Back to the future -- if only

Rick Ellis has been doing the rounds of the IT press since returning to the industry a month or so ago. That occasioned comparisons between the industry then and now. My recollection of the computer business in 1992 is of a world awash in money.

A starter for 10: who remembers Kevin Doddrell? Anyone who watched Qantas New Zealand crash and burn – and saw the sequel play out in court – will know his name. As the airline’s chief executive, Doddrell paid the penalty – a conviction and $32,000 fine -- for not properly reporting its finances in the lead up to its failure in 2001.

But that’s recent history. Those with longer memories will recall Doddrell as marketing manager at Wang New Zealand. That’s going back 10 years, an era brought back to life during a meeting last week with his then-boss, Rick Ellis. In my mind, at least, Ellis’ and Doddrell’s names are forever linked, although I’m not aware of any ongoing connection between the two.

Ellis has been doing the rounds of the IT press since returning to the industry a month or so ago as managing director of services company EDS, after an absence of several years. That occasioned comparisons between the industry then and now. My recollection of the computer business in 1992, the year first Doddrell, and then Ellis, left Wang New Zealand, is of a world awash in money.

Ellis doesn’t contradict that view, remembering it as a time when IT vendors would present the customer with a complete solution of proprietary hardware and software.

This was a line Computerworld reporters often heard from marketing people back then: such and such a vendor was offering a “total solution”; customers had no need to complicate matters for themselves by shopping here and there for all the bits and pieces required to run the organisation.

Ellis didn’t say as much but along with the total solution went juicy profit margins. There was no division of the spoils between hardware and software provider; the proprietary solution seller got the lot. It was a time when computer salespeople thrived – six-figure salaries were common, according to a 1992 Computerworld story – helping many a high-flyer into their first Porsche. And Wang made out all right as well -- in New Zealand, at least. Perhaps its products – principally the VS minicomputer – was a good match for New Zealand-size companies. Its strength was in document management and financial systems that had particular appeal for the legal profession. The chances are there’s still some ancient VS machine chugging away in a provincial law firm somewhere.

Wang’s New Zealand fortunes weren’t being replicated elsewhere, unfortunately. At the time of Ellis’ departure, the US parent was fighting off bankruptcy. His success in New Zealand must have caught the attention of head office, because he was shipped off to run the company in the UK. He went from managing 150 staff doing about $60 million of business to running a $300 million company with 650 employees. He had also absorbed the fact that hardware sales weren’t where the industry’s future profits lay: in his last year at Wang New Zealand, services made up more than half of the company’s revenue.

Ellis lasted two years with Wang in the UK (Doddrell was there for some of it). The parent company, meanwhile, staggered on. In the space of a couple of years its revenue went from about $US3 billion to a third of that. In 1993 it was being written about as having been “reborn” as a services company, the transformation Ellis had instigated in New Zealand. About the same time, EDS, which had a minimal presence in this part of the world, was mentioned as a possible buyer of GCS, the state-owned government data processor. In 1994 EDS did buy GCS, and Databank, giving it the platform on which to build its present $300 million-plus New Zealand business with 2000 employees.

Ellis continued his services education once back in the country, in the demanding airline industry. He had teamed up once more with Doddrell to run Ansett New Zealand. Before that company went into a nosedive, Ellis handed over the controls to Doddrell and became TVNZ chief, which he did for about four years.

After a 10-year break from the New Zealand computer industry, Ellis reports a couple of early impressions. He’s struck by the number of familiar faces still plying the trade. And he’s discovering that the services game has complications that didn’t exist when business was about delivering total solutions. Complications like getting hardware and software from a variety of suppliers to co-exist; and working out relationships with companies that are sometimes customers, sometimes collaborators and sometimes competitors.

He was thrust right into such a situation from the moment he took over EDS. It was bidding, with Telecom, for an outsourcing deal at insurer NRMA. The irony is the $40 million deal went to Gen-i, the company once known as Wang New Zealand, which was also bidding with Telecom. At least he can console himself that EDS’s massive IT management deal with Telecom – originally worth $1.5 billion for 10 years – has been extended by three more, worth another $289 million.

Another feature of the 2002 IT industry that Ellis notes is such massive deals aren’t as common as they used to be. So he’s threatening to start mixing it more with smaller services providers, which will hardly be comforting to them. Could that mean acquisitions? Possibly. How about a bid for the old firm, Gen-i? While still at Wang, he considered buying the company; now, he’s noncommittal. And what about a role for Kevin Doddrell? Well, no -- Doddrell's now in the organic farming business.

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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