Immigrant instinct key to survival

CSA Holding's founder Johnny Moo relates his theory of how to be competitive globally -- it really depends what kind of mindset you have -- immigrant or non-immigrant.
Written by Lim Fung Meng, Contributor
newsmakers CSA Holdings has come a long way since its beginnings as an integrator of multi-vendor systems. Started in 1970, its aim was to become succcessful by integrating for its customers servers from Sun Microsystems, networks from Cisco Systems and storage from EMC.

It achieved this, and in 1991 became the first IT services company to offer shares on the Singapore bourse. Further success came when it listed two of its strongest country subsidiaries on the Hong Kong and Malaysia stock exchanges respectively in 1997.

Much of CSA Holding's success against its bigger rivals has come from the backbone of the three founders--Johnny Moo, Sunny Tan and Seow Chuan Bin. "We not only have to beat the US-based companies in the region but government-linked companies that were coming up left, right and center," Group Managing Director Johhny Moo recalls. "We did right by going regional early because we became more mobile than the rest."

It hasn't been all plain sailing, admits Moo, 62. For example, its operations in the US have been a disappointment. CSA's initial success with software tools may have been a first in Singapore then, but it couldn't hold up against better-marketed automation software in the US market. The marketing dollars required were greatly under-estimated.

Unlike India's renowned Infosys and Wipro, which had their IPOs in the US, and went after the US market in a big way with the dollars generated, CSA struggled with limited funds. It sought partners and acquired companies instead. "But we failed miserably," said Moo, "and of all of our ventures, only one made money for us and that was the smallest of our investments."

In February 1999, CSA surprised the market by announcing that CSC Computer Sciences International Inc, a wholly-owned subsidiary of US-based Computer Sciences Corporation (CSC) had acquired a major controlling interest in the company. For the 12 months ended March 31 2001, CSC had revenues of US$10.5 billion--26 times CSA's 2000 sales of US$394 million.

Question: What is CSC's role in CSA today?
Johnny Moo: With its global multi-year contracts with large multinationals, CSC has something which we felt was crucial to CSA's next era of business--recurring revenue streams from outsourcing.

Our initial focus is to build essential physical infrastructure such as call centers and data centers operating round the clock in Hong Kong, Malaysia and Singapore. We then implement CSC's global best practices and deliver services for CSC global clients from these centers. Our regional customers could also benefit from these global practices as they expand their business.

Why is CSA attracted to the outsourcing business?
Outsourcing contracts are generally signed for a long term, and with more reasonable margins than the systems integration business. Outsourcing allows companies to focus on their core business, allowing them to speed up their market reaction time, and gives them access to other companies' branding/marketing/product development expertise.

For the past 30 years, we have built a solid base of clients with our systems integration projects. But we were hit by the slowdown in tech spending like everyone else. To build a long-term IT services strategy, we have to get into the outsourcing business.

Also, I saw how the Singapore government sold some of its own IT services arm to Singtel, and I realized that is a viable business model with a long-term payback. I then set out to plug the holes in CSA's business and seek out the industry's biggest independent player--CSC was the obvious choice. They have demonstrated their prowess over the past 42 years and we will learn from them.

The outsourcing market in the world will not happen like a big bang. It will grow slowly as companies spin off their non-core operations.

Why didn't CSA go directly to the global clients?
In everything you do, you must know your limitations. We are successful in Asia but not in the US. The US is the biggest economy in the world and most of the global companies which are headquartered there--CSC has done business with them.

On the other hand, we have a strong presence in Asia. It made sense for us to partner each other. Currently, CSA has extensive operations in eight Asian countries, employing approximately 2,600 employees.

After working for so many years, particularly in this industry, is there anything that surprises you anymore?
Not too long ago in Sydney, a young geo-physicist wrote a mathematical program that takes away the drudgery of manually calculating landscape contours for oil exploration. He finally came up with a mathematical model that can process the raw data collected from the field into a meaningful report.

When he submitted the 20-page proposal to his bosses, it somehow found its way to the desk of the editor of Geo-Prospecting magazine and the full formula was revealed to the whole industry. That geo-physicist was me in my first job after graduation, and I was really thrilled then. I thought that I was going to become famous.

Five years after I left that job, a Professor in Melbourne University called to tell me that his graduate students were doing research on exactly the same problem and he wanted to question some of my assumptions. As much as I would like to help him, I told him that after reading my paper, I couldn't understand the what and whys of the formula written five years before!

Last month, at a pub where executives from the company usually go after office hours to discuss things over a couple of beers, I managed to stay on for several rounds of shooting pool with a couple of chaps from other companies. When we were introduced, they mentioned that they knew the company but not my name. Instead, they pointed to Sunny Tan as the boss they recognized. That gave me a great relief and a certain thrill that the succession of the company's business is unquestionably smooth and almost complete.

So the future of the company is in good hands. What keeps you busy nowadays?
My association with young start-ups keeps me current with technology and applications, so if you ask me about storage, I can tell you how it all started from server-attached disks and how it has evolved to network-attached storage and storage array network today because I still enjoy learning. When I look at how a company like Brocade can challenge incumbents like EMC and IBM, I'm really amazed. I may not be able to write programs anymore, but I can certainly evaluate a business plan for such new technology and application.

What is your long term view of Singapore's competitiveness?
I have a theory that there are two types of people in the world: Immigrants and non-immigrants.

Immigrants of the world have generally done well. Those who migrated from their countries of birth and set up homes in other countries have uprooted themselves and have carved niches in their adopted societies. But more importantly, they created something out of nothing--driven by sheer determination not only to survive but to lay the foundation for future generations.

It may sound like a sweeping statement, but societies which are stagnant lack this immigrant instinct.

What about those whose forefathers were immigrants?
Even those whose forefathers were immigrants, after, say, the third generation, they turn from immigrant to non-immigrant because they have become comfortable with the adopted environment.

In today's global economy, where mobility is a given, once a society feels comfortable, it will become complacent and lose its competitive edge. I have seen it in some companies, where the immigrants usually run very fast just to keep their place in the companies while the non-immigrants could be laggards.

A country like Singapore needs to create an environment that will bring in the next generation of highly-mobile people who have the confidence and willingness to go places and make a difference. Unless they take on the entrepreneurial spirit of the first immigrant, they could fail.

If we want to be competitive globally, we have to be very innovative and mobile and continue to have these survival instincts. And we will need to work with others that can complement us and form alliances and partnerships to go after bigger markets.

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