Can our stock go even higher?

I overheard a conversation at the sandwich shop where I usually go on week-ends, two guys were discussing the CGI share price. One said really excited and thought that GIB could reach $20 by mid-2010. In the midst of all the bad news going on the market CGI was, quote: a rock solid foundation. I almost hugged him, but I didn't. Swine flu concerns.

His friend was a bit more pessimistic. His argument was that the CGI stock price got inflated following the acquisition of EDS by HP, then Perot by Dell and then ACS by the copier company. If CGI goes through 2010 without any major acquisition - or being acquired - the share could dip below $10. Analysts want excitement, they want to see real growth.

So I left the sandwich shop with mixed feelings about how well is CGI is perceived by outsiders. If only they could see what I see.

Dude, you’re getting a Perot…I mean a Dell

I love hitting on this nail as I think this merger is something that eventually will kill Dell but save their shareholders. Twenty years from now - assuming Dell will still be a brand name which I doubt – people will associate this company with IT services, not crappy netbooks or PCs whose name sounds like a villain from a bad sci-fi movie. In the end, I believe people will stick with the Perot name and the Dell particle will be dropped out. Or rather ejected.

Perot consultants are now told to promote Dell hardware because their earnings dropped 54% and my sources say Michael is going ballistic over the abysmal sales figures. And things won’t get any better for Dell in 2010.

Picture above was taken during an IT conference in Texas where Perot was sponsoring the event. I’m being told the poor Perot guy was promoting the Optiplex line of desktop, he must have felt like a total douche doing this. Why the hell am I doing this? Are the folks at EDS forced into similar humiliation? Do they have to dress in a 12-C outfit? Can I go work now?

Note to the Perot guy in the silly outfit: Dude, if you still care about your dignity, send me your resume. We’ll treat you right. Selling PCs is not a secret agenda at CGI.

Reader's Column : Profitable growth

Mike, you’ve been hammering the profitable growth theme at CGI for quite a long time but would you care to explain to us mortals what it is?

I’ll be happy to answer this one, as profitable growth has been and will always be a theme very dear to me. The short answer as to what profitable growth is “high profitability and sustainable profit growth”, in order words a fat mark-up that’s getting bigger everyday with no end in sight.

One could argue that it is a totally delusional perspective because, well anything that is highly profitable is bound to enter a situation where more competitors join the fray, prices get lower due competition, and that fat mark-up becomes unsustainable. The recent mortgage meltdown is another example where high-profitability could not be maintained forever.

So if you’re in an industry whose capital is entirely human like CGI, the first thing you must tackle is cost. Humans are insanely expensive, you need to be fiercely control salaries, bonuses and profit-sharing. But – humans are a renewable resource – so if you must loose someone because of salary issues, just do it and never negotiate. There will be always others, and some of them will ask for less. Less money for them means higher profit for the company.

The second thing is focus, meaning not diversify into markets or fields where you have no expertise. For CGI, it means focus on service, not on frivolous things such as software or hardware. Those require regular investments in R&D and maintenance, and such expense is a direct hit to the bottom line.

And there’s the question of bias. Once you paint yourself with a specific color, customers expect you to use that color every time. I mean, it’s like the sex market. If you advertise yourself as a BDSM expert, people won’t call you because they have a foot fetish or they want to wear a diaper. You want to offer the larger broader array of service without locking yourself in a niche that may prove to be too narrow on the long term. So focus while being wide open, this sounds kind of weird but this is the philosophy.

The 3^rd element is almost a secret ingredient, although others unfortunately know about it. It’s called the government. This is where your fat profits can live on forever. You see, when a company does all the wrong things, it eventually runs out of money and disappears in a puff of Chapter 11. When a political party does a bunch of crazy actions that undermine the country, the voters will realize (it may take a while though) that the stupid bastards need to be thrown out of the office.

But government? That bottomless barrel of bureaucracy never runs out of money because they take yours, and history proves that it is an infinite cycle (well almost, like the French said in 1789). If one agency blows a hundred million dollars on a doomed project, no public servant will of course lose their job since no one is really accountable for anything, and they’ll get a budget increase the next year. Why? Because failure brought them more experience, meaning they can handle bigger things. It’s all bull of course and they will repeat the same flawed behaviour with the same dubious technology and the next project will also go down the drain. Failure is definitely sustainable.

