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Page 1 Intentia in France Best in France Case Study June 13, 2005 Alexandre Berthier Vesselina Popova Bettina Freie Adel Benazzouz Michelle Labarthe.

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Presentation on theme: "Page 1 Intentia in France Best in France Case Study June 13, 2005 Alexandre Berthier Vesselina Popova Bettina Freie Adel Benazzouz Michelle Labarthe."— Presentation transcript:

1 Page 1 Intentia in France Best in France Case Study June 13, 2005 Alexandre Berthier Vesselina Popova Bettina Freie Adel Benazzouz Michelle Labarthe

2 Page 2 Executive Overview  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

3 Page 3  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

4 Page 4 The Intentia Proposition Intentia is the intelligent choice for organizations that operate in complex supply chains with resource constraints and want to improve the way they make, move and maintain their products.  100% of resources are dedicated to this market  100% of software is designed for this market  100% of experience is in servicing this market Intentia customers benefit from over 20 years M3 enterprise sector experience, a modern technology infrastructure and a supplier committed to delivering value every time.

5 Page 5 Company Objectives  To provide enterprise wide software and service solutions to M3 businesses that enable them to compete more effectively, increase their productivity, and grow their businesses profitably.  To become the leading provider of enterprise applications for M3 businesses in targeted geographies and specific industries. To achieve these objectives via a planned expansion of organic growth and acquisitions with profitable operating performance

6 Page 6 Intentia Positioning  Make, move, maintain (M3) activities  Flexible, M3 prepackaged solutions  Resource-constrained organizations  Complex business processes  Make it happen, every time  Financially stable supplier  20 years of experience  Modern technology

7 Page 7 Company Strategy  To continue to deliver increasing value and superior service to their existing customers  To focus new business resources on those industries, geographies, and channels to market with the greatest potential (e.g., France)  To continue to invest 12–15 percent of total revenues in development to maintain technological leadership

8 Page 8 Strategy Plan: Three Phases Profit Growth Market Share Stay in the game Play the game Win the game 2004  time

9 Page 9 Goals for 2005  Increase of operating profit by end of 2005  Target best-in-class across all key metrics  Grow in 2005 in comparison to 2004  Create a world-class company with outstanding people  Become an M3 leader within specific industries

10 Page 10 Intentia International AB  Created in Stockholm,1984  Turnover of €330.7 million in 2004  Curent Market Capitalisation of €284.15 millions  2371 Employees in 40 Countries  More than 3000 Customers Worldwide SIN: SE0000349243 Ticker: INT-B Sector DJ: Tech – Software Market Cap based on close price on 06/07/2005 of 15.5SEK

11 Page 11 Paris Nantes Lyon Aix-en-Provence Strasbourg Toulouse Intentia Consulting  Created in Osny,1995 by acquisition of a local company called GTI  Legal Form: SAS  75% capital participation from the group  265 Employees  350 Customers  €58.7 millions Net Sales in 2003  18.3% of the group’s total sales in 2003 Intentia in France

12 Page 12 On a regional basis, Europe accounted for more than 80% of total revenues, and Asia Pacific accounted for approximately 14% of total revenues, up from 12% in 2003. Revenues by Region

13 Page 13 Market Share from Sales in France 2003

14 Page 14 Strong turnaround in 2004 New investors injected over $85 million New senior management team CEO, CFO, CMO Strengthened Board : Romesh Wadhwani (Symphony), Paul Wahl ( ex Siebel and SAP) Strong cash position of $70 million (Q3 2004) Solid equity to asset ratio of 33% (Q3 2004) Positive EBITDA (Q3 2004)

15 Page 15 Intentia begins 2005 in a much stronger financial position as a result of improved operating performance and a SEK 205.6 million increase in cash. Stronger Financial Position

16 Page 16 In the fourth quarter of 2004 all key performance indicators were at their highest levels in eight quarters Key Performance Indicators

17 Page 17 Efficiency Measures July–September SEK million 200420032002 Change in revenue per employee13%-13%-15% Change in service cost and indirect expenses 1) -7%-16%-5% Service margin 1) 16%3%16% EBITDA 1) 4-28-30 1) 2004 figures before restructuring charges for comparison Even Q3, traditionally the weakest quarter of the year, reports a positive EBITDA in 2004, adjusted for restructuring costs

