When I was asked to write something reflective for the 30th anniversary edition, my first thought was: has it really been that long? My second thought was that anyone who was running an IT business in South Africa in the late 1990s and early noughties earned a particular kind of education that no MBA programme could replicate.
By Guy Whitcroft
I joined Tarsus Technologies in 1992 specifically to help land the Compaq distribution rights. We were awarded them, and Compaq became the engine of our growth. By the time I became CEO in early 1997, the business had real momentum. What followed, though, was a decade that tested every assumption we had about how to run a company.
Y2K was one of the strangest experiences of my career.
Companies across the country – across the world – spent heavily on hardware and software in the run-up to 31 December 1999, terrified that systems would fail when the date rolled from ’99 to ’00. For a distributor, that meant extraordinary demand. And then, almost overnight, it stopped.
The first half of 2000 was brutal. Everyone had bought what they needed, and then some. We still made our half-year and annual targets – we were listed on the JSE through MB Technologies at the time, so those numbers mattered – but it required a completely different kind of focus from the team. Managing costs, managing expectations, managing morale. The business didn’t change; the conditions did.
Then came 2001.
The Rand lost 40% of its value in the final six months of that year. For a business buying in dollars and selling in rands, the maths becomes genuinely painful very quickly. Customers expected you to honour quotes that had been sitting for weeks – often for special orders already in transit. You couldn’t blame them. But the losses were real.
And then, in the first half of 2002, the Rand strengthened 30%. Now customers expected prices to fall with every order, including on stock you’d already bought at the weaker rate. We had a full year of constant negotiations for every order – with suppliers, with customers, on terms, on timing. What got us through was the discipline to work the problem rather than react to it emotionally.
The years from 2000 to 2002 were exceptionally tough precisely because the two crises arrived back-to-back.
The Y2K lull hit cash flow hard – particularly for businesses that hadn’t planned for the inevitable slowdown after the buying frenzy. Then the Rand crisis landed before anyone had recovered. A number of companies didn’t survive the combination, including our biggest competitor – and when they went, channel credit virtually halved almost overnight and vendors pulled back on risk across the board.
The HP-Compaq merger was the third hit, and in some ways the most structural.
Compaq had been the cornerstone of what we’d built. And then we added HP as a second major brand. Suddenly, our two biggest brands were one company, and our supply concentration risk was obvious. We had to move deliberately – bringing in other brands, rebalancing the portfolio, reducing our dependency on any single vendor relationship. It was a useful lesson in how vulnerability tends to hide inside your strengths.
What strikes me, looking back across three decades, is how little the fundamentals actually changed.
Technology moved at pace – and continues to do so, faster than ever. But the business principles that determined who survived and who didn’t were the same in 2001 as they are today: managing risk, staying close to your customers, suppliers and numbers, making decisions with incomplete information, and keeping your people focused when the environment is doing its best to distract them.
The technology around us changes constantly. The business inside it, not so much.