Turning point for Origo 2019

Origo’s net profit was ISK 456 million in 2019. Revenue increased by 8% and EBITDA came in at ISK 1,006 million. Results varied by units, however. Software units were a lynchpin of Origo’s operations during the year, which reflects significant changes in the Company’s solution offering and needs of customers, who are increasingly using software solutions to enhance services and operations. One might say that Origo is at a turning point, traditionally being known for sales and service of hardware and related solutions rather than software solutions.

Automation in travel solutions delivers fast benefits

The operations of Origo’s software units are growing significantly, including technical solutions for the travel industry, and the Company has placed great emphasis on the development of its own products and special development for airlines, travel agents, tour operators, accommodation, car rentals and booking agencies. One of Origo's solutions for the travel industry is the Bus Travel Guide, which increases efficiency of the operation and implementation of group tours. The solution consists of a management web and apps for tour bus drivers and customers. Also worth mentioning is Paxflow, a management system for tour operators designed to enhance operational efficiency through increased automation and ensure better customer experience.

Origo introduced the hotel booking system Cover a year ago and the response has been extremely positive. With Cover, hotels can be automated, many of which have spent significant time and manpower on diverse handiwork. The benefits of the Cover system are very visible and especially in revenue management, which is very important for hotels. Connecting to the solution is fast and the benefits of automation are achieved fairly quickly. The solution calculates prices seven times a day, taking into account competitors' prices, demand, utilization of the hotel in question and average price estimates.

Most used car rental system

Yet another travel solution from Origo's is Caren, a comprehensive solution for car rentals of all sizes. With the Caren solution, car rentals can maximise fleet utilization and manage their overall operations. With the Caren solution, a car rental can monitor the fleet in real time and receive reports on driving and use of individual vehicles. Caren is today the most used car rental system in Iceland. The solution is also used by car rentals in Europe and in South Africa.

Origo has also invested in technology solutions for the travel industry that complement Origo’s offering. One example is the British hotel management system The Booking Factory (TBF), an all-in-one solution for small to medium-sized accommodation establishments. TBF is a simple and modern cloud solution currently being used by 250 hotels and accommodation establishments in 11 countries. The solution is marketed under its own name abroad and as a white label solution in Iceland under the brand name Cover.is. The Booking Factory is a great fit for Origo's existing range of solutions and its focus on developing its own solutions for marketing in Iceland and abroad.

CCQ takes flight

Numerous other own software solutions have been a hit with Origo’s customers, not least the Cloud Compliance & Quality (CCQ) solution , which is a user-friendly quality management solution in the cloud and available for subscription. CCQ has been very well received and currently boasts close to five thousand users across around 50 businesses and institutions. At the start of the year, a new version of CCQ for smaller aircraft operators was released, under the name Aviaxis, and its marketing and sale has begun outside Iceland.

Also worth mentioning is the Kjarni HR and payroll system, as the user group for this solution is growing steadily. Origo has focused on good collaboration with Kjarni's users and developing good ideas with them so that the solution continues to evolve. The main requirement of users is to be able to access information anywhere and anytime. There is also a strong demand to simplify work processes and reduce actions that do not deliver value. These factors rank highly in Kjarni’s development for users of the solution and other solutions that the Company develops for users. Origo has also developed a new web interface in Kjarni, where access to information is even better than before. The web interface can be accessed from anywhere and is scalable, so it is the same whether users access it on a computer or a smart device.

Origo also focuses on sales and consultancy services for third party software solutions such as SAP and Business Central (Dynamics NAV). Large projects are either in active development or preparation, mainly for SAP S/4HANA, and demand for the services of Origo's Business Central team increased.

It is worth noting that Origo’s SAP-advisory team was selected Partner of the Year by UnitedVAR, an association of 50 leading SAP partners comprised of approximately 10,000 SAP consultants in 90 countries. Origo was recognized for on-premise SAP business solutions.

One of the main strengths of Origo is the knowledge and level of service it is able to provide to the financial services industry. Recently, Origo has invested quite heavily in the development and operation of digital banking solutions such as online banking, banking apps, ATM solutions and POS solutions. Subscription revenue from these solutions will increase in the coming periods. Our expertise in this area will assist us greatly in the development of further solutions in the field.

Optimizing the amount of banknotes in ATMs with artificial intelligence, automated diagnosis online, attendance scheme with face recognition and automatic measurement of caffeine consumption were the winning projects of the 2019 Superhero Days, and who knows whether these solutions will become products before long.

Origo has also opened a development centre in Belgrade, Serbia, with the goal of the operations being to enhance competitiveness and develop new software solutions for customers. The root of the operations in Belgrade can be traced to Origo’s purchase of a stake in Unimaze, which specializes in electronic invoices. Unimaze had good experience of Belgrade's knowledge society and its infrastructure. Currently, there are ten employees of Unimaze and Origo in Belgrade, all in the same office which opened earlier this year in the heart of the city.

