From Camden to Bangalore: the Hilary Clarke interview
Martin Read, Logica's chief executive, has turned the software company into an international force
Sunday 15 November 1998
And, while Logica's share price tumbled last week following a "sell" note on the whole sector from HSBC, the stock market wasn't at the forefront of his mind.
That's because he was in Bangalore after Logica's announcement of a pounds 1m investment in India's hi-tech capital. The move marks another stage in Logica's expansion abroad, part of Read's strategy to make the Camden- based company an international player.
City analysts cannot heap enough praise on Logica or Read. "I think it's the most interesting IT company in Britain," says Mark Loveland, an analyst with Dresdner Kleinwort Benson.
According to Coleen Kaiser, an IT analyst with BancBoston Robertson Stephens, "It was Read who came and turned round the company and he's very well respected."
Logica's problems began in the late Eighties following the departure of its founders, Philip Hughes and Len Taylor. Despite its reputation for technical excellence, by 1992 the company was no longer recording any revenue growth. It was, says Read "quite small", worth about pounds 130m with the bulk of Logica's clients in the UK.
Today Logica is international, with a large presence in the US and France, and is worth around pounds 1.5bn. Read has done more than turn Logica around in his five years at the helm of the company, he has achieved this at a time when other British-owned software companies have been falling like ninepins to foreign predators.
"Two things attracted me to the company," says Read, an amiable, talkative man who looks more like a university professor than a businessman. "The first was the opportunity to run a public company. The other thing was that I felt, despite all its problems, Logica had a hugely talented staff, was valued by its customers for the technical things it did, and had a good brand."
Read didn't start out planning a career in the business world. A grammar school boy, he won a place at Cambridge where he studied physics. When he graduated in 1971, he was funded for a research doctorate at Oxford by the UK Atomic Energy Research Agency.
At that time he still believed he was destined for a career in academia. But while he says he found it "exhilarating being at the cutting edge of knowledge", his most important discovery at Oxford was that business and managing people was his real passion. He found that out about himself by directing amateur dramatics, a passion that has been taken up by his son, a recent drama graduate.
"My wife says I've been acting all the years I've been a businessman, so I haven't entirely lost the skills," he jokes.
Read's first foray into the world of big business was a job at the international container shipping firm Overseas Containers, where he started off as assistant to corporate planning.
While he was there he picked up an accountancy qualification so he could talk to accountants "on equal terms". In 1981 he moved to International Paint, which was then a subsidiary of Courtaulds.
As commercial director for the company's worldwide marine paints business, he spent a lot of time visiting the company's subsidiaries abroad.
"You'd be in a small company and what you learnt in that environment were the basics of doing business, like where the money is coming from. You can go quite a long way in a big company without being exposed to this, without having to worry about it," he says.
Read's biggest break came in 1985 when he was invited to go for an interview with Lord Arnold Weinstock, the head of the defence giant GEC.
"It was an amazing experience," says Read of that interview. "Everything I said he disagreed with. I felt sick. How could I have blown it?"
It later transpired this was a classic Weinstock tactic - to see if Read would stand his ground and argue back. Would Read give any of his interviewees such a hard time?
"I certainly do it to man-agers. People have to be accountable and they have to know what is going on, and if they don't believe in their business then they are not going to make it," he says.
For most of the time he was at GEC, Read was director of Marconi Defence Systems and then responsible for the GEC Marconi Radar and Control Systems group. Read says he had no moral problems working in the defence sector.
"At the end of the day I think it's important this country can defend itself," he says.
Headhunters targeted Read for the job at Logica, which he began in August 1993. His strategy for making Logica the viable concern it is today is one that any freelance journalist would understand. Specialise, and then sell the same product over and over again, just adapting it slightly to suit the destined market.
"They've really taken a sector focus and because of that specialisation, I think they'll grow much faster than the other companies," says Mr Loveland at Dresdner Kleinwort Benson.
"We haven't just increased our earnings per share fivefold in the repositioning of the company over the past five years," says Read.
"The real beauty for me is that the company is positioned well for the future."
The sectors Read targeted were the newly liberalised gas and electricity companies, telecommunications firms and banking. The three areas now account for around 70 per cent of Logica's business.
"The real trick about our business is that it thrives on change," says Read, who is also a non-executive director of the supermarket chain Asda. "Banking, for example, is having a tough time but there is tremendous pressure on established banks to get more efficient. Every time banks merge, there is a problem sorting out different computer systems, so a merger for us is an opportunity."
In the utilities field, Read expects the company to benefit from the fact that the UK was the first large country in Europe to liberalise, and was ahead even of the United States.
"All the deregulation in the UK has been fantastic for Logica and we have an unrivalled position. The same thing is going to happen in continental Europe - there is a huge market there that we are tremendously well positioned for. That's why I'm a happy boy."
The telecommunications sector is also putting a smile on Read's face not just because volumes of usage are going up all the time, but because of the different kinds of value-added services constantly being developed.
The projects Logica has been involved in include a mobile phone with its own version of Teletext, a "roving yellow pages in your pocket" as Read puts it, and a mobile phone version of an electronic purse by which a plastic card is charged up with money using the mobile phone.
Read particularly likes the latter project because it "brings together Logica's telecoms and banking experience and also our defence business, which if you look at it has a lot of secure systems, very important in terms of how you protect all this stuff."
If only Read had a formula to protect the company's share price, which has fallen despite reporting a 56 per cent rise in pre-tax profit. "Clearly there are more economic worries than there were a year ago but our industry is taking up a bigger and bigger share of economic activity," says Read.
And it's a business where Logica has few competitors. One of the biggest contracts Logica completed last year was with the Saudi Arabian monetary authority.
"There were only three companies they looked at for that: IBM, Anderson Consulting and Logica. I am happy to say we won. It is also proof of how well we are positioned.
"You don't want to be in those businesses where there are 20 other people competing because you end up competing on price."
Read might be a highly successful businessman but he is determined not to lose sight of what it is like for those at the bottom of the social heap.
One of the few things he finds time for outside of work is to sit on the committee of the Portsmouth Housing Association and an adjacent trust designed to help homeless people live independently.
"It gives life a sense of balance. It's very easy when you sit at the top to forget what it was like at the bottom. It's called a reality check."
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