KAROL BRASSARD - DTM INFORMATION TECHNOLOGY GROUP INC (DTM.TO)
CEO Interview - published 06/12/2000

DOCUMENT # KAE608

KAROL BRASSARD is Chairman and CEO of DTM Information Technology Group
Inc. Mr. Brassard made his entr‚e in the high technology industry in
1987 with a personal investment of less than $1,000.  For the past 13
years Mr. Brassard has built high technology companies from scratch,
gone public and, through a skilful business development strategy and
acquisitions, built DTM into one of the key network e-infrastructure
integrators and e-business solutions players in Canada. In 1992, Mr.
Brassard was awarded the prestigious Entrepreneur of the Year Award by
Quebec's Young Chamber of Commerce. For the next two years and then
again in 1998, he led DTM as a finalist at the Mercuriades for the
quality of service provided to DTM clients. He was also nominated in
1998 for the Top 40 Under 40 Award from the Financial Post. He has
recognized the importance of personal involvement in the business
community and has demonstrated it as Governor of the Montr‚al Young
Chamber of Commerce.  

Sector: IT services

TWST: Could we start out with a quick overview and a little history of
DTM, just to set the stage for our readers?

Mr. Brassard: DTM has been in business since 1977, and we are an IT
consulting firm specializing in e-business solutions in Canada. We are
publicly traded on the Toronto Stock Exchange. We have more than 160
employees and we have offices in Montreal, Quebec and Toronto. Our
specialty is to develop, implement and support e-infrastructure and also
e-business solutions; we specialize in Web-enable business processes,
Websites, and of course, Web-enabling any application for the customer.

TWST: Are you concentrating on the Canadian market?

Mr. Brassard: Yes, the eastern part of the Canadian market. And last
year we had over $55 million in sales.

TWST: Who are you competing with in the Canadian market?

Mr. Brassard: In the IT industry, we have different kinds of
competition. The biggest competition that we have is our customers, the
customer who asks himself if he's going to do it by himself or will he
hire an external consultant.

TWST: Why would companies decide to outsource rather than do it
themselves?

Mr. Brassard: E-infrastructure, e-business solutions are our core
competency, and it means that we have to train very specialized people.
In addition, we can offer a better value to the customer instead of
doing it by themselves. Outsourcing makes possible for the customer to
reduce costs and to increase the quality at the user level. In a way, it
brings back the focus to the core operation.

TWST: So that's really your competitive advantage?

Mr. Brassard: Yes, of course, it's our core competency.

TWST: Who are your typical customers?

Mr. Brassard: SMB market and also large corporations, like Bombardier
(the world's third largest aircraft manufacturer), Nortel Networks, the
city of Toronto, Videotron (Canada's second largest cable company).

TWST: And how broad are your services at this juncture?  What are you
offering these people?

Mr. Brassard: As I said before, we offer design, integration and
deployment of LAN and e-infrastructure. We offer support services for
the infrastructure. And we also have a Web development division that
develops Web solutions for a customer.

TWST: And as you look at these markets, how fast are they growing in
Canada?

Mr. Brassard: It depends on which services. Typically for the LAN
services, growth is less than the other sector; it's around 20%-25% in
that sector. But as for Web development, it's at least 100% per year.
And we also have a specialized team with a special focus on the thin
client solution, Citrix's technology. We are currently the main
integrator in Canada for this technology.  Expected growth in this
sector is at 75%.

TWST: And as you look out over these markets over the next two or three
years, what changes do you see taking place?

Mr. Brassard: The big change is going to be the ASP offering.

TWST: What do you mean by ASP?

Mr. Brassard: ASP ' applications services provider solution, and it's an
Internet server-based computing solution. It's going to make a big
splash in this sector for the next five years. And DTM is launching a
new offering called 'Nexxlink.ý With this model we want to ensure that
we are going to be part of this trend and we want to offer this new
solution to our customers. The value for the customer is going to be
very high. ASP application, Internet server-based solutions, are going
to decrease the cost of ownership, the TCO, at least 40% for the
customer.

TWST: That's a big change then?

Mr. Brassard: It's a fundamental shift, and that's why we're saying that
it's going to be a big new trend because the value for the customer is
very high. Today a lot of people talk about new technology, and the new
gadget, and a lot of stuff, but the value for the customer is not always
there. But if the value for the customer is there, it's going to be very
big. The acceptance of the market with this kind of solution is going to
be quite high. We are looking for strong market penetration.