18 Page 18 Strong Shareholder Base, Shares Vision and Long-Term View Stockholders Percentage of Capital Symphony Technology Group24.9 Tennenbaum Capital Partners11.4 Eureka Funds 6.4 Total three major owners42.7 Four major shareholders at the end of September 2004 hold more than 40 percent of Intentia’s capital

19 Page 19  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

20 Page 20 More than 4000 clients around the world Some Examples

21 Page 21 More than 300 clients in France Some examples

22 Page 22 Customer Industry Sector Detail  Distribution –Professional Wholesale –FMCG Distribution  Fashion –High Fashion –Contract Manufacturer, Cut and Sew –Design, Source and Distribute  Asset and Maintenance –Field Service –Depot Service –Enterprise Asset Management –Third-Party EAM  Food and Beverage –Meat and Poultry –Dairy –Fresh Fruit and Vegetables –Bakery

23 Page 23  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

24 Page 24 International Strategy  Presence in 40 countries covering 5 continents  Growth by acquisitions (Europe) or build from scratch (Asia)  Southern Europe is managed from France  Intentia France represents 18.3% of the group’s total sales in 2003  Significant potential justifying a French presence  Launch of R&D offshore in India to produce at lower costs plus a new customer support center (in 2005)  Partnership with IBM and Symphony  Increase of the number of dedicated people to those activities without increasing costs associated  R&D internal department will still conduct the high-added value work  Reduction of staff in Scandinavia

25 Page 25 More than 550 employees in southern Europe : Generating 19% of group’s total sales in 2004 560 Customers 25 Solutions Managers 300 Technical Consultants 15 Developers 50 I-Support Consultants (hot-line ) Madrid Intentia in Southern Europe

26 Page 26 Intentia International Bertrand Sciard, Chief Executive Officer Chief Financial Officer Arthur Gitajn General Counsel Niklas Björkqvist Human Resources Claes Bille Executive Vice President Johan Berg Chief Information Officer Malin Laudon Chief Marketing Officer Allan Davies Research & Development ANZAsiaAmericasEurope, Middle East and Africa (EMEA) Franck Cohen IRD Henrik Billgren Americas David Rode Northern Europe Markus Jakobson Central Europe Cormac Watters Southern Europe René Samama Asia David Hope Australia/ New Zealand Linus Parker

27 Page 27 Organisational Chart of Intentia Southern Europe MARKETING IT RESSOURCES HUMAINES SOLUTION DESIGNER FINANCE I-SUPPORT Directeur Services Stéphane Jacquemet Directeur New Business Fréderic Champalbert Directeur Account Management Renaud Vadon France, Belgique Francophone, Suisse Francophone,Italie Espagne, Portugal Directeur New Business Jordi Salvador Directeur Account Management Jordi Salvador Directeur Services Jordi Salvador OFFICE SUPPORT Vincent Courtier Agnès Bravo Joan Sole Marc Houx Odile Rouxel Alain Roche HW France Patrick Benittah

28 Page 28  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

29 Page 29 Constraints in France  The previous company GTI was more a family run business thus cultural adaptations had to be made (procedures, strong focus on P&L)  Although the rumor says social protection is very much important in France, it actually costs less to fire someone compared to EU countries –France: 1/3 month of salary per year of employment within the company –Italy: 1 month of salary per year of employment within the company –Portugal and Spain: between 1.5 and 3 months of salary per year of employment within the company  Until recently no partnership (vs. SAP for example) so clear lack of resources in France

30 Page 30  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

31 Page 31 Recruitment and Selection  High tech company means two ways of recruiting: 1.Directly by the HR department which is the most common approach 2.With the help of an external consulting firm for very specialized technical profiles, sales persons and management (hunting)  Although there is no assessment center, each candidate has to pass an English test –oral and written  Each selected candidate must receive approval from upper management  total number of employees is under control at the company level  No recruitment problems due to the high level of the French education system  Before: young graduates, internal and external mobility, learning on-the-job  Now: industrialization and standardization

