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Fred Amoroso was named president and CEO of META Group, Inc., the Stamford, Conn., information technology market research firm, early this month. He succeeds founder Dale Kutnick, who will remain as chairman.
META Group, like other research firms and consultancies, was hit hard by the economic downturn and last year laid off 15 percent of its workforce. The company is now seeking to move beyond publishing reports and studies to do more on-site consulting for its clients.
Amoroso previously was president and CEO of CrossWorlds Software, Inc., now part of IBM, and before that was an executive in IBMs Global Services division. Prior to that, he was a managing partner with Price Waterhouse. He was interviewed by eWEEK Executive Editor Stan Gibson
EWEEK: The consulting business has been suffering during the current downturn. What will you do to regain growth?
Amoroso: Traditionally, the research companies provide analysis of technology products. Theres a segment of our customer base that wants publications and research findings. But today, companies are under budget pressure and want to increase their effectiveness in IT. Were helping our customers be more effective with fewer resources.
There are some great examples of companies that have gone through an IT portfolio assessment with META participation. We assess IT assets and their alignment with business and have enabled some companies to improve by 20 percent or so.
In my mind, that is what this is all about. Not just analysis and publications, but how do we help companies become more effective in using IT resources?
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EWEEK: That sounds more like what Accenture and companies like that might do.
Amoroso: The Accentures of the world do this, but a lot of these organizations have developed very deep vendor partnerships and they tend to build a core competence in these [vendor] packages. And they have invested in the people with this expertise.
Were not getting into the implementation services work. However, our independence puts us in a better position to advise customers without regard to alliances.
Meta started principally in research and analysis. But in recent years we developed a consulting practice to give customers more hands-on attention and more support. Its a great growth opportunity for us.
EWEEK: Will this help bring you back to profitability soon?
Amoroso: We just released our second-quarter earnings. While the general downturn has affected everyone, weve done better than others in our space, in terms of revenue declines and profitability.
We are still losing money, and I wont say when well be profitable. However, we took action early and had our downsizing in April of 2001.
EWEEK: Was founder Dale Kutnick asked to step aside?
Amoroso: In any companys development, people ask themselves what they like to do and what they dont like to do. Dale started the company in 1989 and has had a very successful reign. What Dale really likes to do is research. He works with the research team on the methodology and he works with customers. When you get to be a $100 million company, the CEO is going to spend most of his time running the business.
Dale discussed with the board what he wanted to do and collectively they worked on it. Dale is staying as chairman of the board.
EWEEK: Research firms sometimes are suspected of conflicts of interest when they work for vendors as well as customers. What is METAs reponse to such questions?
Amoroso: What our customers are looking for among the research and consulting companies is objectivity and independence. If they felt we would be more favorable to companies we had a larger relationship with, then what value would we have?
At META, no single analyst publishes without other analysts participation, and we do not compensate our analysts for the depth of a vendor relationship because we want them to be objective.
There are some vendors that have asked us to help them in their strategies. We do that, but its 35 percent of our business, and we do that with a different group of analysts.
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EWEEK: As a veteran of both IBM and Price Waterhouse, how do you see the acquisition of PriceWaterhouseCoopers by IBM?
Amoroso: I came from Price Waterhouse and I understand the issues of a partnership[-run company]. The partner tends to work with a fair amount of independence. In a corporate environment, there is more command and control. Integrating those different cultures is not to be underestimated.
PWC had to separate its auditing and consulting businesses because of SEC requirements. Then in doing their IPO, they went through some of the cultural transformation to move themselves to a corporate structure. Those changes will be accelerated under IBM.
One of the reasons that IBM bought them is they have expertise in specific industries that IBM lacks. PWC is organized into seven or eight industry groups, and there are sub-industry groups. For example, Siebel software in an insurance company is very different from Siebel in a bank or a pharmaceutical company. PWC has developed skills that are much more business-aligned.
EWEEK: Some IT people wonder why they should pay money to META Group and others when theres so much information available on the Net and in the trade press. How do you answer?
Amoroso: You have to look at the sources of the information. Can you rely on it? If youre looking for surface stuff, then yes, fine. But if you want a more detailed evaluation, like the META Spectrum, then thats not freely available on the Web.
EWEEK: How important are Web services?
Amoroso: Ive been in this industry for 30 years. Our industry has always talked about technology long before it has been ready for a production environment. Think of relational databases and client-server, not to mention the Internet. Its the same with Web services.
They are not the complete approach to business process mapping across a company. Some of the vendors themselves will judiciously deploy Web services. But is SAP really going to deploy Web services that would enable a customer to deploy best of breed? Probably not.
Web services will have a tremendous role in increasing the value of legacy systems. However, it will be 2003-2005 before Web services becomes a strong part of production IT.
EWEEK: Are your customers continuing to express a strong interest in security?
Amoroso: It is certainly one of the areas we provide analysis on. We do not provide hacking and security services, though. But we have a strong security service. Well advise our customers about what they need to be aware of.
EWEEK: Is the HP-Compaq a potent combination?
Amoroso: Hardware is increasingly moving to a commoditized business. In that environment, companies need to create low-cost manufacturing. When you look at HP and Compaq, theyve decided to combine forces in areas that are under pressure in pricing and distribution. Thats going to make the merger problematic.
EWEEK: Are you seeing any companies willing to spend money on big projects?
Amoroso: Big projects with long-term payback are very few and far between. Most companies are investing tactically. Companies may have a two-to-three-year strategy, but the investment window is six-to-nine months or no more than 12 months.