NZ, Fijian IBM shops join forces

By PETER GRIFFIN

IBM integration partners Datec and Certus Consulting are merging to form a New Zealand-headquartered business with customers throughout the South Pacific.

The combined company will keep the Certus name and will be an exclusive IBM shop selling hardware, software and services for DB2, Websphere, Tivoli and Lotus in New Zealand, the Pacific Islands and parts of Australia.

The merger will bring Datec's 400 staff and Certus Consulting's 32 New Zealand workers together and create a business with revenue of around $80 million.

Certus Consulting chief Greg Woolley will lead the new organisation, and Datec New Zealand chief executive Michael Ah Koy will take responsibility for the Pacific Islands.

"What we respectively have ain't broke," said Woolley.

"But we'll complement each other's strengths.

Datec, a hardware specialist, had expertise in retail which Certus lacked, and Certus, a services and consulting business, had high-level skills in IBM products such as Websphere.

Woolley and Ah Koy will run the business from Auckland.

The merger is a positive step for Datec, a profitable Fijian company left with a tarnished image by political turmoil and the collapse of its parent company.

Michael Ah Koy was linked to George Speight and his abortive attempt to overthrow the Fijian Government in May 2000.

Ah Koy was a friend of Speight's and studied with him at university.

He and his prominent family vigorously denied any link with the coup.

But the family were caught up in a media maelstrom, and Ah Koy moved to New Zealand to escape the frenzy and to focus on running Datec.

"Mr George Speight gave me the impetus to leave. It was guilt by association. There were some sensationalist claims made in the media," said Ah Koy.

Ah Koy hit back, suing Auckland talkback radio host Leighton Smith and TVNZ. He said the cases were bound by confidentiality contracts, but out-of-court settlements had been made.

Fiji has put the ugly events of the coup behind it and Ah Koy has severed all contact with Speight, but the implied association still dogs him.

"These things never quite get buried," he said.

To make matters worse, Datec's parent company Brocker Technology, at the time New Zealand's sole technology listing on the Nasdaq, began to come unhinged financially.

Brocker had acquired Datec for $30 million - 70 per cent in shares, the rest in cash.

But Brocker's other businesses languished, and Datec proved to be its only money-maker.

Brocker's share price plummeted and a share consolidation was not enough to avoid being de-listed from the Nasdaq.

All that made a mockery of the acquisition terms.

"The cash they couldn't pay and the shares worth $21 million soon shrank to be worth $2 million," said Ah Koy.

"We had two options, walk away from our business or get involved in the management of Brocker."

Ah Koy opted for involvement, eventually taking a controlling stake in the ailing company.

The remnants of Brocker are still listed on the Toronto Stock Exchange, giving Datec a valuable channel for raising money.

But once again, Datec was guilty by association.

"Our parent company was a basket case, it really did hurt," said Ah Koy.

"Everyone we tried to work with wanted to see our financials. It was 18 months of treading water."

He described the Pacific Islands as a tough market to work in.

But Datec had secured the biggest companies as clients, from Vodafone Fiji through to most of the multi-national banks operating in the region.

Datec was setting up an eftpos network in Papua New Guinea as part of a joint-venture with banks there.

"You can't afford to be a specialist [in the Pacific]. You can't afford to operate like that in a place like Fiji.

"New Zealand is a high-tech marketplace. All the multi-nationals are here and there are skills. We want to harness those skills and deploy them in other markets around the Pacific."

Woolley said bringing the businesses together had its challenges because of their differing business models.

"Cost is the driver for a services business, margin is the driver for a hardware business," he said.

IBM's managing director, Nick Lambert, gave his blessing to the merger.

Unfazed at remaining off the candidate list for the Fonterra outsourcing contract, Lambert said IBM had healthy business lined up for the year, and that would show in the next filing of its local financial statements.