32 Page 32 Compensation  Profit-sharing scheme divided in two parts 1.French law says that above 50 employees it is mandatory to share parts of the profits (aka Participation). The company has no power on the split. 2.Another part can represent 2 to 3 months of salary and is totally in the hands of Intentia regarding the split, the amount etc…(aka Interessement). It’s however a company agreement.  On top of the usual insurance coverage (Social Security), an additional insurance (mutuelle) is added to even better cover medical reimbursements  Laptops and cell phones for everyone  5 weeks of vacation for everyone plus 12 days due to the 35-hour week (2005 numbers)  Maternity and paternity leave, renting aid, heavy home work aid

33 Page 33 Compensation Key Figures Salary increases always follow the path: recommendation by managers  approval by France steering committee  approval by the group Costs are controlled at a group level

34 Page 34 The Award Program  One of the top 10 reasons most cited by employees when leaving companies is their perception that the company did not recognise and value his/her performance and contribution.  It is an important human need to know one’s contribution is valued.  Compensation plans are an important element in awarding performance but they also have some drawbacks: –They lack immediacy as they are based on performance over a defined period, usually a year. –Do not account for the ongoing incidents of good performance. –Comp plans are structured and formal and can lack the personal element. –Monetary awards are not the only tool in recognising performance and contribution.  Two key principles underpinning their Total Rewards philosophy are the desire to retain the best and to recognise performance and contribution. An Award program is an additional tool to deliver on these principles.

35 Page 35 Why Have an Award Program?  Award programs are about the recognition of performance and contribution.  They range from the informal verbal recognition of a job well done to the more formal giving of a tangible non monetary award.  The ultimate objective of an Award program is to engender an inherent culture where strong performance and contribution is recognised and celebrated.  This culture should encompass both the purely verbal recognition as well as the tangible award.  The motivational factors of knowing one is valued and appreciated cannot be underestimated.  The Award program can become a very important and potent tool for management

36 Page 36 Considerations  The Award program should articulate and reflect the underlying principles. That is, creating a culture where performance is recognised.  It should be immediate. In other words, the recognition, be it verbal or a more formal award, should be given as close as possible to the event that triggered it.  The program should be simple and clear.  The awards should be non-monetary.  Reinforce the principle that recognition of a job well done is not dependent on the giving of a tangible award. A verbal thank you can be as meaningful as a tangible award.  For higher levels of contribution and performance public recognition and celebration are important to the individual concerned and demonstrates to others the behaviours and actions that are valued by Intentia.

37 Page 37 Perfect Partner Award (‘On the Spot’)  The purpose of this award is to enable management to immediately recognise and commend behaviours and actions that support the achievement of business objectives. Underlying principles: –Immediate –Local management ownership –Highlights and reinforces the behaviours that drive Intentia’s success. –Employees can nominate colleagues  The level of the award should be nominal e.g. –Verbal or written recognition of the individual and the behaviour/action –Intentia merchandise e.g. t-shirts, bags, etc –Each Business Group (BG, e.g. Southern Europe) would need to determine the appropriate award type

38 Page 38 Successful Project Completion - Award  On completion of every project a review will be conducted, by management, to determine the success of the project in terms of: –Financials (revenue and variance) –Project quality –Customer satisfaction (customer feedback)  For projects deemed successful, all project participants, along with their spouses, will be taken to dinner by Intentia.  This provision of the Award program also applies to IRD projects.

39 Page 39 New Deal Celebration  Each and every new deal should be celebrated at the BU level. –Diploma –Bottle of Champagne. –Permanent memento.  Any deal above €500k in licence revenue should be celebrated at the BG level. –Diploma –Gift Presented by the BG Manager –All BUs should be encouraged to recognise the sale. –Article on the BG Wire homepage  Any deal above €1m should be recognised at the GO level. –Diploma –Gift presented by GO Sales Director. –Deal recognised globally on the Wire (personalised)

40 Page 40 BG Specific Initiative  From time to time BGs will introduce a specific business initiative to improve business performance.  In many cases successful achievement of such initiatives may be handled as Strategic Objectives within the comp plans.  However, this may not always be appropriate or desireable.  In such cases it may make sense to include the initiative within the context of the overall Award program.  Any awards provided must be consistent with the standard awards provided under the program.

