This is the logic of Logica's success

THE MONDAY INTERVIEW; Martin Read

British computer software company Logica looks poised to reach an important milestone, and most observers say it is down to the efforts of Martin Read, two years in the chief executive slot. For the first time since 1987, the year it reached the height of its popularity as a high- tech growth stock, Logica's share price has pushed back through the 400p level, up from the nadir of just 116p in the bad days of recession-dogged 1992.

If the performance can be sustained, Dr Read will have managed to double the share price since he took over in August of 1993.

The City likes him, analysts praise his instincts and employees are complimentary about the sea-change in attitudes he has brought in his wake. But the convincing recovery in the share price is the compliment that Dr Read is perhaps most happy about. During an interview in Logica's central London offices recently, he interrupts proceedings to take an update on share trading, boastfully pointing out how impressively Logica has outperformed the market.

The share price rise reflects a sharply better operating performance for the supplier of software "solutions" to a blue-chip list of British and international companies, driven by a management newly focused on marketing and sales and a divisional structure more closely tied to its core businesses.

Logica concentrates on three key sectors - finance, telecommunications and energy, offering billing systems, data network control, retailing banking systems and a host of off-the-shelf and customised programs and hardware for business. It clients include the major UK banks, the Stock Exchange, a host of major industrial and utility companies and the major telecoms operators, BT and Mercury.

Logica management readily concedes that the company had become complacent in the late 1980s and 1990s. Following the departure in the late 1980s of Philip Hughes and Len Taylor, founders of Logica (both remain on the board), the company drifted sideways, its impressive 20-year growth stalled in its tracks.

Dr Read says: "Operations at the top had lost their punch. There wasn't enough attention paid to detail." These days, he personally reviews all main areas of the business every three months.

Dr Read was enticed away from GEC-Marconi, the electronics and telecommunications giant run by Arnold Weinstock, and told to pummel the organisation back into health.

But he surprised a few of his supporters by taking a slow and steady approach. Despite one serious round of management-level cuts within four months of his arrival, most of the changes Dr Read introduced were heralded with a soft tongue and a light touch.

"This is a people business," he says of his staff of 3,500. "When you contemplate making changes, you have to think about the employees."

In fact, he goes even further, lauding the work done under his predecessors. "The engine room at Logica was always very good. What needed to be improved were the directions from the deck."

Nonetheless, he did make some staffing changes, getting rid of people "who couldn't learn to think in different ways". He wanted a more focused company, less driven by technology and more aware of the customer and the need for aggressive marketing.

Using what he learned from working alongside Lord Weinstock for eight years - "anybody who can survive that will know a lot about running operations" he then redesigned the company - into its new three-part structure, and introduced tighter lines of management control between headquarters and the company's operations in 18 countries around the world, including the US and continental Europe.

"In the past, those operations were really like separate countries. We weren't benefiting from being part of a single organisation," he says.

In "Year One" of Dr Read's restructuring plan, reorganisation was the key theme. Last year, the focus changed to profitability. Following several years of impressive profits growth, the results turned disappointing in the early 1990s. The downturn coincided with the recession, which hit Logica's traditional client base, particularly banks and other financial institutions, very hard.

Profits were pounds 9m in the 12 months to 30 June 1993, on sales of pounds 217m. By last year, profits had grown to pounds 13.5m, while sales climbed to pounds 228.8m. In the first six months of fiscal 1995, profits were pounds 7.2m, and in line to exceed pounds 15m in the full year.

Promisingly, the company's US operations returned to profit, after disappointing losses.

"How did we do it? There are three ways to improve margins. Grow by acquisition, grow by market share and repeatability."

"Repeatability" is a favourite Read word. By it, he means the use and reuse of standard software solutions, or "kernels," in many different applications and for different clients. A water management system developed for Anglia here in the UK, for instance, might be the core of an application developed for Sydney Water in Australia. "It's money for old rope," Dr Read says. His goal is to be able to re-use up to 60 per cent of a given application sometime in the future.

Acquisitions are also favoured. Last year, the company bought Precision Software and Synercom, two US software houses. This year, there are plans to expand in the Middle East and on the continent. A new office in Prague will be launched within a few weeks.

Of the company's three major markets, Dr Read holds out the greatest hope for telecommunications, one of the building blocks, he says, for the information superhighway. The company is in alliances with Baby Bells in the US to develop software for interactive banking, shopping and video on demand.

Refreshingly, Dr Read is no unthinking convert to the infobahn hype. "If you asked me what the highway will look like, and when it is likely to emerge, I have to say honestly that I don't know." Not that it matters, however. "I don't give a monkey's," he says. "If clients such as Ameritech think it is all going to happen very quickly, and are willing to spend money seriously, then I am happy to be a flea on the elephant's back." Logica, after all, can make a profit whatever the contours of the highway - software to deliver future multimedia products will always be needed.

Arts and Entertainment
books
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
PROMOTED VIDEO
Life and Style
3D printed bump keys can access almost any lock
techSoftware needs photo of lock and not much more
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
News
Dr Alice Roberts in front of a
peopleAlice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
The Digicub app, for young fans
advertisingNSPCC 'extremely concerned'
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution