One-On-One With AMS CEO Alfred MockettOne-On-One With AMS CEO Alfred Mockett
We recently caught up with Alfred Mockett, chairman of the board and CEO of AMS, to discuss the health of the IT-services and outsourcing industry, what customers are asking for, and growth expectations for 2003.
November 26, 2002
IWK: What does the overall business of IT services look like?
Mockett: We are used to 11% to 12% growth per year. Last year it shrank to 4% to 5%, and this year we'll see flat growth. That means you have to be very focused on what you don't do and what you do do. IWK: What has been the biggest change you've seen among your customers?Mockett: We've seen a lot of behavioral changes within the customer base--there's more responsible financial management; decisions are overtly financially driven; there are smaller projects and ones that are broken into chunks with phased implementations; and a [demand] for quick payback. They are saying, "Show me how I can get more out of my existing assets, how to get my costs down, how to improve my products." Not many are saying, "Show me how to grow my top line."IWK: When do you expect a recovery in the services sector?Mockett: I don't see an economy about to take off. I've never seen such a pervasive mood of corporate pessimism in my life. For IT services, to the extent that we'll have a recovery in 2003, it will be back-end loaded--well into Q3 or Q4 and only about 3% to 5% growth. But there are pockets of strength, such as federal spending. We expect 15% growth out of the federal business--that's double historic rates. IWK: What do you think about the Bush administration's homeland security initiatives?Mockett: Normally, I'm loath to jump to organizational solutions to operational problems, but I fully endorse the government's plan. IWK: What keeps you up at night? Mockett: Things that are beyond my control, such as, will we or will we not invade Iraq? There are so many unquantifiable risks. [A war] may change the federal budget and cause a redistribution of spending. There will be winners and losers. We'll have to make sure AMS is a winner. IWK: What's your view on innovation in today's economy?Mockett: It requires push and pull. In an era of caution, we've lost some of the pull. We've lost the early adopters of new technology that made new technology a common currency. So we are getting a slower uptake. IWK: What are customers asking for? Mockett: A lot of [our current business] is about optimizing existing processes. It's about integration and making existing systems hotter and faster. There's also large-scale delete and substitute [initiatives]. IWK: What are the hottest technologies on the horizon? Mockett: Customers are beginning to talk about grid computing. It's not a reality yet, but there's interest. It will provide huge cost efficiencies--cutting 15% to 20% out of the traditional way of doing things. It will change the value creation in the IT world [away from the hardware systems] toward software and integration. IWK: How have attitudes about outsourcing changed? Mockett: There's a lot of interest in outsourcing of business processes and applications. I'm pushing AMS in that direction. Companies tend to have a more liberal view toward things that were traditionally mission critical, such as billing services. There are increasing opportunities there.
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