But you know what? It doesn’t matter from the IT service company perspective. For CGI and its competitors, it means a bigger contract and bigger profits in the end. If you do the right thing in a project and the project goes to hell due to forces outside your control, the customer will still like you. And love saves the day. Once the doomed project has been folded and new budgets have been voted, who will the customer call? Someone unknown? Of course not, the customer will call you because you did a half-decent job. And he likes your face. Success – or failure – is irrelevant, what matters is the relationship. Once you’re in the circle of trust, all you have to do is show up at work the rest will take care of itself.

So my thinking is that profitable growth is something we can build on indefinitely as long we maintain tight control on cost, focus on service and open ourselves to more government projects. This, dear members, is the ground on which CGI is built.

Black Friday special at CGI

This Friday only, get a 2% discount on a senior project manager, 5% on any business analyst, account manager, QA testers or technical analysts, and a whopping 10% on anyone that is currently rotting on the bench.

Picture above was taken at the CGI headquarter on Sherbrooke last night when news of this discount was leaked on a blog. Some people were just plain nuts, they were expecting a CGI person to go troubleshooting their virus-ridden PC at home, like we were some kind of Geek Squad or something. We used a fire hose to cool down the crowd.

To benefit from this very special and one time discount you need to sign (or renew) a 3-year contract with CGI Group and clear any competing firm from your organization, especially the temple merchants from Dell/Perot or the folks from the Blue Man group. This special cancels any other discount you may have been promised by rogue account managers. Void in certain states/provinces. Restrictions may apply on certain projects where money is no object.

I’m feeling generous, this does not happen very often. Act before the effect subsides.

Planning to spend Thanksgiving time on training

Yes, Thanksgiving is a time that you can enjoy and it doesn't get billed to a customer. Those are rare, precious moments, are they? Scarcity makes its worthwhile. I'm planning to force my troops to work on Thanksgiving next year, as this could give our revenues a small notch that CGI desperately need.

As for me, I've enlisted to a special Excel boot camp for CEO only. Serge once told me that there was this executive school specialized in all sort of special training, but it was not for the faint of heart. You had to dress like soldiers, sleep on site, and Excel instructors would wake you at 5:00am screaming at you. Then you would go through classes of hard, high-end stuff related to Excel. Like, how to implement a circular formula even though Excel forbids you to. There's a way, I've been told.

By the end of the day your brain is so pumped up with formulas and worksheets that you can hardly sleep without dreaming in cells (also called a wet dream, in accounting lingo). The instructors then take you to some intense drill sessions to exhaust you physically.

It's a 3-day marathon, and apparently those who manage to go through without a mental brakedown emerge so strong mentally speaking that their next fiscal quarter are astonishing, like profits increased by 10%. I'm so excited.

Reader's Column Day

Your dedicated CEO is listening again to you today, let’s take a call from Roberto:

I’m a junior Java developer and I work at the CGI office. The company is blocking all access to Facebook and MySpace, how am I supposed to do my work if CGI is blocking communication to the outside world?

Let’s do some profiling on Roberto. This is the kind of Gen-Y slacker who posts what he had for breakfast on Facebook, in addition to what kind of socks he’s wearing (let me guess: white), how he feels about the world at any particular moment (meaning, whining about events outside his control), and what score he just achieved at Bejeweled.

If your local CGI office blocks Facebook, it’s probably because you spend too much time posting rants about your lasting acne problems and you’re not delivering any decent code for your customer. Here’s my advice to you: remove the RJ-45 cable from your PC and try doing work – any work – without Internet access.

The first day will be awful, you will experience full blown hallucinations due to withdrawal. Like seeing Pauline Marois in a sexy nurse outfit. Or Michael Dell announcing that he wants to buy CGI. That kind of really scary thing.

Jee, I just scared myself with the last one.

The next day you will able not to launch MSN when you get to work. You may even be able to use other mean of communication, like a phone, to get in touch with someone. Yeah, like talking. Sounds old school, isn’t it?

By the end of the week you will realize that all you can do with a computer is actually work, meaning producing deliverables for which a client is willing to pay. You may realize that Facebook is just a way to channel your inner frustrations and it leads to nothing but more frustrations because no one really cares that you had Christmas-theme Rice Krispies this morning.

