Computer Sciences Corporation (CSC) has appointed Mike Shove as its managing director and chief executive of the company’s Australian operations.
Shove, formerly vice president of enterprise business solutions in Australia, replaces outgoing managing director George Bell, who has been promoted to president of CSC’s European operations.
Shove joined CSC in 1999 after the services giant acquired GE Capital, a 1000-strong, $300 million turnover IT services company. During his time at CSC so far, Shove has primarily been responsible for managing the consulting and application services components of CSC’s Australian business. These business units scope, implement, support and manage enterprise software systems on behalf of customers.
Shove said that applications outsourcing and business process outsourcing were the two next big things in IT services. While he still expected some growth in the infrastructure side of the business (managing the desktop, network, mid-range and mainframe computing on behalf of customers), applications and high-end consulting are the services for which he held high hope for growth in the next 12-18 months.
While the concept of applications outsourcing had been around for some time, Shove said that it was now starting to show some significant growth.
“Many companies have outsourced their infrastructure and have achieved the cost savings they were aiming for,” he said. “The next place they will look to reduce costs is around their applications — there is no need to have 50 people looking after applications internally if there are better and cheaper ways to do it.”
Shove said that a newer and potentially more lucrative opportunity lay in business process outsourcing, high-end consulting services that assist organisations in improving their internal processes. Shove expected CSC to profit from both the initial consulting, the technology CSC would implement for the customer to solve internal issues, and the ongoing management of this technology after its implementation.
“The next evolution in outsourcing is to take over the non-core processes,” he said. “The technology is only part of the offering — it is but the means to an end.”
The financial services and insurance industries were already embracing the business process services opportunity, Shove said.
While he acknowledged that the current outsourcing market was going through some fundamental changes, Shove was bullish about the company’s prospects.
“We are seeing a lot more of what is called ‘smart-sourcing’, or selective sourcing,” he said. “There are less of the very big deals, instead organisations are looking at outsourcing smaller segments of their business. Both the service providers and the customers have matured.”
Unlike CSC’s recent global revenues, which fell in the 2003 third fiscal quarter, Shove said CSC Australia’s revenues had improved slightly on a year-on-year basis. The local subsidiary’s profits were also growing.
“It will be a difficult period over the next 12-18 months, but I believe we are well positioned to grow this business,” he said.
New managing director, Mike Shove, expects CSC Australia’s IT reseller business to see some modest growth in 2003.
He said the reseller business unit, which made up about $150 million of CSC Australia’s $1 billion in annual revenues, to record “steady to small growth”, mostly in the mid-market space.
“Many companies that refreshed their desktop and mobile technology for Y2K now have hardware that is three-plus years old,” he said. “We expect the release of the Windows XP operating system to drive them to refresh.”