He has been in the technology game for a quarter of a century but Peter Kazacos took the first step towards getting his name into the local industry’s Hall of Fame when he co-founded a small IT services company called KAZ in 1988.
It is now recognised as one of the major service providers in the region and, since listing on the ASX almost four years ago, staff numbers have grown from 350 to more than 2500.
The year will probably best be remembered for an unsuccessful search for a new chief executive officer that, because KAZ is a listed company, led to public disagreements at the highest level within the company and, eventually, the resignation of three independent directors.
They included the now former company chairman, Tony Hartnell, who raised issues about corporate governance in his leaked resignation letter. Plans to appoint a new CEO have now been shelved in favour of the appointment of managing directors for the group’s three major business units – they were formally headed up by general managers.
Kazacos said he intended to appoint a group CEO internally, or possibly a chief operating officer, but would not give any indication of when this might happen.
The independent directors have yet to be replaced but Kazacos was unwilling to discuss the situation because such announcements have to be made through the ASX.
This year started well for KAZ when it ousted IBM from a $15 million five-year deal desktop outsourcing contract with ING.
Kazacos said at the time that the deal proved local firms could be a genuine alternative to multinational operators but admitted big contracts were thin on the ground.
“We need patience because government contracts will take time – we are currently bidding on a number of deals,” he told ARN recently. “Some of the longstanding deals at the top end of the scale are taking a lot longer to unravel than anyone could have expected because there was no thought about that process when the deals were struck. Customers are getting smarter about it now and we talk about disengagement before contracts are signed.”
Back in May, the KAZ Group was restructured into three business units – technology services, business services and product development – with the IT arm accounting for about 70 per cent of revenues. While business services accounts for around a quarter, Kazacos insisted it currently had the most growth potential.
“IT services is growing but not by an exponential amount,” he said. “We might start to see the big numbers happening in business process outsourcing (BPO) and have aligned ourselves correctly for that.
“Selective sourcing has become the main flavour as opposed to wholesale outsourcing and it will become increasingly strong next year. We will keep chipping away at the stuff that’s been owned by the multinationals. There are opportunities out there.”
Kazacos said he was particularly looking forward to what he called the big contest in South Australia next year, where local outfits such as KAZ and Volante would be looking to break into the EDS empire.
When advertising for a new chief executive earlier in the year, Kazacos said he was planning to take a more strategic role.
One of the areas he highlighted as an opportunity for his firm next year was mobility.
“There are signs that people are spending money on mobility," he said. "As the solutions become more robust and secure people want to start picking the winners. It is consolidating down to a few offerings and more people are realising that these technologies will be around for some time.”
Kazacos also picked out VoIP as a winner in 2004, a technology that would be savings driven.
He expected to see more on demand services being implemented over the next 12 months.
“A few customers are engaging in that [on demand] process and those numbers will grow as there are more products behind the words,” Kazacos said. “Everybody is talking about it but we are now starting to see some real product.”
As for the general IT market, Kazacos said he saw some signs that spending was coming back but that it had more to do with equipment becoming old rather than innovation.
“This year didn’t get worse but it didn’t get significantly better,” he said. “The full impact of a strong Aussie dollar on hardware and software prices won’t be felt until next year because a lot of vendors are still trying to recuperate their losses from previous years.”
The training market was still a pretty tough one to be operating in, Kazcaos said, because the adoption of technology was generally taking a little longer than it used to.
Training was also the first part of spending allocations to be chopped when belts were being tightened but Kazacos hoped to see some improvement next year.
Winner of the inaugural Australian Entrepreneur of the Year award in 2001, Kazacos sits on the board of directors for no less than eight companies (including those within the KAZ Group) and is also a board member of the Australian Information Industry Association.
But despite his many commitments, he has long insisted on keeping business to weekdays and enjoying his family life on the Saturday and Sunday. These days he spends many of his weekends with his wife Vicki and their children at his farm in the southern highlands of New South Wales.