A New American Anthem

Standing before a room full of analysts and investors this spring, Alfred Mockett began to lay out his vision for the new American Management Systems — one designed to distance the firm from a recent tumultuous past, where the consultancy became better known for layoffs and lawsuits than the popularity of its consulting offerings.
Having last December been named AMS chairman and CEO, Mockett used the April presentation to frequently flag the turnaround experience that highlights his resume. A former British Telecomunications executive, he refused to paint a rosy picture for the firm in 2002, telling analysts to classify it as a "transition year."
Few analysts expected 2002 to be anything but. AMS, which saw its revenue drop from $1.28 billion in 2000 to $1.18 billion in 2001, watched its profits drop 64 percent to $15.9 million during the same period. But the firm's profit plunge was only part of the story.
Prior to Mockett's entry, two of the firm's government practice clients sued the consultancy for combined damages of close to $1.3 billion — causing a major hit to the firm's reputation and stock price.
Enter the turnaround CEO. Mockett, 52, had been hired by British Telecom 10 years earlier to rationalize their Special Business Division — which had a portfolio of regulated and nonregulated businesses numbering nearly 40. Within 18 months, this was down to six key businesses — through partnerships winding up, and by collapsing other ventures and selling them off to reinvest the proceeds into the six "winners."
"I've been on every side of every possible transaction. I've acquired, I've been acquired. I've merged, I've been merged," says Mockett, who most recently served as chief executive of BT Ignite, the firm's $5 billion per year international broadband data and applications services business. "I've always been managing rapid growth or turnaround situations."
Still, AMS is an existing corporation. Instead of a fledgling consultancy in need of a master builder, it is today already a sizable corporate structure with a unique history. Its various chapters bear the thumbprints of a number of different master builders, not the least of whom was Paul Brands, the firm's former CEO, who retired in February 2001 after serving seven years in that position. Brands' tenure was a period of great growth that saw annual revenue rise from $360 million to more than $1 billion. Meanwhile, the firm's offshore revenue during Brands' term grew from less than $10 million to more than $200 million.
"The biggest challenge Mockett faces is getting growth back in place within the company," says senior vice president of equity research at Jefferies and Co. Michael F. Legg, who remains optimistic about the firm's stock, which, having traded at $44 in March 2000, has traded under $25 for nearly two years.
"From a stock perspective, I want to see it grow. I want to see it become a growth story again," says Legg.
To achieve those results, Mockett has now prescribed the immediate consolidation of the firm's offerings from six industry segments to three — Public Sector, New Media & Communications, and Financial Services. The other notable practices, such as Healthcare and Energy, were placed in a business incubator, and will now be allowed to live or die on their own merits, according to Mockett.
Just where that growth can best occur is what Mockett needs to determine quickly. Even the firm's communications practice, which boasts such high-growth areas as broadband and digital media, was unable to grow its revenue last year beyond year 2000 levels.
The person now tasked with curtailing any attrition in that arena is AMS's Vernon Irvin, executive vice president and another BT veteran.
"I believe that the victors in this new challenge will be the ones that understand how to evolve from traditional long distance revenues into a more Internet-centric, wireless-centric, content-centric world," says Irvin, who views a threefold opportunity related to risk management, customer care, and billing. "I think that we can play a very big role in staffing, systems integration, and delivering solutions and outsourcing in relation to helping these companies."

New Faces, Same Focus

Part of AMS's restructuring has involved an infusion of new blood and the reassignment of some AMS executives within the firm.
"Alfred's made a lot of changes internally, including some key personnel ones, but time will tell if they have been for the good," says William Loomis, managing director, Legg Mason. Loomis says that the firm's tightened focus is now required to garner growth in a challenging sales environment.
For his part, Mockett is now zeroing in on the areas where the firm's roots run deepest.
The Financial Services practice has been struggling, with a 22 percent drop in revenue in 2001, and Mockett expects to have a permanent leader for this practice in place by the firm's