The Hindu Business Line : Driving change

Dr Ravi Gopinath is Managing Director and CEO of the Mumbai-based Geometric Software Solutions. Prior to joining Geometric, he headed the engineering and industrial services (EIS) strategic business unit of Tata Consultancy Services from April 2004 to September 2006.

In a chat with eWorld, he talks of the initiatives he has put in place after taking charge at Geometric. Excerpts:

Why did you decide to come into Geometric from TCS? (Apart from the position and what came with it) What exactly did you look for?

There is a certain thrill in driving a business that is very close to your interests as a person.

Owing to my engineering background, I have never been a traditional IT person. In Geometric, I got a tremendous opportunity to spearhead a company that is totally dedicated to the engineering space.

When I came on board eight months ago, Geometric was going through a period of transition.

The company had gone through the growth phase and the time was ripe to start scaling the business.

As opportunities in this space are large, I thought the responsibility of driving the scaling initiative would be very interesting. So it was the opportunity coming out of focus that prompted me to take up this job; and so far it has been good fun!

What were the things you thought needed change when you came in here? Could you please elaborate on what you have done since you came and how you plan to continue architecturing change?

While at TCS, I had encountered Geometric in many cases as a competitor with a strong repertoire of competencies.

However, for various reasons, it had chosen to be a very subdued player and never went out aggressively to market its capabilities.

There are two types of customers we serve. The first comprises companies who are software product vendors and make us a part of the software development cycle.

The second type is the end user of product lifecycle management (PLM) products.

If we look at the value chain, maximum consumption always happens at the end-user level. While we have grown our business in the traditional area of software development, what Geometric had not done enough in the past was to take the competency to market as a systems integrator. This is evident in the small sales force (just four globally) and the limited brand awareness that the company had in the market. Due to this we missed out on the first wave of PLM implementation.

In my first presentation to the board, I had articulated that the top five problems facing the company were sales, sales, sales, sales and sales. I don’t say that we have completely cleared the air on these fronts. However, in the last six months, we have taken three important steps to enhance our brand visibility.

First, there is an aggressive attempt to go after existing opportunities through a rejenuvated sales team. Second is to approach the market as an independent systems integrator.

And third, to leverage existing partnerships with major software companies and thereby enhance the joint value.

Sales transformation is not being driven as a standalone change but I have linked it with a fundamental reorganisation that has been done within the company ranks.

As a result, we have managed to bring in a lot more focus on delivery capabilities and processes associated with it, such as competency generation. If these two building blocks are in place, then the sales exercise also becomes efficient.

Over the last six months, we have scaled the team to nine people. I believe this should go up to 15 within the next one year.

We have one sales person in Europe and Japan; we will be adding in these geographies as well.

What is the status of integration of the Detroit-based Modern Engineering with the company? (Geometric acquired the engineering services division of Modern Engineering in October 2006.)

The integration process is under way and financial consolidation has been achieved. We have made management changes in Modern, with a view to put in place a line-up that will be part of the global management team and drive the common purpose of scaling business and ensuring profitability.

Also, the delivery operation of Modern has started working closely with Geometric’s delivery capabilities.

Geometric’s native offshore engineering group in Bangalore is being managed by Modern Engineering, making them responsible for a larger collective business. What is really pending from an integrating standpoint is to start using Modern as a global platform.

What are the kinds of deals you have you been able to win, thanks to Modern’s involvement?

Early winds have started to blow in. In a strange coincidence, both Geometric and Modern have clientele that are complementary.

In Detroit, Modern, which has a strong footprint in automotives, does work for General Motors and Chrysler; Geometric, on the other hand, is associated with Ford. These complementarities seem to emerge in many dimensions.

Every customer has a global engineering requirement as he is driven by the imperatives of cost, efficiency, market access and so on.

As Modern has a very strong engineering capability and Geometric has expertise in digital technology, we are assuring customers that their global engineering requirements can now be satisfied by a single entity.

Core designing and working on collaborated teams together needs a higher degree of proximity, which Modern offers.

However, for this collaboration model to work, it is absolutely critical to have a strong digital infrastructure in place.

Geometric becomes the preferred partner as it has knowledge of PLM platforms.

This gives us opportunities to cross sell; engineering customers are in discussion with us for PLM solutions and PLM customers are talking to us for their engineering needs.

So the initial deals have started happening across the common customer base. We are currently chasing at least 15 deals of up to $1.5 million.

Going forward, as the operations stabilise, there will be significant volume addition.

We see that your (net) margins have been hit this year compared to the last year (9.5 per cent as against 11.3 per cent), possibly because of Modern Engineering’s margins being much lesser than yours. We understand the synergies you get with this acquisition, but will it continue to remain margin dilutive?

Modern’s results were a tad below expectation. Several programmes that Modern was working on with its clients encountered delays.

Those delays had percolated into contractual delays and hence profits took a hit. Currently 3-4 per cent of Modern’s revenues come from offshore locations.

Our target is that by the fourth quarter of the current fiscal, the offshore component of revenues for Modern should be 16-20 per cent.

That is the challenge that the management team is working on. A lot of cross selling and cross-pollination between Geometric and Modern will help both companies in a big way. I believe that this year is going to be a year of major transformation for the company.

Which new geographies currently interest you?

India and China, I believe, are completely untapped centres. We have not leveraged India as a market at all. We are doing a lot of stuff for MNCs that have captive centres in India.

However, we haven’t been able to do anything of significance for Indian customers, which is a big miss for me. I believe the momentum has started building in the US and hence focus should now shift to Japan, India and China.

adith@thehindu.co.in