Unisys watches revenue drop during year of rebuilding

By ADAM GIFFORD

Further confirmation that the IT industry is going through tough times are expected when last year's results from Unisys New Zealand come back from the auditors this month.

Manager Grant Hopkins said the books would show a loss on revenue of about $138 million, sharply down on the $175 million turned over in 2000 for a $6.6 million profit.

That was a return to 1998 revenue levels, but the business had changed drastically since then.

"We used to sell $18 million of PCs in New Zealand," said Hopkins. "We made a decision to get out of that, which changed the shape of the business through the year."

Mainframe computers, the original Unisys business, were off customer shopping lists last year, and the company was rebuilding as a services business.

In 2000, Unisys New Zealand made 36 per cent of its $175 million revenue from technology and 64 per cent from services - 23 per cent from contracting work out, 17 per cent from network services and 24 per cent from systems integration. Last year, technology accounted for only 13 per cent of revenue.

Contracting out jumped to 35 per cent, network services to 26 per cent and systems integration to 26 per cent.

Staff numbers increased from 650 to about 700 as people came over as part of a contracting-out deal with the Accident Compensation Corporation.

Unisys Asia Pacific vice-president Ron Frankenfield said the outlook across the region was good. Revenues had grown 16 per cent in the first quarter of this year.

The first quarter figures were boosted by money starting to come in from the ACC contract, BHP Steel's decision to upgrade its mainframe and Westpac Trust buying an Intel processor-based Unisys mainframe to run its internet banking, replacing 300 Compaq servers.

One area which did not perform as hoped was Unisys ASP (application service provider), which rents out software such as Stayinfront customer relationship management, Orderware electronic commerce and Great Plains financial and distribution.

The ASP idea was that small and medium-sized companies might use enterprise software if they could access it over the internet for a monthly rental.

Hopkins said there have been some wins, but most customers and software vendors were still uncomfortable with the idea.

But he said the exercise showed Unisys New Zealand how it could go after companies which were smaller than its traditional customer base.

"We developed a matrix servicing model which is flexible and highly scalable," he said. "It is all about defining what it is you provide for a customer, based on the level of availability and type of service they want."

Hopkins said Unisy's global contracting-out business was looking at adopting the model as best practice.

Frankenfield said Unisys saw room for big growth throughout the Asia-Pacific region in business process contracting-out.

He said portfolio risk management and processing mortgages, cheques and credit card payments were prime targets.