| BUSINESSWEEK ONLINE : MARCH 29, 1999 ISSUE | ||||||||
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| COVER STORY
Q&A with Compuware's Peter Karmanos ''I resist the urge to go off into the technology ozone'' Peter Karmanos Jr. is the founder, chairman, and chief executive of Compuware Corp., based in Farmington Hills, Mich. Founded in 1973 as a consulting firm that helped companies use their computer systems more efficiently, Compuware is now a leading provider of professional services and software that help IT (information technology) professionals build, customize, test, and maintain their data networks. Karmanos is adamant that Compuware stay focused on this core strategy, which has fueled annual growth of about 40% a year. Its revenues are now approaching $2 billion, and Karmanos expects that figure to double in the next two years. He spoke recently with Business Week Correspondent Joann Muller in Detroit. Here are excerpts of their conversation: Q: Compuware has been growing steadily in recent years, but that growth accelerated in 1998. Why? A: We had been planning to grow a paltry 35%-40%, but the demand for year 2000 solutions pushed us to 45%-50%. We'll continue at that rate for a while, but we've been trying to scale down our year 2000 efforts to make sure we don't fall off a cliff when that problem is finally resolved. I'm of the opinion that it's not as big a problem as people believe. I think we'll go through Dec. 31, 1999 and into Jan. 1, 2000, and you may have a few distractions and inconveniences, but the world will be just as pleasant as it's always been. Q: So where will you find new growth opportunities after the demand for year 2000 solutions trails off? A: There's a huge backlog of new systems that have to be implemented. Clients put them on hold until they resolve their year 2000 issues. A few of the research companies are talking about a nuclear winter, where nobody does anything. We don't believe that. We believe our growth rate will be uninterrupted going forward. But we also are going to be closing in on $2 billion in revenues, and continuing to grow at 40% a year is going to be extremely difficult. We'll focus on markets with high growth potential and on strategic acquisitions. We'll continue to build our professional services operation through acquisition and will look for key products in the desktop- and mainframe-tool space. We're not an outsourcer. I don't have a vision of running everybody's computer for them. We continue to grow because we're focused. Companies get in trouble when they get distracted and make new claims of where technology is going. We wait to see what is actually being bought by Corporate America, what their problems are, and then we provide a solution. We may not be the first ones there; we may be second, or third, or fourth there with a solution, but we concentrate on building a strong infrastructure with a large sales force and excellent distribution around the globe. We try to stay away from the latest and greatest stuff because often times it doesn't come to pass. I've always run this business on the premise that we are not going to be pioneers. Once companies decide this is the technology they'll use, we step in to provide the tools that let them use it. There's so much hype in this business, it drives me to distraction. Technology exists to solve a business problem, and to bring a return to the customer. I say to my people over and over and over -- there isn't a single CEO in the world who bought a computer because he liked the database that came with it. They buy the computer to run an application that will get a return for the company, whether it's to save on the number of people, or provide better service for their customers, or to get a better handle on the marketplace. A lot of people get tangled up with the underlying technology and forget the reason that they bought it was the return on investment. Q: You've referred to Compuware as a "blue-collar company." How can a high-tech software and services firm be blue-collar? A: We're going to run it like an efficient manufacturing organization. We want to provide tools you can install at noon and have value by 4 o'clock that afternoon. It isn't some kind of esoteric, wonderful new piece of technology that people can't figure out. So I resist the urge to go off into the technology ozone, and try to keep our company focused on creating products that have value for our customers. That's why I call it a blue-collar operation. Q: Most of Compuware's business is in developing software tools for older mainframe and Unix-based computer systems instead of newer desktop systems -- aren't you missing the boat? A: If you stop to think about it, in any other business in the world, the word "legacy" means quality. But in computers, technologists talk with disdain about legacy systems. But why? People have invested billions in these systems, and they work. They provide value. Just because they're not technically snazzy doesn't mean they're bad. Everybody said mainframes would be dead, they'd all be gone by 1991. We said, "We don't think so. There's an estimated $10 trillion worth of mainframe applications out there. We don't think people will toss them out tomorrow." And we were dead on the money. Q: So how do you keep growth going? A: That's my biggest problem. That's why we have a merger and acquisition group that is very active looking for opportunities. I keep looking for things that would bring us growth in $100 million increments and reject things that are not focused. We're also creating product and services ties, where we can go to Ford, or GM, or the large banks, for instance, and sell them $50 million or $100 million chunks of services and products, helping them get their systems done and for less money.... So I know how we'll get to $3 billion or $4 billion in revenues over the next 18 months to two years. Now what I'm worried about is getting to $10 billion and still growing 30% a year. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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