Face it boy, the world is a harsh place and self-interest drives this place. Now get back to work.

What a surprise, Dell earnings down 54%

Really, no one saw that coming. Even me. Revenue was down 15 percent over the last year, and profits fell 54 percent. They blame weak pre-order demand for Windows 7 machine, which is typical of the denial phase when your business is going down. What does Michael think about this?

Founder and CEO Michael Dell said he expects companies to begin to order new PCs as part of the so-called "refresh" cycle starting early next year. "With an aging install base ... an accumulation of new technologies with hardware, software, virtualized clients...IT managers know they can't extend these assets forever," Dell said. "I think it will be a refresh that occurs over perhaps 18 months. I can't remember a time when a high percentage of (IT managers) skipped an entire operating system."

I agree, even we at CGI skipped over the Vista ditch, we’re still running XP with Explorer 6 and although it’s far from being perfect it works okay. Here’s the problem, you entire hardware business depends on how bad Microsoft screwed up with their aging Windows code. PCs are commodities, it doesn’t matter if you buy a Toshiba or an HP laptop anymore. It’s all the same shit.

Michael, if you were a smart man you would sell all your PC business to some nameless Chinese company, admit that Christmas is over, and focus exclusively on Perot, because that’s where the money is. Even IBM who is not the sharpest knife in the drawer understood that a long time ago, but you’re still fighting a war that is basically over. Michael, take a word of advice from that final scene in Chinatown

Jake Gittes: Why are you doing it? How much better can you eat? What could you buy that you can't already afford?

Noah Cross: The future, Mr. Gitts! The future.

Yes, the future. We at CGI understand this very well, IT service is where the future is, nobody cares about nuts and bolts anymore.

How to handle salary reviews

This is a post aimed at CGI managers who need – as part of their loooong list of duties – to meet with their subordinates on an annual basis and discuss their performance, their objectives and (gasp) their salary.

First of all, I strongly encourage you to use the term “salary revision” or “salary review” rather than “salary upgrade”, as the latter directly implies “more” and it’s a bad negotiation start when your position is a manager. Altering perceptions by changing language is one of the basic skills of any successful person.

Next, you need to read our latest financial news, take a yellow marker and outline any fact that could be used to dampen any eagerness from the employee to get a fat raise. For instance, if you work for CGI in Canada, this is what you should say to your subordinate: We're still operating at a negative growth level in Canada. Negative growth, catchy term eh? This is what I mean by using language in a clever way.

And then you say that revenues generated in Canada fell to $2.17 billion from $2.34 billion in fiscal 2008. Never mind that there are other good news in the pipeline, your job is NOT to cheer employees. At this point you set the stage and the employee is forced to listen to this deluge of bad news, which puts a bucket of icy water into his personal gain perspective. If you master the art of observation, you should notice that the employee face has changed a bit, like a cloud is now blocking the sun.

Then you move to a more global perspective: CGI spent $35 million in severance and costs related to “rationalizing excess real estate” as jobs were transferred to "low cost offshore operations" in India. That’s double talk for firing douche bags at all levels who didn’t sell or bill enough to pay for their own salary.

In addition, if we can get rid of a $50K SharePoint specialist in Ottawa and do the same job by a guy named Apu in Mumbai who charge 4 times less, everybody wins. But CGI had to spend $35 million to do this, so it’s less money for potential salary upgrades. You understand?

Once you got through all those negative news, you put a cheery upswing before you deliver the final blow, like : despite all the bad news that are going on these days, CGI wants to show you how much we appreciate all those long hours that you’re putting for the company, so here’s 2%, that’s the best we can do under the current gloomy conditions.

If you play the right cards before this moment, the employee should feel happy to get a 2% raise. He feels he’s not considered as “excess real estate” but a “strategic resource” for CGI, and it’s the side of the fence where he wants to be. Again, it’s a matter of managing expectations and altering perceptions.

So let me know if you have any questions regarding this, feel free to share your experience, what works and what doesn’t. Fake Mike Roach at GMail Dot Com.

