Brickbats pile up on Infinity Group chief

By PETER GRIFFIN

New Zealand Rugby Union chairman Murray McCaw, criticised for the World Cup debacle, is under fire for his management of technology company Infinity Group.

Former employees and business partners claim McCaw's "arrogant" management style, combined with internal politics, have pushed the potentially profitable company into the red.

McCaw became chief executive of Infinity in December 2000 when the company was formed through the merger of several IT businesses, including Wellington firm Comtex, which he headed and part-owned.

Former employees, who did not want to be named, said the legacy of McCaw, who stepped down as chief executive in December, was continuing to affect loss-making Infinity in the form of poor sales.

They say McCaw's Wellington-centric management style did not work for Infinity's larger Auckland-based operations, which primarily consist of Trilogy Business Systems, Madison Systems and asset management company RDT Pacific, which merged with Comtex in December 2000.

"There was a real culture difference between Auckland and Wellington," said one former employee.

McCaw, a prominent Wellington businessman, found himself at odds with Infinity's Auckland sales staff.

He is still an Infinity director, and said he had always intended to step down as chief executive to pursue other interests.

"I was at Comtex for five years. I'd run my course, really."

He acknowledged that things had not gone smoothly since the merger but pointed out that bringing three different companies together in a depressed IT industry created its own problems.

"We were concerned with a whole lot of internal things as well as delivering to the customer.

"In hindsight everyone would say that you could do things differently," he said.

"The company's not in any danger or anything like that."

In April, McCaw was fending off allegations that the NZRFU was largely responsible for New Zealand losing the rights to co-host the fifth World Cup with Australia.

He accepted that the union was partly to blame for the loss but said it had "carried out every reasonable action to ensure the sub-hosting was held".

Some disgruntled former employees draw parallels between the Cup debacle and McCaw's management style.

Infinity, a promising IT conglomerate competing with the likes of Datacom, gen-i, EDS and IBM, was backed mainly by former Brierley executives Paul Collins, Bruce Hancox and Patsy Reddy. Its shares trade on the unlisted securities market.

Infinity reported a loss of $5.2 million on revenue of $87.7 million last year.

That compared with revenue of $41.5 million in 2000 and a bottom-line loss of $21.3 million, largely made up of goodwill writedowns spanning the merging companies.

Last year's loss included a write-off on software assets of $1.6 million.

Infinity was originally forecasting an $8 million profit for last year.

A Stock Exchange listing was also tipped when the company came together.

Last year the company raised an additional $6.8 million in capital through a rights issue.

Stuart Robb, who took over from McCaw as chief executive in January, said the Wellington-centric style of management was now gone.

"Post-merger we had a lot of disjointed teams - silos with walls around them. [And] we had a corporate office [management] structure within our group which we've gotten rid of."

Robb said Infinity was trading within budget and would probably finish the year in the black.

Despite redundancies, new appointments had kept staffing levels similar to those at the time of the merger - about 560.

He was optimistic about winning new business this year as companies which invested in IT just prior to Y2K started to upgrade.

Problems at Infinity extended to how it billed its customers. Sources claim the company's financial systems were in disarray, leading to disputes over outstanding bills.

One former customer, which has since taken its business to a competitor, said it had not settled a bill for tens of thousands of dollars because it was dissatisfied with the project Infinity had carried out.

Crucial to Infinity's success this year will be the ability of its sales team to win business in an increasingly competitive IT services market.

Former employees say the company faces an uphill battle because "the original Auckland sales team has been obliterated".