In a market dominated by multinational manufacturing giants, Cornel Ung has grown Optima from a small PC dealership in West Ryde, Sydney, to a large ASX-listed Australian computer manufacturer.
Ung migrated from Macau in 1980. It wasn’t until he was studying at Macquarie University in 1986 that his passion for technology would become a commercial reality. An enterprising young man, he started from the bottom, building computers for fellow students while studying at Macquarie University in 1986. He was 24 years old.
“I was selling computers in the uni -- advertising on the uni noticeboard in each of the faculties. I was doing OK, doing seven to 10 units per week -- it was good income, pocket money,” he says.
After finishing university in 1988, Ung looked for a job in the computer industry and was encouraged by one of his local manufacturers to set up his own business. He found a location and started a business in 1989 dubbed Australian Budget Computer. “At that time, we were doing extremely well with ads in the paper and we were generating a lot of business from a small retail shop.”
The business was healthy and he was enjoying good profits, but he was not satisfied. “After three months, I decided to bring in a container load [of stock] from overseas. That was a big challenge, because I didn’t have the funding,” Ung says.
He started assembling computers at the back of the Sydney shop. “After one year with the shop, we decided we had a choice. To open more retail shops or move into true manufacturing, setting up a production facility, providing a distribution network for our resellers -- so I decided to become manufacturer.”
“That was 1990.We moved the business to Rydalmere. We had one building to start with and after three years, we expanded to three buildings.”
“Our business was growing really fast -- from 20, 30 to 500 active dealers. That’s how the business started. We changed the name to Optima Computer Technology in 1990.”
Since then, Optima has grown at rates of between 30 and 40 percent every year and despite the downturn of the late 1990s, it managed to survive.
It was even the victim of a fire at its building in 1989. “We had offsite tape and insurance cover. People thought “Optima is gone!” he says. Today it has 140 staff and would expect that number to grow to between 160 and 180 people next financial year. It also employs around 50 casual staff in its production area.
Optima won its first government contract in 1996 with the Department of Public Works and a move into the state education market came in 1997 when it cracked a deal supplying boxes to the NSW Department of Education and Training (DET). “Because of that business we grew significantly.”
At that time, the [education] rollout was 12,000 to 15,000 PCs. “We started with a 10 percent market share of that contract and at one stage our share went up to 40 percent so we grew significantly over the past few years. At the moment we’ve got around 20 percent [4000 PCs]. The department gave a large chunk of the business to IBM,” he says.
Today, government sales make up 50 percent of Optima’s business, predominantly in NSW. This month, it completed a $5 million rollout of 3300 desktops and 400 notebooks for DET.
The company was given four weeks to supply the machines to every state school in the Hunter/Central Coast region. DET purchased the supplier’s WorkPro 7000 series units based on Intel’s 915G chipset. Due to the fact that Optima is focused on the NSW Government and builds from a production facility in Sydney’s Homebush Bay, it does not come up against the likes of builders such as Ipex, which focus more on Federal Government business, Ung says.
“We are not really focused on Federal Government, except the Department of Defence, which is our customer. Between 2002 and 2003, we sold 25,000 PCs and in 2004 we delivered 6500 to them.”
“At the moment we are waiting for the contract to [renew] soon, so that could be a few more thousand units we could ship to Defence,” he says.
While it is strong in NSW Government, 30 percent of its sales are derived from the regional reseller channel and the remaining 20 percent from retail sales with mass merchants. The company builds computers for retailer the Leading Edge Group, which has a strong regional presence and would look to add a few more retailers to its books next financial year, Ung says.
Optima’s point of differentiation when selling to government is its ability to tailor-make machines for the customer and offer services around them. “Recently I talked to one state department CIO.
His point of view is that he would like to support a local company but what’s more important is the value of service you can provide to the department,” Ung says. Optima has been able to communicate well with state government departments and lobbies CIOs of each department to explain clearly the services Optima can provide, he says.
