With an eye on a surging market, Lai Yam-ting drives Automated Systems with a 'change or step aside' mindset AS A VETERAN industry player, Lai Yam-ting has seen it all: the mainframe era, the personal computer revolution and the dotcom boom and bust. In Hong Kong, he has watched the industry's halting recovery from Sars and its inexorable push into China. 'This is not a boring job,' says Mr Lai, managing director of Automated Systems Holdings who thrives in the cut and thrust of 'faster, more fascinating and more challenging' technology developments. 'In most cases, people are afraid of change, but in our industry, we must embrace change and follow the market, or step aside. There is always something better we can do. That gives me joy and keeps me going in this business.' That mindset also sums up Mr Lai's three decades at Automated, which hired him in 1976. After graduating with an electronics degree from the Chinese University of Hong Kong, he applied for a job with the small but highly entrepreneurial professional technology services firm rather than joining his classmates who went to work with electronics manufacturing companies. Mr Lai started as a service engineer and technician tasked with installing hardware and software and trouble-shooting. He also wrote client software programs, such as a coupon-matching application for the old Maria bakery chain. Automated, founded by the United States-educated Peter Kuo Chi-yung in 1973, distributed and sold so-called minicomputers from Digital Equipment Corp (DEC), customised applications and a data entry programs. The company also provided technical training for running and upkeep of those systems when outsourcing system maintenance and support were largely unheard of. 'Peter Kuo, who was my boss for 25 years, gave me quite a bit of exposure in those early days,' Mr Lai says. 'He had a more open style in managing the company, compared with typical Chinese companies.' One of the projects Mr Lai got involved in was setting up the telephone betting system for the Hong Kong Jockey Club, which has remained one of the largest and most important clients of Automated. With very little knowledge of Putonghua at the time, Mr Lai made his first trip to the mainland in January 1980. 'It was freezing in Beijing, but I had a big job to do: it was the first DEC system installation by Automated in China,' he says. The two decades that followed saw Mr Lai land key promotions as field services manager at 36 and deputy general manager at 49, as Automated captured major government contracts and diversified the range of products it distributed in the local market. Automated's growth into Hong Kong's leading professional IT services group helped pave the way for company's listing on the main board in 1997. The group has won more than 100 IT services deals with the government since the 1970s. Its outsourcing contracts with the government have included data conversion of more than 3.5 million plans for the Land Registry and applications maintenance and related support services for the information systems of the Customs and Excise Department, Health Department, and Highways Department. In the commercial sector, Automated has provided key IT infrastructure - including security, data storage and stock trading solutions - to financial institutions such as Standard Chartered Bank, Hong Kong Exchanges and Clearing, Hong Kong Monetary Authority, BOCI online trading, Deutsche Bank, Societe Generale, Bank of East Asia, Morgan Stanley Dean Witter, and Goldman Sachs. 'Our main difference from the competition is that IT services are our only business,' Mr Lai says. 'We work to understand better how technology can help our customers become more productive and efficient.' He succeeded Mr Kuo as the group's managing director in 2002. The following year saw the biggest test for the group. The uncertainty brought by Sars in 2003 drove the company to cut jobs for the first time. 'It was a tough time and we had to lay off 160 people,' Mr Lai says. 'But we learned our lesson and this test only helped make us stronger for the long run.' He says Automated secured an important source of recurring revenue in 2004 from managed services. This market segment is expected to be the source of more revenue in the future as the group relies less on 'moving boxes' at a time when companies are pushing to extend the life of their computer hardware and are more prudent with their IT spending. 'With managed services, we cover IT infrastructure outsourcing and facilities management, network operations, desktop computing and data-centre management,' he says. 'Depending on a customer's requirements, we provide personnel, equipment and systems. This shared-service model enables our customers and us to achieve economies of scale.' Automated found business improvement in the financial services and hospitality industries. It secured turnkey system contracts for hotel management to use in four new hotels on the mainland and one in Hong Kong. The company also won contracts to set up document management systems for a large legal firm in Hong Kong and manufacturing company in Japan. Research firm Gartner forecasts that Hong Kong's IT services market will be worth US$1.4 billion this year, up about 4 per cent from US$1.35 billion last year. Automated last week reported a 26.61 per cent gain in net profit of $23.46 million for the nine months to December. The group credited its positive performance to the completion of large IT infrastructure projects, continuing growth of its managed service business and increased revenue from capital interest. With $311.9 million cash on hand and no bank borrowings, the company said it had generated satisfactory capital interest of more than $6 million, thanks to rising interest rates. It also booked an unrealised gain of $3 million from the revaluation of its investment in Taiwan-listed Data Systems Consulting. 'Compared with contracts on hand of $300 million to $400 million in previous years, we currently have contracts on hand of $500 million, more than 60 per cent of them service-related,' Mr Lai says. For the nine months to December, the firm's overseas business stayed strong. The company won deals to supply advanced computer systems and services for the 553 branches of Thailand's Bank for Agriculture and Agricultural Cooperatives. Along with Hewlett-Packard and Unisys, Automated also signed to participate in all four outsourcing categories under the government's new Standing Offer Agreement for Quality Professional Services programme that started last month. HP, Automated Systems and Unisys can bid for a range of IT services projects worth anywhere from $260,000 to more than $10 million. These include pre-implementation work, project management, full system development, information security and so-called ongoing services. 'This government initiative and the growing business from the commercial sector are all positive signs for the local IT services market,' Mr Lai says. Biography Lai Yam-ting, 52, is managing director of Automated Systems Holdings, a professional information technology services group with offices and service centres in Hong Kong, Macau, Taiwan, Thailand and the Philippines. The main board-listed firm is a major subsidiary of Singapore's CSA Holdings, which is controlled by United States-based information services giant Computer Sciences Corp. Mr Lai was appointed managing director on April 15, 2002, replacing founder Peter Kuo Chi-yung. Mr Lai previously served as general manager of Hong Kong operations for a decade. He obtained a bachelor's degree in electronics with honours from the Chinese University of Hong Kong in 1976.