Chief of ASX-listed outsourcer, Oakton, claims a return to project work and incremental spending from government and private sector customers will bring it a more robust and predicable year.
Oakton managing director, Neil Wilson, expected an ongoing focus around stronger cost and return on investment to improve demand for IT services in 2010 – in contrast to the dour 2009 climate. He highlighted better information management and access to data as a key area of opportunity.
“There has been shift in most of our clients to look at spending more, but not significant amounts – it’s more incremental as it’s still a tight market,” Wilson explained. “Clients are starting to invest in converting CapEx to OpEx as they’re seeing an upside, and want to have the most efficient operation to support that growth and a better base to grow from. They also don’t want to incur more cost across systems, processes and back office.”
Wilson also claimed organisations were now committing to more IT spending and cited a swing across its customer base towards committed project work, rather than role-based contracting.
“A number of clients have had mergers and acquisitions, and dealt with less than optimal processes and systems because they had no money to spend on them. Now they’re starting to find capital to allocate for operational expenditure benefits,” he said.
“About 70 per cent of our business now is project work, whereas it would have been 40 per cent role-based four years ago. Customers are now looking for an outcome.”
Oakton was one of several companies hit by the economic downturn, reporting a 48.8 per cent drop in profit to $14.3 million in the 12 months to June 30, 2009. Revenue was also down 3.8 per cent to $194m.
In a recent presentation to shareholders, Wilson highlighted an operational review and optimised business model, refocus on services offer and client segmentation, and staff cuts. The company also reduced its Australian headcount by 150 last year, while increasing its presence in India.
Alongside operational enhancements, Oakton finished off the year by appointing one of IBM’s former solutions area managers to run its Victorian branch.
Mark Fretz was most recently the associate partner and solution area lead for Enterprise Integration and Portal and Content Management Delivery at IBM, where he covered specialist architecture and global business services projects. He also boasts of stints with Reuters, LogicLine Group and CrossWords Software. Fretz replaces Christine Scammell, who left after 18 months in the position.
“Mark has a deep understanding of the services areas we operate in. He also has a good blend of small and big business experience,” Wilson said. “Big business is what we want to keep on growing, but we also want the touch of a smaller business.
“Also, his experience fits with the types of project work we are getting more of these days. IBM is a partner of ours and he will add value to our business there as well.”