41 Page 41 Top Performers Award  Annual event for the company very top performers in all functional areas: –Sales –Services –IRD –Corporate Services –Also a number of wild card nominations

42 Page 42 Communication  In the giving of an award how it is communicated to the individual has an important bearing on how the individual perceives the award and the level of pride/satisfaction they take in it.  Communication to the wider population is also very important: –Individuals will know that their contribution has been publicised and recognised across the organisation. –Allows others to celebrate success and congratulate those who have been awarded. –It is an opportunity to reinforce the behaviours and actions that management require.  The Awards given for successful project completion and New Deals will be published on the Wire on a monthly basis.  The Perfect Partner Awards and any BG Initiative award will be published on the BG Wire page.

43 Page 43 Training  Mostly done internally for most technical subjects by the Intentia University  Training standardized within the group  Trainings are conducted locally, but more specialized ones might take place in other countries  Special trainings such as languages or supply chain management are done by external companies  Training represents 5% of the total personnel costs of the French subsidiary  Training subjects examples: Movex Operations, Movex Finance, Movex for Beginners, Java, API Programming, Source Code

44 Page 44 Evaluation Objectives (excerpt from original HR documents) « Objectif L’objectif de l’entretien de fin d’année est de :  Définir un profil structuré de vos compétences, opportunités d’évolution et domaines dans lesquels une formation vous serait utile.  Établir des objectifs à court et long terme  Satisfaire les besoins de l’entreprise en personnel compétent  Créer une relation ouverte et confiante entre vous et votre responsable.  Procurer au responsable un feed-back sur son style de management et exprimer vos attentes vis-à-vis de ce responsable  Évaluer les objectifs de l’an dernier et vos performances. »

45 Page 45  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

46 Page 46 Hiring  Intentia expands through organic growth and acquisitions. It came to France through acquiring the French company GTI in 1995. This acquisition reduced the costs incurred when a business is built from scratch in a new country and after it started the hiring of new labour force related to the development of the main activity of the French office – sales.  The hiring costs include publishing of announcements for job positions in news papers and internet.  When recruitment of personnel for high managerial positions is demanded, the company uses hunting.

47 Page 47 Payment  Salaries. The major part of the expenses of Intentia are the salaries of the employees. In terms of salaries the costs are higher than in other countries from Southern Europe.  For comparison we are showing the average salary of a business consultant including VC + Social costs  Note: The salary in a small structure is significantly higher as there is one employee in charge of the business development of the office  more experienced staff (salaries are comparable to France)  Bonuses. Each year the employees receive the amount of 2 to 3 monthly gross salaries as additional compensation for their contribution to the profits that the company have realized. This is only true for France.

48 Page 48 Payment  Social security charges. The social security charges that the company pays to the state for each employee in France are one of the highest in Europe.  Royalties. The function of the French office is to distribute the products which are developed in Sweden. Thus, it pays more than half a product price of royalties to the Swedish office.

49 Page 49 Training  A major input, tightly related to the performance of the office is the employees’ up-to-date knowledge.Intentia allocates 5% of the total gross salary of an employee for training.  Due to the nature of the products, the company uses internal training system for technical staff and sales force. Some employees are trained to be trainers later on.  External training systems are also available. For example – leadership programs.  The compensation that the company offers upon dismissing is one- third monthly salary. For comparison in Spain this number is 1,5 month, and in Portugal between 1,5 and 3 months Dismissing

50 Page 50 Communication  English is the official language in Intentia and employees are expected to be operational in it. During the job interviews every candidate passes a mandatory English language test.  Cultural differences. The HR department considers that there are not major cultural differences between the management in the different offices and there is exchange of people between the offices.  Centralization. The policy of the company is directed toward centralization, but according to its managers the procedures are much less rigid than in other similar companies and the formalization and justification of expenses are much more flexible.  Products. All products are translated in the language of the country in which they are sold.