An industry whose capital is human

As you know, CGI is not manufacturing trinkets like some of our competitors do. The human element – to reuse the Dow Chemical campaign – is at the core of what we do. And humans are unfortunately the most difficult species to manage.

When Serge hired me more than 10 years ago, I did a very thorough due diligence of CGI, Kojak-style. At one point, we were having a drink at the Queen Elizabeth hotel in Montreal, I took out my Mont Blanc pen and sketched a triangle on my napkin. Its three points were meant to represent the three types of stakeholders: shareholders, clients and employees. I used to believe that, in the long term, we could not succeed if we couldn’t find a balance among the three partners.

How naïve I was. Here I was, a young guy in his mid-forties who only had one job at Bell Canada for 25 years, trying to come up with something smart to impress the company founders who were looking for a CEO.

Where did I get the idea about the triangle? Let me share something with you. If you read about how the current Toyota logo came to existence, you learn that the two perpendicular center ovals represent a relationship of mutual trust between the customer and Toyota. Where are the employees? Nowhere. What matters is the bond between the corporation and customers, employees are just necessary gears required to move cash flow from one party to the other.

I figured I was smarter than those Japanese dudes. Moving employees in this grand vision thing did sound impressive and it helped get my job at CGI, but everyone knew I was full of shiitake. They didn’t care though, because it sounded great.

While humans are the building blocks of any IT company, they must be corralled to bring order and unity which lead to profitable growth. If you shed too much light on your employees, their egos sprout and next thing you know you have union representatives knocking on your door. You don’t want that, do you? DO YOU?

So, on the surface you need to give employees the impression that they are important. Profit sharing, lots of HR processes and even human contact once in a while. But underneath all the nice things, you need to rule your staff with German-style discipline. They are – like the philosopher Waters once said – just bricks in the wall. Middle management is the concrete that hold the bricks together, and you need lots of it. And bricks serve a very specific function, you don’t want bricks on the loose that decide what color the walls should be. You catch my drift?

Clients also need to be corralled, especially the ones in the government sector, but they bring money, lots of money. If one decides to build a crazy program that costs hundreds of millions with a vague scope of work and it is willing to pay for it, I say let it bloom into a thousand flowers.

Employees are an expense from an accounting perspective, so the relationship is entirely different. You need to give in a little, but not too much. Bricks need air to survive, so it’s up to you as a manager to run your experiments and decide how much.

You’d be surprise how low you can go.

CGI is not for sale

When you’re a teenager girl and no one asks you out, either two things. Your physical appearance puts you in the Susan Boyle class and most people would guess that you live with approximately 12 cats, or you’re a total knockout and no one dare to ask you out because they know you’ll turn them down just by the way you grin.

In one very good interview I gave to the Financial Post recently, I said that CGI has never been approached for a merger because everyone knows we’re not for sale. I like to think that our more of the same (MoTS) strategy will ultimately deliver more value to the shareholder (me in particular) and we can grow this thing slowly without taking unnecessary risks.

I don’t want to be in a position where I have to sell knickknacks like Perot has to do now. Now that those guys report to a hardware outlet, guess what happens when Perot consultants do let’s say a strategic plan to overhaul your infrastructure. You’re right, they’ll want to shove a truckload of blade servers up your butt so that the local VP from Dell get a huge fucking bonus this year. Everyone has an agenda. Same thing with IBM, their codernauts want to lock you in a long-term mainframe service plan along with their biased consulting expertise.

You can’t be all things to all people and pretend you have your customer interests at heart.

Of course what I don’t say is that a merger would put me in a position where I would have to report to someone, and when you’re a CEO this is like a total demotion. We all have egos, don’t we? I would rather retire, go back to Pembroke and grow a subsidized product like pigs or corn.

But I have to admit, I’d like to have offers on the table for CGI. Just for the pleasure of being considered and then politely say no. Or yes. But no one calls. Is it because we’re so heavily in the Canadian market which is considered a niche from the U.S. perspective, or is it because we’re a prized jewel whose value puts us above the rest? I’d like to think the latter, but I have my share of doubts like everyone else.

Vatican wants to outsource their IT

Their Exchange server was down this morning and the 72-year priest usually in charge of IT was sick. Poor Ben had to deal with the issue personally, trying to install the latest Microsoft security patches and getting expiration messages from the antivirus. Sources tell me that His Holiness lost his temper and started screaming in German at the Windows 2000 server, something related to the Devil lurking in technology.