Good results were achieved in the sale of solutions from Fortinet and Microsoft, and Origo was recently named the Microsoft 2020 Partner of the Year in Iceland. This is an acknowledgement of Origo's successful partnering with customers on developing and implementing Microsoft 365 with an emphasis on security, the teamwork tool Teams, and adapting Azure cloud solutions for customers. Origo was also named a Fortinet Gold Partner for sales of the company's security solutions, and Partner of the Year for Infrastructure and Security Solutions by IBM Denmark. Google also selected Origo as a partner in Iceland for cloud solutions and G Suite Corporate Solutions in 2019; such collaboration ensures Icelandic companies' access to experts in the development, implementation and operation of Google solutions. Google is one of the world's biggest brands and a leader in the development of technology solutions for individuals and businesses. About one billion people use Google solutions worldwide. Most people are familiar with products such as the Google search engine, Youtube, Android, Maps, Chrome browser and G-Mail.

Cloud solution developed according to customer needs

In order to meet the needs of customers, Origo has developed Aurora DataCloud, a pioneering, cost-effective storage solution for data that needs to be stored in large quantities for a long time. It was designed for the media industry, to serve as an archiving solution for video and audio but has already proven its value to other types of users, including commercial airlines and museums. Aurora DataCloud was built using an innovative combination of IBM servers, storage and tape systems to create a highly automated, versatile system that users can choose to interact with in a number of ways. It offers customers a low cost, reliable, secure and environmentally friendly solution to the problem of storing large quantities of data for long periods, while keeping the data easily accessible at any time for the users. Iceland’s exclusive use of geothermal and hydroelectric power means all the energy required to run Aurora DataCloud is renewable – a factor that is particularly appealing to European customers looking to offset their carbon footprint. At the same time, we emphasise being able to offer our own cloud services domestically or provide customer service through various cloud service partners anywhere in the world. These include Google, IBM and Microsoft.

An increasing number of Icelandic companies rely on multi-cloud services in day-to-day operations. This entails numerous new challenges relating to the management, security and usability of such solutions. These challenges are not only technical but also of a financial nature and are therefore of major importance in business operations. It is very easy for companies to start using cloud solutions, as the implementation process becomes increasingly simple, but it is important to have an overview of security factors and cost.

Cloud service buyers are technological directors and programmers, who are a growing buyer group such as for Kubernetes (so-called "Container Orchestration" system for "Docker Containers") container service, which enables programmers to move systems between cloud services.

Artificial intelligence to combat hackers

Security solutions are also a growing service component of Origo and not without reason. Hackers are increasingly directing their attention at companies and individuals in various ways. There are examples of them having acquired huge sums, both domestically and abroad. Therefore, it is important for companies to protect their environment well.

Cyber-attacks have become an sophisticated industry with powerful people behind it. Therefore, it is important to address these issues very firmly. One branch of this illegal industry is so-called fraudulent mail in the form of false payment orders, with corporate executives usually being the targets. Hackers also employ a variety of social engineering methods to get computer users to relax security requirements or break security rules. For example, they try to make e-mails appear to come from friends or colleagues. Hackers can also detect if the victim is abroad, making it is easier to carry out attacks. Origo places great emphasis on fighting off attacks on its customers, and data analysis plays a key role in this respect. Companies’ digital data is growing at a rapid pace and powerful tools are needed to process and analyse all the information coming in and out of companies. Synchronising data from different security tools can provide an accurate picture of the state of affairs at any given time. Origo also uses artificial intelligence to help identify patterns and changes in behaviours or processes. Artificial intelligence can also help predict things to come.

Origo received two awards this year from IBM Denmark, being named Partner of the Year for its security solutions and data cloud respectively from among IBM partners in Denmark and Iceland.

The outlook for Origo's managed services and infrastructure operations is good. Sales of larger enterprise solutions and service contracts have started to recover, operational efficiency has improved and demand for security and cloud solutions and solutions for the automation of business processes has increased significantly. Today, Origo's Service Solutions unit is well placed to meet the increased demand and provide customers with efficient and reliable service.

Strong growth in online sales

For many years, sales of end-user equipment has been a mainstay of Origo's business. There was robust revenue growth both in the fourth quarter and the full year (around 20%), partly driven by the acquisitions of Tölvutek and Strikamerki. The main reasons for the decline in profits are growing competition in equipment sales, pressures on profit margins and rising operating costs, due partly to the integration of acquired units. Origo is strongly placed to improve the unit's profitability by solidifying the revenue base and reducing costs. It is worth bearing in mind that the customer base is both large and loyal, and brands such as Lenovo, NEC, Bose, Canon and Sony have a devoted following among enterprises and consumers alike. Strategic efforts have been made to improve results in this area of Origo's operations, with particular emphasis on improving profit margins, by introducing a new structure and areas of focus which should drive better results in 2020. In October, Gunnar Zoëga was appointed Managing Director of End-User Solutions.

Online sales continue to grow at a robust rate, creating opportunities for further automation of sales channels.

Great efforts have been made to promote and strengthen the online store and make it more accessible. The changes have appealed to customers who are increasingly using online shopping, with 75% growth in online shopping in 2019 compared to the previous year. The online store brand is growing rapidly, offering 80 product categories, 150 brands and 8000 product numbers.

When shopping in Origo’s online store the products can be picked up in special smart boxes located outside the store in Borgartún at any time of day. All messages automatically go to the customer, which entails considerable time savings and convenience. Customers can come when it suits them, which is part of Origo's increased automation.

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