Integrator Logical Australia will slot the final pieces into its major corporate restructuring puzzle in the next few weeks, leaving it a leaner, more focused company after enduring six months of pain, according to its recently appointed managing director Stuart Hendry.
The Datatec-owned company made six acquisitions in 18 months before the end of last year, and then faced the arduous task of merging all purchases into one entity. This saw the company cut 50 staff in December, with others leaving of their own accord, fuelling rumours that the once pedestal integrator was being hammered by a downturn in the networking market.
Notable exits from Logical included CEO Lyle Potgeiter last month; two Cisco Certified Internet Engineers (CCIEs) who went to Cabletron services company GNTS; a number of state managers; and national sales manager Walter Labio, who handled Logical's blue chip IBM account.
But throughout the changes, Hendry maintains customer service never suffered.
"We've been through that pain after the last six months and now have a much more focused management team and more focused strategy to go to market," he said.
Instead of having to cut back due to market constraints, Hendry claims Logical's reshuffle came about in an attempt to consolidate the acquisitions of the CNI Group, Corporate Computer Services NSW and Victoria, C:Drive, Anite Networks Australia/New Zealand and ACT Networks.
Hendry was imported as sales director under Potgeiter from Logical in Europe 18 months ago, before being handed the baton as MD.
"Lyle took the company through the entrepreneurial stage of acquisitions," said Hendry. "He's now passed the baton to me, in effect, to take [Logical] towards stability as a corporate company and grow it organically."
Wheeling and dealing
Throughout the restructuring process Logical has managed to snare a number of high-profile contracts, including its IP telephony rollout of New Zealand's Ministry of Social Policy.
The installation of 8000 Cisco IP phones and subsequent network infrastructure received a glowing endorsement from Cisco at its recent Partner Conference in Las Vegas. The rollout was the largest IP telephony installation outside Cisco's own campus, and saw the vendor cutting code for its architecture for the convergence of Voice, Video and Integrated Data (AVVID) software platform specifically for the project.
But this is contrasted by a network migration by international law firm Mallesons Stephen Jaques to Gigabit Ethernet which, ARN was informed, nearly went horribly wrong.
In July last year Enterasys secured the procurement contract for Mallesons, incorporating around 1000 wireless cards, core backbone LAN and WAN infrastructure and Layer 4 switching estimated to be worth more than $5 million plus services charges. At the time it was understood that Enterasys and Logical won the contract over Mallesons' incumbent network suppliers Nortel Networks and Cisco Systems.
But by November, sources close to the deal claim Logical had been unable to resolve technology issues with the core backbone infrastructure, which nearly caused the customer to pull the pin on the agreement. It is alleged Enterasys was then forced to drag Logical's engineers out of the project and replace them with it's own.
Ian Fewtrell, managing director of Enterasys, would not comment on the deal, but sources suggest the vendor had put Logical on a credit freeze by December 2000 - the same time in which the integrator formally began its restructuring process.
Hendry, on the other hand, claimed he was unaware of rollout issues.
"If there were problems at Mallesons it wouldn't have been related to the restructuring," Hendry conceded.
However Logical's NSW branch manager, Kieran Bryce, who ARN quoted as a company spokesperson when the deal was announced [ARNnet, July 3], has since left Logical and was replaced as branch manager only recently by a Perth-based manager.
Hendry claims the company has returned to a state branch-based structure and, with the appointment of a Victorian branch manager this week and a new chief operating officer next week, the company has rounded out its new-look management team. Jon James, formerly UK-based chief financial officer of Datatec/Logical, will take on the COO position, reporting directly to Logical's UK CEO Steven Lawrence.
Post acquisitions, Logical had a number of overlapping management positions within each state. By reducing its management structure and adopting a state-based strategy, Hendry claims it can address the cultural idiosyncrasies prevalent between states.
"It is important from a cultural perspective that state managers can make decisions. In the UK people don't mind it being London-centric, but here [customers] want to feel they can deal with a person who can make their own decisions," Hendry said.
Of the 50 staff to go last year, Hendry claims around half were upper management, 10 administrative roles and 15 from other parts of the company.
"While that change is taking place, other people will use it to their own end. But what you have to remember is Logical was brave in the cuts it made. We started at the top [with management] and worked down. That takes a bit of balls - most people start at the little guy," Hendry asserted.
The way forward
Going forward Hendry's mandate is to take the company into a new era of professionalism, and is willing to put money into programs such as human resources policies and business planning to do it.
"Compared to the UK the quality of [Australian] technical people is much higher, but the quality of management is much, much lower. Australia's an isolated place so it seems the engineers are more self-reliant, whereas in the UK they are more willing to turn to someone for assistance," Hendry said.
At the end of the day any company's decisions are based on profits and the bottom line. Time will tell if Hendry's claims that Logical will improve the services-based proportion of its revenues from the restructuring over the next year will in fact eventuate.Photograph: Stuart Hendry, managing director Logical Australia