By Joe Rukin
ITM Communications, the parent company of ITM Activate, the graduate recruiter who provide web hosting for NUS and a host of student unions has gone into voluntary administration, after management realised that their current liabilities couldn't be met- i.e. they had run out of cash.
So on the 1st November, Kroll Buchler Phillips, were appointed as Administrators by the High Court. ITM Management had been desperate to secure extra private funding, but failed, and these cash-flow difficulties- i.e. cash was flowing out, but none was flowing in- spelled disaster. 20 of the 39 Blackpool-based employees have already been made redundant in what the receivers see as an essential measure, if they are to be able to salvage the business and sell it as a going concern.
David Whitehouse, joint administrator for Kroll, tried as any administrator would, to paint a more rosy picture. He said:
"We are hopeful that we can secure the future of the business through a
going concern sale to a third party. Indeed, we have received serious
expressions of interest from several parties and we are optimistic that the
business will be attractive to a business that wishes to grow within the
area of online service provision. We are working with the NUS to provide a
fast and satisfactory resolution of the Company's difficulties which we hope
will benefit all the stakeholders of the business"
The placing of the company into administration is just the latest in a long line of troubles which have dogged the partnership between NUS & ITM. When the original deal was signed, eyebrows were raised at the fact that Owain James had signed away all internet rights to ITM for 30 years. It also seemed that NUS were getting a particularly bad deal, as the deal hinged on NUS taking up to a 5% stake in the company, if the scheme was a success and if ITM floated on the stock exchange. Many current NUS staff and NEC members who were around at the time of the deal may well find themselves under increased pressure for not investigating the deal as thoroughly as might have been done.
As time passed, the value of ITM, who had planned to float on 28th May this year, dropped from £1bn to £100m, meaning NUS's potential stake had fallen from £50m to just £5m. ITM had also been criticised for 'stealing ideas' by amongst others, the Student Zone, who wanted to speak to NUS about their Student Debt Reduction Scheme, but instead were only allowed to talk to ITM. Their idea, for a swipe card which held discount money on it was then promptly nicked by ITM, who stripped out the benefits to students.
The news that the company has been placed into administration could be disastrous for students unions and NUS, with the potential to mirror what the collapse of ITV Digital meant to football league clubs. Unions that still had their websites hosted by ITM would have budgeted for significant income this year, which will now be unlikely to arrive. NUS also will have to take a big hit on its income (if it ever actually got any income from ITM) for the upcoming year which may have consequences similar to the £300,000 of cuts planned last summer.
Whilst NUS have sent out a press release, saying that they are endeavouring to make sure that student unions get their money, in reality there is nothing they can do. If a buyer is found, the money, or some of it will probably follow, but if no-one does buy ITM, then those unions that have probably already spent their budgeted income from their website will be left short. While all websites are still up on their original servers, there is no guarantee for how long this will continue, and NUS is recommending that unions make backups of every page on their site. A better, or at least more specific recommendation would be that you back up in html and/or xml, if you've got it in Dreamweaver or other such design package, you may not end up compatible with whatever system you end up with.
As for other practicalities, this leaves the new NUS card up in the air. Many student unions who have submitted the paper forms filled in by students to register their cards are still waiting to get electronic versions back from ITM, and students are waiting for their e-wallet to become active. Again, carrying out this task is hardly likely to be the priority of the administrator, and practically is unlikely to take place if over half ITMs staff have been made redundant.
What seems hardest to understand is how bad ITM have been over the years. After signing a contract which delivered them advertising rights for 30 years for one of -if not the- best marketing demographic at a knock down price, it seems unbelievable that given those circumstances, anyone could get it wrong. But wrong is how it has been from start to finish. ITMs software, which they hoped to ensnare student unions imnto hosting deals, was klunky, prone to endless runtime errors, slow, garish, hard to edit and more importantly lacked sufficient size to allow unions to put anything more than twenty pages of content on at the start.
Finally over the summer the main NUS website was redeveloped into something reasonably worth having, but it was too little too late, and looking at the relaunch with the hindsight of what has just happened to ITM, it seems it may have been motivated more by desperation than realising their first couple of attempts weren't up to scratch.
So now a buyer has to be found, and maybe one will. Looking at the FT, you will be hard pushed to find anyone willing to buy into a net firm, but ITM has more than that, activate the careers service is something, but more importantly, ITM now has it's hands on personal information for almost every student in the country, and that must be worth something to someone.
And reading between the lines of the statement from Nick Gash, NUS National Director, one might believe NUS have been handed the opportunity to get out of a contract which has hamstrung them. He said;
" NUS fully realises that the ITM deal has not been without its critics and, while the situation in which we find ourselves is, in the short term, very difficult, we believe that it does give us an opportunity to secure an effective outcome for NUS and students' unions for the future."
NUS recommend that unions wanting to know more contact Lucy Sycamore at the NUS Marketing Officer on 020 7561 6565. However, if you want to go straight to the horses mouth, remembering that all administrators reports are public documents, you can contact the Kroll administrators at the ITM office on 01253 395 600, or get hold of their PR people, CGI on 0207 0724124
