Profile: Channel survivor

Andy Hegedus, director of Melbourne-based systems integrator Southern Cross Computer Systems, is one of the IT industry’s true survivors.

Since setting up the company with his wife, Joan, in 1982, SCCS has turned a profit every single year and is still going strong despite the constant run of mergers, takeovers and acquisitions that has characterised the channel in recent years.

After graduating from RMIT in 1961 with a Bachelor of Electrical Engineering, Hegedus joined Swedish electrical power engineering company, Asea.

After spending six years with the company, including a four-year secondment in Sweden, Hegedus saw an ad in the newspaper. "It said: 'Engineers, accountants and scientists, are you frustrated with your job?'

"It turned out that that was how IBM recruited back in those days. They were basically looking for people who didn’t quite fit in with their chosen profession," he says.

After joining IBM, Hegedus spent two years as a trainee -- there were no computer degrees in 1968 -- before spending time as a systems engineer. He then jumped the fence into sales, or went on quota as he puts it, and notched up a total of eight-and-a-half years with Big Blue selling time share, banking applications and mini computers.

He then joined Honeywell as the national sales manager of its time share division and spent two years there before moving to Wang as its national accounts manager. After three years at Wang, he decided it was time to go out on his own and he started Southern Cross Computer Systems with his wife Joan, then the charge sister at St Vincents’ Hospital Casualty Department.

"I started up SCCS because I had always wanted to do my own thing and I figured I could do things better (I was young in those days) than some of the large companies.

"And since founding it [SCCS], I have always emphasised three principles: never compromise on quality; always make sure the customer gets value for money and what they need, not necessarily what they tell you they want; and respect the individual," he says.

For Hegedus, respecting the individual means that the company encourages people to have a healthy balance between life and work. "Unlike some large companies, we don’t particularly like employees to work 120 hours a week, we want people to have a balance in life and there’s been a lot of emphasis in career planning rather than performance reviews."

Hegedus and his wife do not just talk about work-life balance, they live it. Hegedus is a ‘racing man’, as he puts it. "We have had racehorses ever since I was working with Wang. My current horse is called Real Soon Now.

"We also once had a sixth share in a horse called Never Under Charge which won the Foster’s Stradbroke Handicap [one of the biggest horse races in Queensland] and when I first started the company, the horses I had then were probably making more money than the company," he says.

These days, SCCS has 50 staff and has secured some good size contracts, rolling out a wireless network for the Department of Education and Training and designing a network for the Victorian Parliament.

Hegedus says SCCS’ ability to compete well against much larger organisations comes down to its emphasis on training, its capacity to retain employees and making sure it does everything well.

"We’ve got a huge training budget -- both maintenance and new training -- and as a result we have a very low attrition rate. We have got contracts with companies such as Telstra through the quality of our repair centre, which is something a lot of companies don’t think is very important anymore.

"The CEO has been here for 10 years, the operations manager joined a few weeks after me and there are a lot of 15- year veterans with the company. We look after people and they treat the company like it’s their own, which helps us punch above our weight."

Taking an interest in people that work at the company has also contributed to its success. "We have two [particular] employees, one was my customer in 1972 and the other is the daughter of a customer, and it’s nice to be able to maintain those relationships and share some of the success with those people who are friends -- there’s a lot of satisfaction in that.

"So we’re probably not as focused on the bottom line as we are on the overall value of the company, but it’s a question of how you value things in life."

Participating in community projects has also added another string to the bow. "My wife Joan has become a fellow of the Williamson Foundation [a Victorian foundation set up to benefit the needy].

"It takes 30 people and builds networks around them. These people are individuals who are not community leaders now but the foundation believes will be later as they have more time. There are three people at Southern Cross who are fellows of the Foundation, two of whom the company has funded," he says.

SCCS is maybe not as large a company as it could have been, but Hegedus is satisfied with running a happy business. "I believe that when the customers do all right, the company grows. We haven’t become a large company but we’re still here and we’re still profitable.

"There is some emphasis on profit -- after all this is a business and we haven’t had one year without being profitable and the forecast says much the same thing," he says.

Hegedus has seen a lot of changes over the past 37 years working in the IT industry.

While at Wang, he won the BHP contract, which was so large that it made the cover of the Wang annual report in the US. But two years later when he got the Conzinc Rio Tinto Australia contract for 10 times as much, it wasn’t that big anymore because Wang and the whole industry was growing that fast, he says. Somewhat deprecatingly, Hegedus also puts down some of his success to luck and being able to pick where the industry was going to go.

And there have been times when not being on the latest bandwagon has turned out to be a good thing. "Right now we’re ahead of the trend but we never got onto the dotcom wagon, which turned out to be a good thing in the end. So today we do a lot of managed security mainly with Network Box.

"We’ve got a good relationship with F5 [selling] secure remote management, application traffic management [products] and we sell VoIP with 3COM.

"We’re about to sign an agreement with a telco for mobility PDA-type applications and last year we sold more IBM X-series [servers] than anyone while maintaining great relationships with HP and Toshiba. We’re very good at what we do and we don’t do everything."

Still, Hegedus admits that Southern Cross was a bit late to the party when it came taking advantage of some IT trends in the past.

"We started off as a software company writing applications for companies such as National Australia Bank but then we started selling Wang mini computers to various organisations before getting seduced by the glamour of PCs.

"Although my background was mainframes rather than PCs, for two years at IBM, I was spent selling time sharing. When you sell a mainframe you deal with the IT manager and with the board but in the early days when you sold timesharing or PCs you dealt with the users. The result of this was that by happy coincidence, I had a good grounding to go into PC selling, but we were fairly late into the personal computing world and didn’t get into PCs until the old XT [Computer] was nearly dead."

And in other cases Hegedus believes he was just plain lucky. "There’s an element of luck in everything you do. We got our first personal computing and networking order for $1.9 million three years after we started the company, in 1986.

"Southern Cross had been selling Wang word processors to TAFE and in those days TAFE was controlled by a TAFE board and they bought centrally.

"In September 1985, the TAFE Board rang up and said you’ve been a good supplier, we’re going to put personal computers and networks into 19 colleges of TAFE and we’d like you to reply to the tender."

Hegedus recalls that he remembers not really knowing much about networks or personal computers.

"I sort of knew, but we weren’t selling PCs, we were selling Wang mini computers and word processors. We went in with Toshiba desktops and 3COM networking gear. Every college we went to said they wanted another classroom like that and overnight we became the biggest 3COM reseller in the country.

"We were seduced by that. We went from being a small company writing software jobs that people didn’t want to do, to being a company with a national profile."