Rand Blazer Is Fired Up!

So never mind the fierce rain pelting the windows of the executive conference room. Or that daylight-saving time has run out. Blazer is "raring to go," to size up the market's finer points. In an exclusive interview with VARBusiness, he eagerly shares his points on subjects as diverse as competition and customer-spending patterns, among other topics.

Foremost on his mind is the innate strength of the market, which Blazer characterizes as stronger than other sectors, such as manufacturing or transportation. IT, he thinks, "will grow better than the economy as a whole because of the promise it holds for productivity." His best guess as to what kind of growth to expect in 2004: 7 percent to 13 percent.

Where the growth rate eventually falls will depend on customer profitability, Blazer believes. "We're not going back to the '90s [in terms of spending]," he admits. The head of the $3.1 billion IT consulting firm thinks companies still recognize that there is some discretion around spending in the short term. "They can back off or go faster, depending on their profitability." Blazer's advice: "Take in consideration the health of your customer and push accordingly."

BearingPoint focuses on five core client groups: high tech, financial services, consumer investor markets, communications, and content and public services. Blazer anticipates some will be up in 2004, financial services perhaps, and some will not, like communications, and content and public services. He is concerned that budget deficits might hamper state spending.

"It affects where you deploy your sales force, where you put your capacity into work teams and how you manage business and make investments," Blazer says. "The growth will come in waves, over time, [and] it will be incremental and cautious. Be patient. Customers will spend on their timetable."

So how has BearingPoint made out by following this strategy? For its fiscal year ended June 30, the McLean, Va.-based company--ranked No. 29 on the 2003 VARBusiness 500 list of largest solution providers--increased its sales to $3.1 billion from $2.4 billion. However, earnings per share dropped to 22 cents from 34 cents from the year prior. According to Standard & Poor's, the 17 analysts who follow the stock rate it a "medium hold" as of Oct. 24, down from a "high hold" in July. Analysts at those financial-services firms expect, on average, earnings per share to climb to 35 cents in fiscal year 2004. That's better than some, but not as good as others.

BearingPoint has enjoyed some big public wins this year, including a brand-new $70 million deal announced Oct. 28 with the International Air Transportation Association. The major six-year managed-services outsourcing deal calls for BearingPoint to implement, manage and staff an invoice-management service for the air-travel industry. It also scored two state deals since Labor Day: a $16 million contract to provide business-process-redesign and tech-modernization services for Minnesota's Department of Employment and Economic Development, and a teaming arrangement with Massachusetts to update the state's procurement system.

Blazer says Accenture and IBM are his major competitors. In particular, IBM, which Blazer refers to as the "first of the mega-firms," is on his radar screen. Combating that muscle will take daring and creativity.

"The rest of us are best-of-breed players--Cisco, EDS, BMC for storage, Microsoft for office software. You have to be very good at what you do...for any of us to become a mega-firm. We'll see a trend toward mega-firms. Whether it's good for the customer is yet to be determined. [And] it's too early to tell if IBM has the winning hand," he says. Conversely, "some of the smaller players are exiting--no capital. It's convergence."

Specialization, Blazer continues, is "akin" to being a best-of-breed player.

"Usually, it means a specific solution," he says. "But I call it the combination of what the solution is, what your expertise is, and who your target audience is. They all have to be in alignment."

The CEO pointed to SAP's core set of software adapted for the automotive industry as a good example.

"Specialization is consumer-targeted," Blazer says. "We first have to start by defining the marketplace and [then] tier down from there by setting relationships and solutions."

Asked about influencers, which he refers to as "small consulting firms," Blazer says they don't get in his company's way. Clients, he says, may consider soliciting their advice, "but they don't rely on them completely." And while he doesn't want influencers taking away his clout or billings, Blazer does want to make certain they know about the virtues of BearingPoint, the better to recommend it. "So it cuts both ways," he admits.

In the final analysis, the BearingPoint CEO is pleased with the recent economic upturn; it's just that he'd like to see it move ahead steadily, not so hurky-jerky.

"If anything is going to freak me out, it's the timing of it all. I'd like to see more steady optimism. Not take two steps and pause...just planned steps," Blazer says. The scattershot nature of the economic rebound, he notes, "affects the way you determine levels of investments and resources, and the way you deploy. We have 16,000 people at stake. It would be easier to manage them [with] a little bit more rhythm."