The Wall Street Transcript
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TWST: Raju, can you give us a brief overview of Sierra
Atlantic?
Mr. Reddy: Yes. Sierra Atlantic is an IT services company focused on enterprise
packaged applications--implementation, upgrades, maintenance, and cross-product
integration--by leveraging our offshore delivery model and strategic software
partnerships. We are celebrating our tenth anniversary in this business
with consistent, profitable growth, such that today we have 450 people
worldwide, growing to 500 by year-end.
TWST: Can you tell our readers a little bit about the alliance you
have with PeopleSoft?
Mr. Reddy: Yes. PeopleSoft is the newest of our strategic software partnershipsone
of our key differentiators--that started with Microsoft, Oracle and Siebel.
The PeopleSoft relationship is about two years old now. It started with
a technology partnership--specifically, we were contracted by PeopleSoft
to do back-end maintenance and develop bug fixes for their PeopleTools
products, predominantly from our India offices over the last year-and-a-half.
More recently, we also signed a significant new relationship with PeopleSoft.
They are licensing our business process integration products, which we
call Application Networks, that connect PeopleSoft CRM, HR,
supply chain and other applications with back-office applications from
SAP or Oracle. So, these are products built and supported by Sierra Atlantic,
and PeopleSoft is licensing them from us, selling them under the PeopleSoft
brand worldwide. Our opportunity extends to the implementation and further
integration services built around these, what PeopleSoft is calling Process
Integration Packs.
TWST: Are you looking at any other alliances or partnerships in the
future?
Mr. Reddy: Well, we have had a very special history with Oracle over our ten years. In fact, that has been our strongest and the longest relationship of all the major enterprise software companies. It evolved into a major product re-engineering project when they bought a company called Datalogix about six years ago. So, we moved their process manufacturing product line to the Oracle Internet platform. In many ways, Oracle was one of the first enterprise software companies to invest in all-Internet computing. We helped them transition that product line from 3GL technology to the Oracle Internet platform, and we continue to do the product maintenance for Oracle today. Weve also taken that expertise and built the leading consulting practice for Oracle Process Manufacturing worldwide, with over forty customer projects. So, I would say our Oracle focus has been predominantly in the manufacturing and distribution verticals, both process and discrete.
We also have a strong relationship with Siebel around
its Universal Application Network initiative, as well as with
Agile Software, BEA, TIBCO and webMethods. And SAP, of course, the enterprise
market leader, is a software alliance partner to us.
TWST: Can you tell our readers some of the long-term objectives you
have set for the company?
Mr. Reddy: We have grown our revenue for the last six consecutive quarters,
and we are cash flow positive and profitable, as we ride a very significant
offshoring wave in the software industry. Most large U.S. companies are
looking to IT with the primary objective of reducing costs, and we see
a unique opportunity for Sierra Atlantic to emerge amongst the top 10,
if not in the top 5, worldwide in offshoring services, by focusing on
enterprise package applications. Even today our enterprise applications
practice is bigger than three of the top six offshore companies, all public
companies--TCS, Infosys, Wipro, HCL, Cognizant, and Satyam. It is certainly
older than all six of them, and we service more Oracle customers, say,
than any of these companies. So, we see a very significant opportunity
for us to become the pre-eminent player in offshore services around enterprise
packages from Oracle, PeopleSoft, Siebel and SAP. We provide full life-cycle
implementation, maintenance, upgrade and integration services for these
products, and we further differentiate ourselves by building our business
process integration products around them. So, now with the PeopleSoft
endorsement on top of strategic product development relationships Siebel
and Oracle, we bring great credibility to our mutual customers. We are
able to enter large accounts by virtue of these partnerships. For all
these reasons we see a significant opportunity for Sierra Atlantic to
emerge as the leading player in this space.
TWST: Can you let some of our readers know the challenges that are
facing Sierra Atlantic?
Mr. Reddy: Yes. I think for us, while we do have significant differentiators
and the strength of major partnerships that help us get into large accounts,
we need to learn faster about how to procure large multi-million dollar,
multi-year offshoring contracts. The offshoring market is growing 30-40%
per year, so we need to double our revenues every year to stay ahead,
because the market does favor the larger companies.
TWST: Raju, can you tell us some of the benchmarks or milestones that
investors can use to help judge Sierra Atlantic?
Mr. Reddy: Revenue growth, clearly, and gross profit margin are key metrics
for an IT services business like ours. Our strategy is to differentiate
ourselves with higher value-add services through the IP we create. That
value should reflect in our gross margin, and, of course, overall company
profits. Some of the other parameters that IT services companies are measured
by include utilization metrics, how efficiently we manage our resources,
and the number of million dollar clients we develop and retain.
TWST: How does Sierra Atlantic stand out from rest of the crowd in
your sector?
Mr. Reddy: How do we stand out? Our biggest differentiator is our R&D
partnerships with the major enterprise software companies. Just think
about it, we do not know of any other software or services company that's
doing product development or maintenance work for more than one of SAP,
Oracle, PeopleSoft and Siebel. The amazing thing about Sierra Atlantic
is our ability to achieve this sort of mind share and a trust relationship,
I must say, with three of these companies over the last few years. That
is a significant factor in our ability to sell into the customer base.
TWST: Raju, can you tell me a little bit about yourself and the management
team surrounding Sierra Atlantic?
Mr. Reddy: Sure. I spent about 10 years at Intel, in a variety of software
engineering and marketing management roles before I started the company
in '93. One of my colleagues, Marc Hebert, who heads our Alliances &
Marketing programs, came from Oracle. He was the first CIO at Oracle and
has been with the company for about five years now. Bob Hersh, our CFO
for the last three years, has brought several companies public and managed
them as the CFO. Joga Ryali, our CTO, heads all of our IP and the technology
partnerships that we talked about earlier with PeopleSoft and others.
Joga has 15 years of experience with Lucent and other companies here in
Silicon Valley. Sarath Sura, who heads our Global Services based in India,
has been with me since our founding days. And GK Murthy, who heads North
American sales, comes from HCL, one of the largest outsourcing services
companies, a public company. He has been with us for six years. Together
they form a great core team. The fact that we have worked closely together
through this downturn, coming out of it so nicely, has been a real boon.
Yes, that has made the team stronger.
TWST: What is Sierra Atlantic doing to help get their message out to
the rest of Corporate America?
Mr. Reddy: We participate in a variety of industry events jointly with
our leading partners, and we do a lot of PR work. We have a strong India
telesales organization that calls on prospects worldwide. So, most of
our lead generation activities are built around our key software partner
relationships.
TWST: Raju, I am going to give you the last word, is there anything
you would like to add to the interview?
Mr. Reddy: We would love to get our message out to more companies that
are considering IT offshoring, that Sierra Atlantic is very uniquely qualified
for their enterprise software packages. We build trust in all our relationships.
TWST: Excellent. I want to thank you very much Raju from Sierra Atlantic.
