger.
“We have an ambition to have
around 5 per cent of the national
“The best thing to do, if you
think you’ve got something good,
is push it aside, free it up, give it
space.”
CSA’s journey of innovation
took another step in 2014 when
technology entrepreneur Peter
Rossdeutscherjoinedaschairman.
He also chairs a board
sub-committee looking at growth
opportunities outside CSA’s core
consulting activity. Continued on page 24
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4. FEATURE PROFESSIONAL SERVICES
24 businessnews.com.au | February 29, 2016
ACCOUNTANT ACQUISITIONS IN WA*
Deloitte: Cloud Solutions Group, Qubit Consulting, KD Johns & Co
EY: C3 Business Solutions, ISD Analytics, Oyster Consulting
KPMG: Markets IT, Momentum Partners, SGA Property Consultancy
PwC: Appian Group, Hands-on Systems, GEM Consulting
* This is a sample of acquisitions in recent years, not a full listing.
For more see
businessnews.com.au
OTOC
survey market,” Mr Thomas told
Business News.
That presents two major chal-
lenges: the group will need to
complete a further 10 to 15 acqui-
sitions over the next five years to
achieve its goal; and it will need
to effectively integrate those
businesses so it doesn’t repeat
the mistakes of companies like
VDM Group.
Mr Thomas said Otoc was pre-
pared to bide its time to find the
right opportunities.
“We’re not seeking out dis-
tressed businesses that we can
improve through cost efficien-
cies and cost-cutting,” he said.
“We try to identify businesses
that are sound in their own right.
“We’re looking for principals
who are attracted to the con-
cept that we’re building a large,
national surveying-related ser-
vices business.”
Mr Thomas said integration
was a gradual process than
cannot be rushed.
“We allow them to operate
stand-alone for a two year period
and that allows us to work hand-
in-hand with the principals on
how the integration process will
take place,” he said.
Mr Thomas said the inte-
gration of core areas such as
11KPMG AUSTRALIA
ACQUISITIONS IN PAST
TWO YEARS
Many strategies, one goal
for businesses – diversify
From page 23
It’s not a
simple property
sale, nor is it a
complex M&A
deal, it’s in a
sweet spot right
in the middle
that suits our
service - Justin Carroll
treasury and finance had deliv-
ered savings, such as through
consolidation of insurances.
There was also a concerted
effort to improve and standard-
ise business processes to create
not just cost savings, but more
importantly, consistent quality
and service delivery.
Lycopodium on track
Mining-focused engineering
firm Lycopodium has broadened
its activities over the past decade
but has no plans to shift its core
focus, despite the downturn in
that sector.
“Overwhelmingly we are still
resources focused and we’ve been
careful not to lose that,” managing
director Peter De Leo said.
“It’s what we’re very good at
and have a very good name for
internationally.
“Our story has been more about
broadening than diversification.”
Lycopodium has completed sev-
eral small acquisitions since 1999,
including its Melbourne-based
process design business and its
Perth-based asset management
business, which have given it
exposure to industries outside
mining.
“They are small but they are
doing some great work,” Mr De
Leo said.
“They’ve made the landing a
little softer.”
Lycopodium has also created
new business streams, including
its infrastructure arm, which has
won numerous small contracts
on projects ranging from the
Yanchep Surf Lifesaving Club to
suburban land subdivisions.
“That was really just an
extension of what we did for
mining-related projects, building
camps, non-process infrastruc-
ture and civil engineering,” Mr De
Leo said.
He said the company’s core
minerals business was already
diversified across commodities
and geographies.
“There is no plan to reinvent the
company or anything like that.
“Webelieveatoursizeandscale,
that there is a sufficient market
across our existing sectors.”
Accountants
The ‘big 4’ accounting firms
have made more than 20 local
acquisitions over the past two
years,mostlyofspecialistconsult-
ing groups in the technology field.
PwC Perth office managing
partner Justin Carroll said the
group diversified into new areas
when it recognised synergies with
the needs of its clients.
“If we get a lot requests, we will
look at buying or building up the
capability internally,” Mr Carroll
said.
PwC’s latest acquisition was
national infrastructure advisory
firm Appian Group, which has
worked on projects including
Perth Stadium, Fiona Stanley
Hospital, Elizabeth Quay and Mid-
land Health Campus.
“They have deep project skills
that have been fully integrated
into the PwC network,” Mr Car-
roll said.
He said acquired firms could
have a lasting impact, even if the
principals moved on after a few
years.
In Perth, for instance, PwC
acquired GEM Consulting in 2007
and Mainsheet Corporate in 2009.
GEM’s Robert Radley is now
at Azure Consulting, his former
colleague Brian Beresford was
recently appointed head of
corporate finance at Euroz Secu-
rities, while Mainsheet’s Maurice
Argento now runs a management
consulting practice at BDO.
“Those people have left but the
capability and type of business
they built, the methodologies,
mindset and thought processes,
that all stays,” Mr Carroll said.
“The acquisitions also estab-
lished a critical mass that has
allowed us to continue.
“Wouldwedothosedealsagain?
Every day of the week.”
Mr Carroll said PwC’s consult-
ing practice, headed in Perth by
Andrew Friars, was one of its fast-
est growing divisions.
A notable growth area for PwC
is real estate advisory, a service
it has offered for three years in
Perth and six years nationally.
Mr Carroll said PwC focused on
providing strategic analysis and
advisory services rather than just
being transactional.
He believes PwC’s rounded
capability was a major factor in
the firm being appointed last
year to manage the sale of the
Insurance Commission of WA’s
commercial property portfolio.
“It’s not a simple property sale,
nor is it a complex M&A deal, it’s
in a sweet spot right in the middle
that suits our service.”
Mr Carroll said while most of
the graduate recruits joining PwC
were from a traditional commerce
background, the lateral hires were
often from different areas.
This includes psychologists,
doctors and clinical nurses
working in the firm’s health con-
sulting practice.
“That’s become a huge part of
our business, maybe the best in
Australia,” he said.
Mr Carroll said PwC was also
building a substantial legal prac-
tice, which currently employs 120
people in Australia.
He said the firm’s strategy was
to be a one-stop shop for clients,
but it would only offer legal ser-
vices that were relevant to its core
business.
STRATEGY: Justin Carroll says acquisitions created a critical mass that allowed PwC to
continue. Photo: Attila Csaszar