What made Sami run?

Sami Totah left his position as Amdocs COO to become chairman of CTI, a small company he believes is poised for breakthrough.

After rising all the way from junior programmer to COO of Amdocs (NYSE: DOX), Sami Totah decided it was time for a new direction. In January 2003, after 18-and-a-half years at Amdocs, he abandoned his comfortable office on the ninth floor of the Amdocs building in Raanana, executed an about-face, and went into venture capital and start-ups. He also went back to school to study for an executive MBA.

Totah was recently appointed acting chairman of CTI, which developed and markets advanced value added services system. He is also a venture partner at Giza Venture Capital.

Totah, a veteran of Unit 8-200 (the IDF signal intelligence gathering unit), began his career at Amdocs as a programmer in the Yellow Pages company, when the company had only 70 employees. He was soon appointed leader of a team, and went on to be promoted every year. He was a project manager, site engineer, and a division manager, until being appointed COO in October 2002.

I didnt skip a single level, he now says, including three relocations: in Thailand, Canada, and Dallas. He returned to Israel in 1996 as budget manager for billing, and has remained here ever since.

Globes: What makes a senior executive at one of Israels largest companies give up his comfortable chair and guaranteed benefit package to go in pursuit of an unknown future?

Totah: After 18-and-a-half years in the same field, I felt Id gone as far as I wanted to. Id reached a point where I felt I could afford to take time out. I wanted to reinvent myself. My idea was to study, and take up new fields in which Id never dealt before. Venture capital funds and start-ups were exactly the kind of refreshing change I was looking for. Its hard now to single out one main reason that made me decide it was the best time for a change. Theres no mathematical formula; there were all sorts of reasons. Id say that studying and the need to reinvent myself were my two chief motives for leaving.

Another major reason, which bothered all of us at Amdocs recently, was the lay-offs at the company. In many cases, I had to tell people myself. Thats very difficult emotionally. I dont wish it on anybody. Among those I had to fire were people who had worked there for a long time, and who were close friends of mine, or of other company executives. We never for a moment considered not laying off an employee, just because he was a friend, but that made it very difficult. Obviously, we would have preferred not to lay off anyone. We did it because we had no choice. In any case, the combination of all these factors made me conclude that I needed a change.

Why did you choose to study?

Ive been thinking about studying for a long time. Two years ago, I agreed with Avi (Naor), who was CEO of Amdocs up until October 2002, H.G.) about studying overseas, but I was asked to put it off for a year. When the time came, they asked me to take up a new position in the company (COO, H.G.). At the beginning of this year, though, I felt that was it now or never.

Amdocs entered the billing market in the early 1990s. Demand for billing systems picked up in the middle of the decade, with huge growth rates in the market. Amdocs, which grew with the market, became one of the giants controlling the global billing market. The 2001 communications market crisis, however, affected the companys results, and the company had to lay off employees. It is now recovering, however, and its sales are rising again.

Amdocs is now gaining new momentum and signing deals, including several particularly large ones that have been a long time in the making. A reasonable assumption is that you were involved in at least some of the deals now being signed. Dont you feel any regret that youre leaving just at the turning point, and someone else is now reaping the benefits?

Absolutely not. First of all, Im very glad that Amdocs is making progress. Secondly, Ive been out of the company for half a year already, and I can say that for me personally, this change was the right thing, at the right time. In the six months since I left, things have worked out just as I wanted them to. My job at Giza, and my activity with Pitango Venture Capital (one of the CTI shareholders), combine every thing I wanted to do. The innovation and volatility of start-ups, raising capital, evaluating companies, and so forth. Start-ups face entirely different problems than those facing Amdocs. Its not a battle over every deal, or a race to meet the forecast; its a do-or-die struggle for survival. It gets my adrenalin flowing, and gives me a chance to use the experience I gained at Amdocs.

At the same time, I want to stress that Im not coming to start-ups in order to replace the CEO. I didnt leave one operative post just to take up another one. Id say that in essence, Ive got a combination of activities that meets my expectations, and I hope it will continue for a good many years.

How did you get to CTI?

After I left Amdocs, I spoke with several venture capital funds. Pitango called me because they realized the potential of hooking up with CTI. The idea was that I would bring the experience that I accumulated in the communications field. I spent 18-and-a-half years in a company that was always growing, and I had management experience; experience in working internationally, large contracts with strategic partners and integrators; experience in negotiating and opening development centers around the world, and business connections with both small and large communications operators.

Why CTI?

I really believe in CTI. I didnt come just to earn a years salary. I think the company is a winner. It has the right product, at the right time, and in the right market. The company is now positioned correctly, and is on the verge of a breakthrough. Even if that breakthrough takes another 12-18 months, its clear to me that it will come. The company operates in a real market, which has grown. The number of messages transmitted between telecommunications operators will rise, and the need to handle them will increase.