TWST: And are you an early mover in this area?

Mr. Brassard: Our feeling and the feedback that we receive from the
industry is that we are the first Canadian company to launch this kind
of service on a wide scale.

TWST: And that will be launched next month?

Mr. Brassard: Yes. There are some Americans companies there, some US
players, but they have been in this industry for six or nine months. But
in Canada we are going to be the first one.

TWST: And are you going to target these products at  the same customer
base?

Mr. Brassard: Mostly for the SMB market.  Our target is between 25 and
500 users because it's a segmented outsourcing offer. And for customers,
the value is very high because the customer will cut part of his
internal IT staff. And this kind of customer doesn't have a CIO or a
large high-tech department. It's a good offer for them. And today, with
conventional technology like a LAN, it's a challenge every day to manage
this kind of technology for a small and medium-sized business.

TWST: Is it becoming more of a challenge all the time?

Mr. Brassard: Yes. With Nexxlink services, the customer won't buy a PC
anymore, or buy LAN software, or LAN services, and office software, e-
mail and everything. He is going to rent it. He's going to have services
run on a rental basis, fixed costs per month per user, subscription
based services, a predictable expense! 'Hassle free computingý provider.

TWST: Is it a really different model then?

Mr. Brassard: It's a different kind of model, it's a different kind of
model revenue for us, and it's good for the cashflow of the customer.
Hosted in our state-of-the-art data center, the customer will have an
outstanding infrastructure and service, and at a cheaper price.

TWST: And how are you going to distribute and sell this product?

Mr. Brassard: In our geographical market, we are going to sell it by
ourselves. We have a sales team here, and we are going to also have a
business partner program for an IT consulting company, or a telecom
company, to resell this kind of service.

TWST: What changes, if any, will have to take place at the company to
allow you to take full advantage of this opportunity?

Mr. Brassard: It won't be a major change because we already do that for
the customer. We have large customers that, in fact, we build inside
that IT department, such services. But the difference is we build the
data center and we build the services for ourselves, and we operate it
ourselves, and we run the services.  So for us it's not a big change.
It's very close to our core competency, and we can leverage our company
on these kinds of services. And the big change for us is going to be the
revenue model because today, we sell our services to the customer, and
it's a per hour rate. In this kind of service, it's going to be
recurring revenue, steady recurring revenue, fixed per month. And in a
long-term relationship, it's a major improvement on our prior business
model. We think that we are going to create more value for the
shareholders because we are going to build cashflow.  I think that this
industry is going to be a new industry, and at the end, the market is
going to evaluate this kind of company, this kind of service, like they
do other subscription services, such as wireless cellular phones, or
cable, or telephone companies. There is big cashflow per user, per
month. And I think that on a rental base, PC service, the value of a
customer is going to be very high compared to other service, because,
for example, a cellular phone is $40, $50, $60 in revenue per month. But
for services like that, it's going to be over $200 per user.  The EBITDA
will be very different than the EBITDA on the cellular phone. I find
that value is going to be very rewarding for the shareholders.

TWST: If we put all this together, what kind of growth should investors
expect from DTM over the next two to three years?

Mr. Brassard: With the ASP Services Provider, we will improve the
revenue model of DTM. We will have a recurring revenue stream. It will
create a lot of value for our shareholders. On the three-year
projection, we projected that we are going to achieve over $100 million
in sales.

TWST: And is this going to be all done internally, or are acquisitions
going to play a part?

Mr. Brassard: No, internally.

TWST: Are there acquisitions likely to occur, or do you have everything
you need in-house?

Mr. Brassard: Carrying out acquisitions will depend on the price of our
stock. The problem we have right now is our stock is so undervalued
because stakeholders don't realize the potential.

TWST: So acquisitions aren't part of the equation at the moment?

Mr. Brassard: You know, it's tough to say right now.

TWST: Do you have the management team in place that you need to execute
this strategy?