Anyway I had my Italian business development VP sent pronto to the Sixtine Chapel, it looks like they have a server room underneath ground level. I know, I should have send a tech guy to fix the problem, make the Pope happy, and then and only then discuss outsourcing deal.

Problem is, this goes against the CPMF methodology we have at CGI. If you want to make a quick buck, sure you can fix the issue asap. But if you want to make real money like we did in Q4 and address profitable growth, you need to address the business issues first, and then write down a scope of work, talk price and schedule, sign a waiver in case we scrap centuries of Vatican confidential data, and then we try to find a tech with a goatee and an earring who can fix the problem. Total billing time: a couple of weeks.

My sources say the biz dev guy was not able to talk to His Holiness, even though he showed his CGI business card - I'm surprised. Note to self: call Benny next week and have lunch with the guy.

About my recurring nightmares

The annual tour proved to be too much to pursue my therapy at the same time, and since I’m home this week-end I figured I should visit my therapist and talk about some recurring nightmares I’ve been having.

I usually sleep very well at night, and our Q4 results should have a calming effect on me. But somehow I can’t seem to get any rest at night. I wake up in the middle of the night covered with sweat, my head filled with terrifying visions. So I went to see my therapist today, hoping that he might have a quick fix.

Do you have specific memories of your dream, asked Paul.

Of course, like last night I dreamt that I was managing Research in Motion and that I had cool prototypes landing on my desk every day. There was a baby foot in my office, and every Friday at 4:00pm it was happy hour. I was wearing khakis and a t-shirt, I mean I’ve never dressed like this at the office in my entire life.

Or the other day, I dreamt I was a powerful CEO in Silicon Valley, my employees were playing volleyball outside at lunch time, everyone was working their ass off and enjoying their time at the office so much that they didn’t leave until midnight. We had a company cafeteria where chefs had these wonderful organic meals available free of charge to everyone working for me. I could hear laughs in the hallway. And there was a Steinway in the lobby, so that everyone could appreciate the beauty of this instrument.

Paul raised one eyebrow and said, Mike I'm not sure I'm following you, what part of those dreams do you find terrifying?

Don't you get it? Everything! Everything is my dreams is terrifying, just imagine what it would cost me to have a fully subsidized cafeteria, and I'm not talking about buying a fucking piano. I mean, those expense need to be changed to a customer, who will pay for all this? I don’t understand, why on God’s green and sustainable earth do I have these nightmares?

I think you may have repressed feelings, said Paul. Your subconscious is dying for fun and creativity. Your micromanage your company at unprecedented levels, you do not trust anyone but yourself and the control culture is so ingrained at CGI that nobody has fun anymore. So while at the conscious level you’re able to control those feelings, your subconscious is not on par at this difference shows up at night in your dreams.

Paul, you couldn’t be more wrong I said. I took out my Q4 results from my briefcase and I showed him the key numbers that we were able to achieve. We delivered very good results in fiscal 2009, despite the worst economic conditions in more than a generation, I said. My subconscious must be thrilled, no? I then took out some printed slides I had for financial analysts, explaining to my therapist that CGI is a much lower risk than most technology companies in Canada. U.S. revenues increased by 7.9%, I mean this should not cause me any nightmare, right? Sure, Canadian and European revenues fell a little, but this recession should be over soon and we shall continue our profitable growth strategy.

Paul paused for a very long time. Maybe he was processing our Q4 results to determine if he would buy CGI shares after our session.

He suggested we continue to talk about my dreams next week. Damn.

What I want for Christmas

I had a stunning revelation during our annual tour and I’d like to share it with you. And no, it does not involve a ray of light, a church and paying an orphanage overdue taxes.

I took the picture above at the Heathrow airport, those giant displays are used to show departure and arrival information. Serge was with me, eating a pastrami sandwich while reading People magazine. I said to him, you know what Serge, we should put technology to better use. You want to upgrade to Windows 7 he asked, while keeping his eyes on the Angelina Jolie picture.

Of course not, I want those huge displays, I said. Serge looked up, choked on a sandwich bite and interrupted his reverie. Why do you want those things anyway? Watch AVI files?