In the course of my talks with the venture capital funds, I examined several companies. I knew that if I wanted to enjoy what Im doing, I had to click with the people. In my first meeting with (Pitango managing director) Aaron Mankovski, (CTI president and CEO) Erez Marom, and the rest of the company management, there was a comfortable feeling of good chemistry that guaranteed cooperation.

How do you view the job of CTI chairman?

One of the problems of an external chairman is what added value he can give the company and the investors what his real contribution consists of. I thought about it a lot. Being a consultant is the easiest thing. The problem is that when advice is given according to the book, the person getting the advice quickly identifies it as number three in the second paragraph on page 122 of the management book. Since he can read the same book, he loses interest rapidly. The moment I decided to be acting chairman in certain companies, I said I wanted to give them much more help than they could get from books.

Several conditions have to be fulfilled in order for that to happen. The first is that I have to be involved in regular work, regardless of where management is located. Unless Im involved in the regular work, its very unlikely that Ill be able to help when theres a problem. Only being thoroughly involved will enable me to help out, without requiring two days just to explain to me what the problem is.

Being involved in regular work doesnt mean being the CEO. It does require good chemistry with the managing team, and willingness on managements part to accept what I can contribute. I found all of that at CTI.

For most of the time you worked at Amdocs, the company operated in a growing market. CTI, on the other hand, operates in a market that is now in a deep recession. Arent you worried about becoming chairman of a company that operates in such a tough market?

No. The telecommunications market may be in recession, but it still benefits from the worlds largest technology procurement budgets. Furthermore, I believe that where the volume of investments in technology is concerned, the telecommunications market has now entered the last phase before recovery. Indications are already visible now that 2003 is likely to be a turning point. I predict that in the near future, the market will return to the same situation as before the boom.

CTI deals with messaging and notification, where things are starting to move, particularly where sophisticated applications are concerned. The important point, however, is that CTIs market is now starting to buy systems again. The first voice mailbox systems reached the market in the early 1990s. Since then, every time the operators wanted to add new services, they upgraded their old systems, and added new features. Today, more than a decade later, theyre reached the limit for upgrading, and the market will now have to replace the old systems.

Telecommunications operators know that theyll soon have to provide more sophisticated and advanced services to their customers. Telecommunications operators who wants their systems to support future technological development knows that an upgrade wont provide them with the capabilities of a new system. The market is now at a crossroads.

CTI is well-positioned for this crossroads. It has advanced systems with a uniform platform, to which many services can be added, at the choice of the operator or the user. CTIs system was planned as an open system, which enables it to function as a shelf product, including connectivity to the software, telecommunications equipment, and computers made by the worlds leading manufacturers. I really believe that the company has a technological message for the operators. In addition, CTIs system occupies a much smaller floor space than that required by other companies systems.

Incidentally, once all the services can be provided on a single platform, maintenance becomes much simpler. Furthermore, todays current systems are uniquely designed for each type of service. I predict that at some point, with the development of the messaging market, the whole question of controlling and monitoring these systems will assume a critical importance, especially where cost is concerned. Thats one more reason why a uniform, flexible platform, which enables the operator to introduce new services quickly, is essential to the markets continued development. The whole world is going towards open systems, and were already there.

Six months ago, Comverse Technology(Nasdaq:CMVT) announced a new value added service. It says the system is open, and includes a variety of services on a single platform. Isnt the launching of a competing system liable to affect you?

Not only will it not harm CTI, but it could even help us. The fact that large companies in the value added services market, with very large global customers bases, are announcing new systems only buttresses the claim that the old systems must be replaced. Ive no doubt that our competitors will use any means to try to hold on to their customer, but reality is too strong. The competition is offering new systems, and thereby signaling the market that its time to replace the current systems. This situation puts CTI on almost equal footing with its competitors, because when you replace a system, you have to choose the best one, and the identity of the current supplier is less important.

Replacing a system means re-examining the technology, a conversion, procuring new equipment, and so forth. An operator who wants to replace a system in interested in choosing the most appropriate one, and will therefore consider all these aspects, regardless of which system he has now. Its reasonable to assume that the competition will claim that changing to their system is simpler, but I trust the operators to be intelligent enough to realize that replacing a system means replacing a system.

Another CTI advantage is that it values working with strategic partners, such as IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ). CTI isnt trying to provide all the services immediately. It may seem a small and rather young company, compared with the voice mailbox giants, but cooperation with the hardware giants gives the customer confidence that comes with support and services from large stable companies with proven experience, which will be around in the long term. The customers gets a single package, with an advanced value added services platform, geographic distribution, stability, and services and support from the worlds leading companies.

Published by Globes [online] - www.globes.co.il - on August 27, 2003

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