“We explain to the department how we can save them money. They will go for the most cost-effective solution for the department. Being competitive, being local, we should be able to turn around and provide more efficient service than the multinationals because they are not building here.”
Optima runs an image download system that enables it to tailor-make an individual image for each machine – something that multinationals cannot necessarily do, he says. It also uses an SAP back-end system like many government departments who can place their orders online.
The company’s services however, are quickly moving beyond PC manufacture and customisation.
Optima will move strongly into the managed services business next financial year, Ung says. He has employed a new general manager of customer service -- Alf Santomingo. “His role will be to develop managed services products and offer to customers,” he says.
A forthcoming contract with a 5000- seat state government department -- which Ung declined to name -- would see the company provide a managed service to the customer. This would involve Optima providing desktop, server and notebook deployment services, procurement, rental arrangements through a finance company and helpdesk support. “We expect to sign [the contract] in the next couple of weeks,” he says.
The department felt that Optima could provide this managed services one-stop shop, Ung says. “We will have more focus this year on [providing] managed services for other government departments as well,” he says.
There are about 30 NSW Government departments of which only three of four are buying from Optima at this stage.
“We believe that there’s a huge opportunity for us to lobby the departments and explain the service that we can offer for them. We are investing in resources to address that business,” he says. “Our focus will be in NSW first, but we will expand that to Federal [business] moving forward,” he says.
Market difficulties
When the market was in a depression, resellers were impacted. “I guess the reseller always tries to differentiate themselves, but at the end of the day, I think that IT resellers need to always be ready to adapt new technology earlier and service the customer with those technologies. That’s the winning strategy for every reseller,” he says.
While Optima has been successful with regional resellers, it is also looking to work better with metropolitan resellers. Its dealings with metropolitan resellers dropped off during the late 1990s due to increasing competition, sales tax issues and a general market squeeze in city areas. “We have put up a strategy to help them to create demand from consumers and bring the traffic into their shop. That is something that we’re working on to help resellers promote our products,” he says.
In the regional areas, Optima issues catalogues detailing its product line. “We might consider putting more third-party products in our catalogue for more product reach. That will give value to the reseller,” he says.
These days, the supplier is facing more competition than ever before. “You always have competition. Compared to the old days, absolutely, you didn’t need to do anything. They [customers] came to you. Today you have to offer them products, differentiate and bring traffic to them [the reseller]. Business is getting tougher and tougher. The ones that survived have got to be more innovative and more competitive,” he says.
In the early days of Optima, Ung says he worked closely with staff, spending long hours with them. As the company grew with new contracts and increasing staff numbers, he admits there was no way he was able to meet with staff and mentor them.
“I guess we have to work harder to ensure that information and message will pass through to the bottom level of the staff and make them also understand the value of the company and what’s their value to the company as well,” he says. “I think that was missing in the past and we’ve tried to improve that.”
Three senior Optima staff resigned last November. Company managing director Douglas Wong resigned along with channel sales manager Michael Calculli and CFO and company secretary Justin Taylor.
“We’ve had major interruptions -- we had some changes last year in terms of management structure. We appointed a managing director but the person left after three months and that caused some impact to us,” he says.
“Some of the people didn’t necessarily understand the direction of the company. Yes we can develop the HR process but I think the issue is that I just don’t have enough time to talk to them more often, mentor them and explain to them what is the value of this company. I think that’s something that has been missing.”
He admits that when management make changes, people do not feel “settled” within their jobs. “That’s a moral issue. Even though you assure them, they want to sit tight and see,” he says. “That’s something we have to deal with at the moment. What we promised, we are able to deliver. We have a quarterly meeting [with staff], we have an intranet in-house so we can communicate with the staff. It’s something that’s just recently developed -- it had never been fully utilised in the past.”
Also, he prides himself on having the capability to provide the right direction for the company.
“If we can foresee what’s going on, we have to make a change and decision at the right time and make sure that the direction we are taking on is going to be of benefit for the company in the future. I’ve got to be in the front line and understand what’s going on in the market and make a decision for change,” he says.
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