This is the way a CEO should manage his organization I said. I need a couple of displays like this in my office, so I can monitor all the financial vital signs and check on what’s important. First panel should display weekly revenues per business unit, the next one should display expense reports per locations, and then time sheets to approve, the works. This will be my PeopleSoft dashboard, this is the only way for me to get the BIG picture.

If I walk into my office and immediately see that our U.S. North East revenues were down 1% last week compared to our yearly average, I can pick up the phone and act on it.

Do you see the potential? This is the only way to track down the smallest financial details of CGI. Imagine working on a 30-foot high spreadsheet. Any CEO should have this.

Serge was first doubtful such an investment was worth it, but when he saw the sparkle in my eyes he immediate knew I would track pennies across the world and CGI would quickly recuperate the cost of those screens.

I’m all excited as I write this post, like a teenager getting his first sports car.

Profit sharing and expectations

You know where I stand when it comes to dealing with expectations. The lower, the better. When you can convince yourself not to have any expectations, something magical happens. You get up in the morning, you take your shower, you go to work and you just do whatever lands on your desk and … you’re happy. Not happy per se but you have no real strong negative emotion. When a dark cloud follows you to work and make you feel all gloomy, it’s because you expect something and that something is out of reach. Expectation is the mother of disappointment.

This happy state of consciousness can be achieved using medications but health care is already out of control – especially here in Quebec where socialism has torpedoed the government finances – so we need to work on an drug-free approach to induce happiness while controlling costs.

Problem is, you just can’t say to people “expect nothing” to do the job. Even Stalin had to promise something to coerce Russians into his regime.

So we at CGI invented this profit-sharing scheme to motivate our troops to do their job. For one thing, it allows us to gloat about how good we are when we interview candidates. Each CGI member has a very small share of our profits, not a lot of money obviously, but this small token makes many people happy. It’s the intention that counts, not the numbers.

Of course there’s a bunch of strings attached. Your business unit has to reach its numbers, and CGI corporate as well. If CGI as a whole performed very well and your business unit tanked for reasons outside your control, you won’t get a dime even if you had a stellar performance. I think it is a fair approach.

When I’m doing the annual tour, many CGI members I met shake my hand and tell me all the wonderful things that they did with their profit-sharing bonus. I was able to buy new brakes for my ’98 Corolla said a mom of 4 in Montreal. I bought an iPod so I don’t have to listen to all the annoying chitchat going on next to my cubicle said one large analyst in Houston. I will be able to buy a turkey and invite my folks for Christmas said one junior guy in Ottawa. I was almost in tears.

It is during those precious moments that I realize how important my role is and why profit-sharing brings joy and happiness to all CGI members.

I'm not a star CEO

Some CEOs like to put themselves in the limelight whenever they can. They enjoy the public scene, they never miss an occasion to show themselves as if the CEO appearance ratio and stock price have a direct correlation. Some enjoy driving obscenely expensive cars in public to showcase their wealth and social status. To me, this is the road to perdition for shareholders, customers and yes even employees.

Me, I’m just a regular guy from Pembroke, Ontario and you won’t see me flashing my butt in some high-profile social event. Instead, I’ll be at the office drinking black coffee when everyone has gone home and I’ll be crunching numbers like crazy.

I was reading that Montreal’s underground water system is so dated that 40% of the water leaks before it reaches its destination – homes and businesses. How a city government could be so incompetent and negligent over the years is beyond comprehension, is the last retard-in-chief just got re-elected. Go figure. That’s what people want, I guess.

A good CEO has to drive the vision but also micromanage the details and fight the evil where it hides. Underneath a spreadsheet row or column, that is. If 40% of my revenues would leak before it reaches our bank accounts, I would go ballistic. This is why I see myself as the Chief Plumber Executive, one who’s not afraid to get his hands dirty and who is ready to lift every stone to make sure things are done right. If there’s a leak somewhere, I want to be the one who spots it first. I don’t trust my trusted lieutenants.

I like to get involved in a lot of minute details and this drives my staff totally crazy. Sure they’d prefer a CEO who’s not involved in the day-to-day stuff because they’d have more liberty to accomplish their task, and people don’t like it when someone is breathing down their neck.

