Telecom New Zealand Ltd. has decided to merge its newly-acquired systems integrator, Computerland, into existing subsidiary Gen-i, and plans to announce the details of the process by July.
Chief information officer Mark Ratcliffe says Telecom New Zealand has officially been the owner of Computerland for seven months and the company had always intended to wait a full year before making any changes.
"It"s a model that"s worked well overseas with both BT [British Telecommunications Plc] in Britain and Deutsche Telecom in Germany adopting it," Ratcliffe says.
Telecom New Zealand is currently undertaking a consultation period with all the affected staff as well as with customers.
"Some of these changes might be seen to be inward looking and that"s true but we"re going to retain our commitment to our customers throughout the period."
Telecom New Zealand has only just finished digesting Gen-i, which it bought in June 2004 for NZ$62.5 million (US$44.8 million). However, Ratcliffe says he"s confident the company hasn"t bitten off more than it can chew by choosing to merge with Computerland so quickly.
"We"re confident the model we"ve chosen is best practice and that we"re retaining the strengths of both Computerland and Gen-i in the process."
Ratcliffe says the integrators work on quite a different model to a telco.
"In telecommunications, the engine of your business tends to be your infrastructure, whereas the engine of these companies is their people."
He says there will be some adjustment in terms of the sales forces as the two companies are combined, but that it shouldn"t be much of an issue for the sales staff involved.
"Telco sales tend to be based around a monthly contract, while IT sales are typically a fixed-term contract, and so the sales staff focus on getting that contract signed. But having said that, we"ve been doing IT contract work [at Telecom New Zealand] for five years now and our staff are well used to it."
Ratcliffe says sales staff are also comfortable with a changing standard for remuneration each year. "It"s surprising how many ex-Telecom staff there were at Gen-i and Computerland and vice versa," he adds.
Asked whether Telecom New Zealand is concerned the two companies will be competing in the marketplace for contracts, Ratcliffe says in the short term that"s less likely to happen.
"There"s no point us going to market with two very similar offerings under different brand names, so we tend to keep Computerland away from existing Gen-i contracts and so on." Ratcliffe says the head of Gen-i, Chris Quin, and the head of Computerland, Chris Mackay, meet regularly to discuss how best to tackle upcoming tenders.
No decision has been made yet on branding for the merged business, although Telecom did adopt the Gen-i brand after it bought the company instead of sticking with its own in-house Advanced Solutions Group name.
"We"ll probably run both in the short term," Ratcliffe says. "Gen-i has a strong brand in the main centers while Computerland is better known in the regions so we"ll have to see how that pans out."
Telecom purchased Computerland in August for NZ$26 million.