This month's case study looks at a computer systems company that is struggling in a slowing economy but with an owner who may be too tired to save it.

At 57 years of age, he knew his energy was flagging and he was not as quick on the uptake with new technology as he used to be.

'It's always like this coming up to time off," managing director John Redmond remarked to his PA. "You think that if you had to work one more day without a break, you'd collapse from exhaustion."

"Have a good rest," she said as he gathered up his bag and jacket. "I hope you get some decent weather in St Lucia."

"Me too. See you Monday week," added John as he left the office of Personnel Systems Ltd on Baggot Street, Dublin. In truth it wasn't so much a rest he wanted, as time to reflect on the major problems facing him and the company.

He found it hard to believe that it was well over 20 years since he had started the company with Richard Colton and Paul Clarke. An idea that was first batted about during after-work drinks in Searsons on a Friday night had evolved into a highly successful, market leader in computer systems for human resources (HR).

Back in 1978, the three of them had worked in the head office of a large insurance company. John was in the personnel department, Richard and Paul were on the computer systems team.

In his department, which was responsible for all aspects of recruitment, employee appraisal, salary discussions, training and employee discipline, John sometimes felt he was drowning in paperwork. Staff were employed simply to keep the hundreds of employee files up-to-date. Not only was a huge amount of time spent filing pieces of paper, but then hours were also being wasted searching through files for basic information.

He began to think about how computerisation of the records would transform the department. After sharing the idea in the pub, John started working with Richard and Paul at weekends to develop a computerised personnel system. They came up with one which covered six key procedures: recruitment; staff performance appraisal; career progression; salary and remuneration details; training records and disciplinary procedures.

John proposed to the personnel manager that they introduce it on a pilot basis. Picking a relatively small department of 30 people, John and his colleagues looked at what information was needed and loaded all the data from the relevant employee files onto the system. The pilot was a great success, and the three of them were asked to implement it throughout the company.

After that, such was John's confidence in the new system that he persuaded Richard and Paul to join him in setting up their own business, Personnel Systems Ltd, in 1981 to sell it to other companies.

During the 1980s, Ireland became the world's second largest computer software exporter. Personnel Systems thrived as more and more Irish-based companies looked for computerised systems to improve efficiency. The development of employee-related legislation, driven mainly by the EU, also boosted business. As case law concerning employees' rights developed, companies saw the importance courts placed on HR processes. Employers needed to be able to prove they had followed correct procedures.

Personnel Systems enjoyed over two decades of growth and profitability, with continuous enhancement and development of services. The company branched out into producing disaster recovery plans, and offered this to clients, along with a HR records archiving and a backup facility. This was followed by a database management toolkit, an IT governance review and enhanced security systems. In addition, the company produced modules of its systems to sell into the small and medium enterprise (SME) sector.

But then in the 1990s large conglomerates started to centralise "back-office" operations to increase efficiencies and reduce costs. Initially many of these shared service centres focused on finance operations, such as payroll and accounts. But it was not long before businesses began to centralise personnel administration.

Many of these shared service centres developed their own database management and IT governance systems, as well as in-house backup and disaster recovery systems. As shared service centres became popular, Personnel Systems found its services contracts with some major customers were only partially renewed. In addition, as a client concentrated its system in one place, the number of sites that Personnel Systems was maintaining were reduced, and so maintenance revenues also began to fall.

John and his colleagues realised that their business strategy had to change. For the first time, revenues from their key, corporate customers were falling, not only from services being taken in-house, but also because the new shared service centres were seeking to drive prices down. This situation was masked to some extent by continued growth in the SME sector, though it would take the recruitment of many SME clients to compensate for the loss of a single large corporate client. However competition here was coming from specialist providers who were offering bureau services - effectively an outsourced shared service.

Last but not least, John knew the company would have to embrace the internet if it was to remain a market leader. However, it would be difficult to develop a long-term internet solution as web application servers were still relatively new and untested, and there was a confusing barrage of offerings in the marketplace. Selecting the best internet-related solution for the company's needs would be a huge challenge.

In recent weeks, John had had very frank discussions with Richard and Paul about the state of the company. His colleagues agreed that they faced three major questions:

1. What could they do to counter the loss of revenue from their large corporate clients?

2. How should they safeguard their SME business?

3. How should they adapt to the potential and the threat of internet-based solutions?

But John had kept quiet about another, more personal dilemma. He had earned a very good living from the business over the years and had invested sufficiently to provide for a reasonably comfortable retirement. He had occasionally thought about selling his interests, but had always put it off, the company was going too well.

He knew that if he tried to sell his shares now, it was unlikely he would receive what he believed should be a true value for them.

Also, "jumping ship" at this stage did not appeal to John, as he felt he owed something to his partners and the loyal staff.

However, at 57 years of age, he knew his energy was flagging and that he was not as quick on the uptake with new technology as he used to be.

Although he was the majority owner, John was beginning to concede, to himself at least, that he might not be the best person to lead the company into the future.

These were the issues on his mind as he lay on the beach. He had nine days to decide what to do next.