But you know what? If nobody watches you then you become lazy like those veggies working for the City. You become so lazy that your assets crumble in ruins and nobody cares anymore. Someone has to run the circus and focus on the fundamentals. So my apologies if I make your life a living hell and you need to run every decision by me and only me. I guess you’d rather see me in a talk show discussing world events rather than checking your expense report, don’t you? That won’t happen. And the result is this.

This is what profitable growth is about.

Today's the big day

Watch for the announcement today, we're going to surprise analysts. Will it be $0.24 per share like Bloomberg is predicting?

Will Hostess buy CGI? If so, free twinkie for everyone but only for those working in U.S. locations. We don't have twinkies in Montreal... sigh

More later. Roach out.

The art of writing an annual report

For those of you outside the C-suite, writing an annual report is a tremendous effort that requires months of preparation by copywriters, accountants and almost everyone the floor. The numbers of course have to be razor-blade sharp with no Enron-style conversion, but crunching numbers is not a difficult task per se.

What’s immensely difficult is coming up with the right combination of words to reassure the shareholder that we’re not screwing up things and that absolutely everything including our pencils are under tight control. After reading a CGI annual report, you should have the overwhelming impression and we are the best company in the galaxy quadrant, our people are the crème de la crème and that all our clients are among the top 1% of the best managed organizations and that they do business with CGI because they are on top of the world.

Which brings me to government clients.

Writing that government is a well-managed organization is like saying Lindsay Lohan is a clean sober young woman who has her priority straight. Yet, we can’t write that our government clients are doomsday machines gobbling huge budgets with no visible results. Here’s what we wrote last year in our annual reports

Governments at all levels face unprecedented pressures, such as economic constraints, healthcare challenges and accountability demands. To manage an effective response, organizations must create leaner and more high-performance structures.

Can you name me one – just one – lean and high-performance government structure? Of course you can’t, because such thing is a fantasy. Maybe the White House kitchen is efficient I’ll concede but they sure at not lean. This is wishful thinking, government are by definition obese and since no one is accountable there cannot be any performance. Tectonic plates move much faster than anything in the government world.

So we do our best to write government stories with a twist that make them look interesting, and this is no small task. We first handpick government projects that didn’t derail totally and where the scope of work didn’t change 10 times in a year. Then, we isolate projects where the client didn’t make headlines for burning taxpayer money in dubious initiatives. The final selection is so small you could use a crippled hand to count it.

Finally, the people who write our annual reports were not involved in the project so there’s no personal frustration involved. And they live in another country, so they don’t know jack about this government client, their taxes didn’t fuel this project, so those people have a pretty neutral view of the situation.

Our '09 annual report is coming soon, dear members. I don't want to spark any false rumors, but it may be our last, so treasure it.

The annual tour is almost over

The past few weeks have been particularly exhausting, as I toured many of our offices in the U.S. and Canada. Picture above taken in L.A., I'm the fellow with the baseball cap on the left. I feel like an army general touring military locations, each time reminding my brainless soldiers of what’s important, how to behave, and what’s the big picture they should grasp. It ain’t easy, I’m telling you. I cannot count the number of time I had to answer questions concerning a possible merger of CGI with another big fat company. My answer was always the same : we’re analyzing different options, the market is good and we’re sticking to our plan.

It’s not a sexy answer, but CGI is not about fun or thrills, so anything exciting would be out of character. It’s like watching Kojak, you don’t expect Terry Savalas to dance the polka in the middle of an investigation. Or - for the younger crowd - you do not expect Patrick Stewart to snort a line of cocaine in the Enterprise ready-room.

We’ve done a couple of press releases recently, Yellow Pages for $100M, Daimler Financial Services, GSA for $32M. This is highly frustrating for me, because these are pretty fucking big announcements and Wall Street analysts could not care less. Our stock should be at $30, don’t you think?

Anyway. We’re releasing our 4^th quarter results and FY09 results on Nov. 9^th, and we’re coming on strong. Yes, dear members, you’ll get your $2000 profit-sharing bonus this Christmas unless our business unit screwed up – some of you did big time. Consider yourself lucky to have a job, and get back to work.