51 Page 51 Integration of the French Managers Into The Organization  Bertrand Sciard became a CEO of Intentia International in Sweden when Bjorn Algkvist, the former CEO of the group decided to concentrate on the strategy of the company as a shareholder  Bertrand Sciard has rich experience acquired as an Executive VP of GEAC, responsible for the activities in the regions of Europe, Middle East, Africa and Asia Pacific, as a CEO of Presys and after occupying different positions at IBM

52 Page 52  Intentia Business  Company Products and Clients  Why did Intentia Come to France?  Constraints in France  Adaptation to France  Key Constraint Costs  Key Benefit Numbers

53 Page 53  Strong market concentration, profitability depends heavily on market share Market share Top 330% Top 1052% Top 2070% Top 4085% Top 60100%  Intentia is one of the big players: SAP >10%, Intentia and Peoplesoft/JD Edwards >5% and one of only few profitable companies Key benefits of being in France

54 Page 54 Market situation (global) : Crisis since 2001

55 Page 55 Consequences of the crisis: –Strong competition: Take-over of competitors‘ market shares is only way to grow –Market concentration: Alliances and take-overs (e.g. PeopleSoft /J.D.Edwards), the 10 biggest players accounted for 72% in 2000 and for 85% in 2002 –2/3 of players make losses –Battle for mid-market between SAP and pure ERP players such as Intentia –Small players survive in niche-segments

56 Page 56 Intentia France as compared to the Intentia Group (1) Proportion of Sales Proportion of Employees With just 7% of employees Intentia France contributes 12% to the sales of the group The figures indicate a high level of PRODUCTIVITY which allows the French subsidiary to be profitable despite the rough market environment.

57 Page 57 Intentia France as compared to the Intentia Group (2) Sales of the Intentia Group Results of the Intentia Group Intentia France was the most profitable part of the company in 2003

58 Page 58 Intentia France: Positive net result and cash flow despite significant decrease of sales Cash flow Net profit

59 Page 59 Intentia France: Development No. of Employees, Turnover Development of Headcount1997199819992000200120022003 No. of employees beginning of year84133205229242289286 Increase51976448773216 Decrease2254035303548 No. Of employees end of year133205229242289286254 Development % 54%12%6%19%-1%-11% Average (beginning + ending) /2109169217236266288270 Turnover (% of average no.)1,8%14,8%18,4%14,9%11,3%12,2%17,8% Profitability could only be retained by a reduction of the workforce Remaining workforce is required in order to be prepared for the expected market turn around

60 Page 60 Expected positive evolution of the French mid- market segment: Facts & Figures 20032006 TCAM (%) CA (M€)Poids CA (M€) Poids ERP suppliers 422,526,2%567,529,0%+10,0 Best of Breed suppliers 600,037,1%685,035,2%+4,5 Technology and infrastructure suppliers 592,536,7%697,535,8%+5,5 MM Market Editors 1615,0100,0%1950,0100,0%+6,5

61 Page 61 Responsibilities: Due to the importance of the French market and its central location in Southern Europe, Intentia France manages and consolidates the whole Southern European region (i.e. Spain, Portugal, Italy) Government assistance: not applicable Impact of location for transportation: not applicable as the product consists of software and services and Intentia France serves the French market only Cultural adaptation of products: not applicable for ERP software and related services except for language adaptation Location Characteristics

62 Page 62 Action plan of Intentia Group as response to financial difficulties  Entrance of major new investor Symphony Technology Group triggers important changes –Influence on management –Change of CEO in May 2004 –With Bertrand Sciard, a French becomes successor of Björn Algkvist  cultural mediator between the Swedish culture of consensus and decentralisation and the very profit-oriented American way of management –In July 2004 approvement of plan to streamline the organization, to focus on development and customer support and to orient the company towards higher growth potential markets

63 Page 63 We Thank  Agnès BRAVO, General Secretary,  Stéphanie LONGATTE, HR Manager,

64 Page 64 Our Team  Alexandre Berthier, HEC MBA  Bettina Freie, HEC MBA  Adel Benazzouz, HEC MBA  Vesselina Popova, HEC MBA  Michelle Labarthe, HEC MBA

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