CompuCom - An interview with Carlos Sagasta

‘I have worked in the Telecommunications, Media and Technology space for the last 25 years in multiple roles including consultant, investment banker, investor, head of strategy and financial planning, and Chief Financial Officer. I have been fortunate that these jobs afforded me the opportunity to work with a wide group of stakeholders and in a variety of situations, across multiple geographies.

I have worked with Thomas H. Lee, our main shareholder, in the past and I always found myself impressed by the company’s investment culture and professionalism. To me, their commitment to their investments is extraordinary and deeply supported by the work they put into analyzing any new investment they consider.

When they called in the winter of 2014 to talk about CompuCom, for me it was an opportunity to once again partner with a great firm and a terrific group of investment executives. Coming back to work in the United States was already something I was contemplating, and therefore, it all fell in line nicely. When I did my due diligence on the company, I had several conversations with some of the key executives and our CEO, Don Doctor. As a result of those conversations, I saw in the IT industry many of the challenges other industries have experienced or are still undergoing.

In our particular case, the IT industry is feeling a massive amount of pressure coming from global competitive dynamics. In addition, the space is transforming in how our work is performed as customers continue to digitize their processes and work forces. The way in which we deliver technology outsourcing solutions in the coming years will be fundamentally different from what we have done in the past, and concepts such as Robotic Process Automation (RPA) and digital hybrid solutions will become terms completely mainstream across our and our customers’ industries.

Being able to assist an organization to change and adapt to those challenges is an extremely attractive challenge. Digitalization usually creates massive disruption in any sector and tends to create many negative effects in competitors who are resistant to the change. However, in my experience, the truly successful companies are those that are able to embrace the change and rethink how they go about their business – from the way that they sell to how they manage their internal organization. It takes a very clear view of the company you want to become, constant communication and unwavering discipline to successfully make this journey. The CFO is a critical agent of change in any transformation of this magnitude, due to his or her responsibilities relative to company performance, as well as both internal and external communication.

The role of CFO is well positioned to drive cultural change within a company. What goals did you arrive with as CFO of CompuCom? 

I had three primary goals coming into CompuCom as the CFO. First, to find mechanisms to stabilize the financial performance of the company so that it could optimize its financial obligations. Second, to re-engage with our debt holders to recruit their support and knowledge as we embarked into the turnaround and transformation of the business. Third, to find areas of growth within our new focus and properly direct resources to these areas, in order to recover a growth trajectory for CompuCom in an industry that has been challenged from a growth standpoint over the last few years.

We are making good progress in relation to my first goal. Over the last 15 months, we have significantly streamlined our operations while continuing to deliver great service to our clients. In addition, we have been able to win new and significant businesses that will position us well for future opportunities. Although most people believe that the only way to do this is through traditional cost cutting, I believe that the real avenue to success is to try to engage in “cost transformation.” The difference is that you continue to perform the work that you were doing before, but you find a more innovative and often digital way to do it.  To this end, we have been investing in RPA and applying this innovative technology to our own internal processes. This has resulted in large reductions in the number of incidents we manage with traditional resources while delivering a faster response time to our clients. Another example has been the deployment of Solution Cafés® across our clients’ campuses. This service model – which involves walk-in tech support delivered by certified technicians – improves our productivity by more than 50% in the number of tickets we are able to resolve for our clients’ end users per day. At the same time, end-user satisfaction grows by at least 10% and we ultimately deliver a lower-cost model with greater profitability.

I believe our efforts have contributed to the stabilization of our Income Statement and will provide us with the stability to build our recovery with the flexibility we would not have been able to achieve without these changes.

With regards to the second goal, we have made great progress and have dramatically improved our communication and transparency with investors and market participants. My experience has always been that a solid relationship with your debt holders is built on constant communication and a degree of confidence to be able to make investors a part of your overall strategic direction. We have a diverse and relatively large investor group, but I can honestly say that our key bond and loan holders are knowledgeable of our strategic direction, and are supportive. For example, when we bought back a piece of our outstanding bonds earlier this year, we went directly to our top holders to measure their appetite for the transaction, both as a participant and overall investor. One of these participants recently said that they appreciate the candor with which we talk about the business, even though they may not always like the nature of the news.

The third goal is where we continue to face a major challenge; however, we feel that we are rapidly addressing it.  Returning the company to growth is unquestionably our most difficult challenge, particularly when you have a limited amount of capital with which to execute.

In the first 15 months, we launched three major initiatives to grow our business around an expansion of our regional delivery models, a completely remodeled dispatch delivery model and an investment in the rapidly growing Internet of Things (IoT) space.

Our regional investment has seen CompuCom acquire significant minority positions in two leaders within their regions that are already showing great promise in the creation of cross-selling opportunities for CompuCom. This will be a large contributor to our growth story for 2017. As a CFO, I spend a considerable amount of my time talking to prospective targets and performing due diligence. But most important is building the relationships that enable these new investments to get properly integrated into our day-to-day operations and provide quick and measurable value to our equity story.

We have also launched an extension of our field service model called Tech-Zone®. This model is a digital hybrid approach for the delivery of technical services that combines the traditional dispatch we all are used to, combined with a walk-up service element, concentrated around high-density business areas. This model is of great interest to our clients who have highly mobile and widely distributed workforces, and aligns with the demands of the millennial workforce, who tend to prefer immediate support options. The Tech-Zone model is also very attractive to traditionally underserved small- and medium-sized businesses (SMBs). Currently, CompuCom has launched Tech-Zones in North Carolina and Florida, with plans for an aggressive national rollout over the next 24 months. The challenges of rebuilding a key part of our business and adding this Tech-Zone model has required us to rethink how we deliver our back-office support from the ground up, automating what before was a highly manual operation.

However, the most exciting and groundbreaking adventure for CompuCom is the recent acquisition of the IoT division from technology provider Extensys. IoT refers to the ever-growing network of physical objects that feature an Internet Protocol (IP) address for Internet connectivity, and the communication that occurs between these objects and other Internet-enabled devices and systems. This market space is expected to grow dramatically over the coming years. In fact, research firm Gartner estimates that there are more than 6.4 billion IoT devices in operation today and that number expected to grow to 20.8 billion by 2020. In that same timeframe, Gartner expects the IoT market to grow to more than $300 billion in revenues for technology providers.

As a result, we see a massive opportunity to help support our clients’ operations. As we say, anything with a chip, sensor or plug eventually needs to be supported or optimized, and CompuCom is uniquely qualified to provide that on-demand value to our clients.

 Is there anything else you would like to add?

We strongly feel that CompuCom delivers the best combination of digital and human delivery, remote, dispatch and onsite support to become the leading IT provider of solutions for today’s digital workspace. We’re very proud of the work that our 11,500 associates deliver every day to our clients. And we’re equally proud of the roster of clients who partner with CompuCom, including seven of the top ten retailers in the U.S. and six of the top ten financial services corporations. Our overall objective is to help our clients’ end users be more productive than they thought possible – on any device, anywhere, any time.