Dialing Mediocrity

Common sense, if there is such a thing, tells us that mediocrity is to be avoided at all cost and we shall pursue excellence in order to achieve our goals. This binary view of the world is obviously too simple and we need to understand the subtle shades of grey that define the world in which we live. To be able to understand those minor but important differences is key to a mature management style, one that does not condemn mediocrity per se.

We are humans and – whether we like or not – we sometimes achieve mediocre results despite our best intentions. How we manage mediocrity is up to us, and here what separates leaders from the rest of the pack.

French painter Monet once asked his sales agent to sit on a stool so that he could do a portrait of him. After a while, Monet would rip the canvas, unsatisfied with what he had accomplished. He would start again, handling the paintbrush in a different way perhaps, and then again after some time he would explode in rage, shredding the canvas to pieces. He could go on and on like until the end of the day, much to the discomfort of his sales agent. It was dark and then Monet would call it a day, with no paintings to be shown. He would strive for perfection, and anything less was meant to be destroyed.

Could Monet get a job at CGI? Of course not, the poor bastard would be filtered out by our HR minions. Psychological tests would clearly show that this guy could not last a single day at a typical government site. Monet might try to shred the imperfect client, something that is clearly verboten in our CPMF (Client Partnership Management Framework).

Mediocrity is everywhere, and once you accept it and understand it, the world suddenly becomes manageable. Mediocrity flourishes at our clients sites, it is also present within CGI and yet the world continues its course and we manage to post profits every quarter. Is it worth it to fight mediocrity? If mediocrity generates generous sales and revenues, what’s not to love about it?

I’m not saying mediocrity is the new mantra upon which we should build out future. What I’m saying is that mediocrity is so present that we should learn to benefit from it, rather that rejecting it at the cost of decreased sales. We do not have the luxury of ignoring mediocrity.

It takes a while to get used to this philosophy, but anyone who’ve worked long enough for a government client understands this pretty well. Coming to terms with mediocrity is an evolutionary process. You learn to enjoy mediocrity, it no longer gets on your nerves and drives you crazy. You laugh at mediocrity, which makes your day worthwhile and you have some great stories to tell to your wife / husband / parole agent. Mediocrity will clearly outlive you, so why worry then?

If the client wants you to create a 45-page PowerPoint deck full of irrelevant details, just do it. If the client wants you to host dozens of working sessions where everyone acts in childish manners with no objectives in sight, just do it and put on your best smile. It’s easy to do, the client will be happy, and CGI will be happy.

At the end of the day, that’s what counts.

Members Column Day

Let’s open an e-mail from another disgruntled CGI members, hoping I can fix whatever is wrong in his head.

Dear Mike, I am a young CGI member fresh out of college and I have to say this company is truly supporting new employees, I feel like I’m really part of something here. How do you encourage leadership so that new hires like myself can quickly get more responsibilities within the company? Signed: Ron

Ron, I guess you first worked at McDonald’s during college so maybe you deserve a first CGI reality check here. While at McD you first got working on fries, and once the manager saw that you were not entirely clueless and you could read the time on your watch, you were upgraded to the McFlurry station. And then after 6 months you moved to making quarterpounder which was a big, big step and the manager gave you a pat on the back, way to go champ, maybe a few years from now you’ll be night manager. Sounds like it?

CGI doesn’t work this way pal, and leadership is not exactly something we value because there’s only one leader and that’s me. Only Captain Kirk decides where the Enterprise goes. The rest of you red shirts are expandable. And I really don’t need to breed future leaders. I mean, this is just bull you read from highly paid management consultants.

Why? For one thing, there are already dozens is not hundreds of VPs at CGI who would give anything to take my seat - and my parking spot. And I’m not talking about the thousands of starving directors who work their ass off 70 hours a week hoping I’ll notice them (yeah, right). So if you’re at the lowest level of the pyramid I think you should put lid on any hope to move very high – that is unless you plan to live 670 years.

The other reason is that CGI is on the block and I hope to find a buyer so that I can retire. So let’s say IBM buys CGI, your hope to move to a VP position is probably 5M to 1 against. Why bother? My advice to you: keep doing whatever you’ve being doing as long as your client wants you. Keep your expectations bottom low.

If you want to move to a real manager position, I advise you go to Tim Horton’s. You’ll get to wear a funny hat, something CGI cannot provide.