No more RM PCs for schools as RM switches to software and services – Abingdon factory to close in 2014
One of the strongest, longest running brands in computer equipment for UK schools, RM Education, is pulling out of hardware production.
The Abingdon-based company made the announcement this week to signal the change of focus of its educational technology division to expanding its software and services offerings. The move, long predicted by business pundits, follows a review of the company’s educational technology strategy.
In a statement issued this week the company revealed that “In addition to the previously indicated reduction of around £40 million in revenues associated with the conclusion of the Building Schools for the Future (BSF) projects, the division will exit the declining and low-margin sale of personal computing devices. A significant reduction will also be made in the scale of the division’s associated sales and marketing activities and in central services functions.
RM Education undertook severe restructuring following the emergence of the Coalition Government and its abolition of BSF, shedding a number of companies it had acquired to support major contracts for supplying new schools. The new developments mean a further 300 or so redundancies over the next 12 months, and staff consultations are now taking place.
The company expects the fall-off of BSF activity and hardware pull-out to reduce the educational technology division’s revenue by around 50 per cent over the next two fiscal years, plus one-off costs of around £10 million “which will be reflected as an exceptional item in the results for the fiscal year to November 30, 2013. This includes provisions relating to surplus property and redundancies. In FY14 the ET division is expected to trade around break-even as a result of the timing mismatch between revenue decline and cost elimination. After the reorganisation, the division is expected in FY15 to deliver much improved margins on the lower revenue.
The company statement highlights educational technology’s “successful record of extending services and software contracts with existing customers”. These include new new developments, like RM Unify and RM Books, there have been new customers for RM’s administration offering, RM Integris School Management Systems.
Other RM divisions 'unaffected'
RM says its other two divisions are unaffected. These are Assessment and Data Services, providing major database and e-assessment services, and Education Resources, its direct marketing resources business.
“Although we will continue to provide infrastructure hardware to support our network and internet services, we are proposing to exit all end-user hardware (RM branded and third-party PCs, tablets, thin clients, monitors, WCT, peripherals etc),” explains Dale Peters, head of corporate development with RM. “That means that our factory at Milton Park is likely to close mid-2014.
“It’s important to state that we’re not in any financial difficulty — we continue to have a strong year — but the fact is that the lack of requirement for education differentiation, commoditisation, shift to tablets, end of BSF, lack of capital funding etc all combine to make it impossible to make a reasonable return on hardware.
“This is really the next stage in our transition into a software and services business. It will allow us to really focus our attention on becoming the leading software and services partner for UK schools — RM Books and RM Unify are just the start of our innovations in this area.”