Mr. Brassard: Yes. We think that we have a great management team. We
have a lot of experienced people in this field. As I said before, it's
not a major shift for us, it's just a different business model. The
technology involved in this solution is part of our core competency. The
difference is, we are going to run a data center. Right now we already
do that for the customer, but we are going to do that for ourselves, and
we are going to rent ' it's shared time. It's like back to the future.
In the 1970s, people sold shared office services. It's the same kind of
service, with the Internet and a different technology, but it's the same
basic concept.

TWST: As CEO of the company, where are you spending your time right now?

Mr. Brassard: My full attention is on launching this new service. Right
now it's my top priority, and I have been working on that for six
months. Before launching the new service, the priority was to be sure
that the company was on the right track and was profitable. This job has
been achieved.

TWST: So everything is in place now?

Mr. Brassard: Everything is in place, and our top priority is to launch
this new service.

TWST: From a financial point of view, is the balance sheet strong enough
to do what you want to do?

Mr. Brassard: Our balance sheet is strong enough to launch the services
and to demonstrate to the market that it works. But we are going to need
a cash injection when we are ready to do step 2. And step 2 is to launch
it in the larger marketplace with a very aggressive marketing campaign.
Next fall, we are going to need to do a second issue.

TWST: Earlier you were talking about your stock price and the fact that
it's undervalued. Why is that? What is the market missing?

Mr. Brassard: The market has not priced in these new services. DTM has
been low profile, way too low profile in the past.

TWST: Why did you need to have such a new profile?

Mr. Brassard: Last year we were low profile because of Y2K issues, and
our strategy was improving the company. We had to do our homework, but
now is the right time to be more visible. Investors don't know DTM, but
it's a big point on my agenda for the near future.

TWST: To make sure the market does know you?

Mr. Brassard: Yes, with the new services.

TWST: With those services, will you move that beyond the Canadian market
at all, or are you going to stay at home?

Mr. Brassard: For the first year, our strategy is to stay at home, at
home meaning the Canadian market. After that, we want to re-evaluate our
geographical strategy. We are going to look at the European market
because we have bilingual people. Our service is going to be bilingual
too; it's very easy for us to add some other languages to our services.
It's very easy here in Montreal to hire people who speak three or four
languages, and with the Internet and telecom bandwidth, we could provide
these services to some European markets. We could be very competitive.
Some big US companies, are more focused inside the US market, and the
market is so huge in the US that they are not very interested in
penetrating either Spain or France. It's not their priority.

TWST: Whereas it could be for you?

Mr. Brassard: For us, maybe, it could be an opportunity. We have the
North American technology, North American mindset, and we are very, very
competitive here in Canada. The Canadian dollar is very low, compared to
the US dollar. The labor cost is cheaper than in the US. We have highly
skilled people. And we also have government grants for our IT labor.

TWST: And you're not going to turn it down?

Mr. Brassard: No. I'm going to say thank you.

TWST: If you were sitting down with some potential investors, what two
or three reasons would you give them to go out and buy your stock today?

Mr. Brassard: Our company is well established with a high profile
customer base. We have skilled people, sales, and we are profitable. In
the Internet world, that is a rare situation. We are very well
positioned to capitalize on the new ASP trend and obtain a leadership
position in this exciting $22 billion market. At the current price our
stock is not cheap, it is a steal. It is more than a strong buy, it is a
screaming buy!

TWST: Is there anything else that we should have talked about?

Mr. Brasard: My wish is to get strategic investors. The money, in my
point of view, is the easy part of the game. But we are looking more for
a strategic partner,  a partner that could be a marketing partner to
leverage our sales, and also a technology partner to get better support.
We are already having some discussion with a large partner. Actually,
Montreal is a really dynamic market for an IT business, and right now,
we are the last company not affiliated with a large corporation publicly
traded. Other big players in town, all of them have done alliances with
somebody else: Cognicase with National Bank, LGS with IBM, CGI with BCE,
Informission with Quebecor. We are alone. We are the last one.

TWST: That's either the good news or the bad news.

Mr. Brassard: I'm sure that we are going to have a good opportunity in
the near future.

TWST: Thank you.

Karol Brassard
 Chairman & CEO
 DTM Information Technology Group Inc.
 9900 C“te de Liesse
 Lachine, Quebec
 Canada H8T 1A1
 (514) 828-4428
 (514) 828-4429 - FAX
 Websites: dtminfo.com
nexxlink.com
 E-mail: brakar@mtl.dtminfo.com

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