EPITA IT Markets Basic Finance and Marketing Lecture #3 Oct 25th 2006 Jean-Noël GORGE

Previous week V.I.P. (Very Important Points)

25,0 20,0 15,0 10,0 5,0 0,0 -5,0 PIB L&S Investissement -10,0 +3,5% +1,8% 0,0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -5,0 PIB L&S Investissement -10,0

60's 70's 80's 90's 2000's Cycle phase HW Mature Techno. Emerging Users 60's 70's 80's 90's 2000's

Micros ( Client/Server, ERP) Towards integration 90's 2000's Micros ( Client/Server, ERP) Each layer comes on top, previous layers never disappear !!! (See millenium bug) 80's Minis & department's IT (VAR Digital, HP, DG) 70's Mainframes Cobol 370 CICS etc 60's Assembler & Co

Digital Times Digital Era Industrial Era Networked Organizations Pulled flows « On demand » Fast and lean Information Immaterial Digital Era Chirac Internet Industrial Era Napoléon III Railways Mass production, « Pushed » flows Raw Materials Heavy « tangible » investments Taylorism/Marxism

Industrial times IT challenges Design/Engineering Design/Engineering Solution = "re-foundation" = ERP Manufacturing Problem = Integration Logistics Purchasing Sales Mktg-Comm Finance

Digital times IT systems Conception Fabrication Logistique Achats Ventes Finance Mktg-Comm Need for external integration Company B Company A xxNet Design/Engineering Design/Engineering Need for Internal Integration Manufacturing Logistics Purchasing Sales Mktg-Comm Finance

Questions ?

IT Cycles and Software Services

Towards integration Components Hours + Hourly Rates + Time Sheets 60's

Software services business basics Fondement du « business model » dit « un homme, une heure, un euro », ou (1xn) (1xt) (1xp) = Revenues (CA) N = effectif T = taux d’activité, rapport entre jours (heures) facturés et jours (heures) facturables, bref le « tace » P = prix, tarif, tjm

Towards integration 60's 70's Components integration Components Components + Fixed quotes (Specs, Prices, planning Hours + Hourly Rates + Time Sheets 60's 70's

Towards integration 60's 70's 80's Components integration System Components + Fixed quotes (Specs, Prices, planning CI + 1/3rd parties Systems (minis) Hours + Hourly Rates + Time Sheets 60's 70's 80's

Towards integration 60's 70's 80's 90's Components Components integration System Integration Services Integration Components + Fixed quotes (Specs, Prices, planning CI + 1/3rd parties Systems (minis) Hours + Hourly Rates + Time Sheets Consulting + Build +    "Run" 60's 70's 80's 90's

Towards integration 60's 70's 80's 90's 2000's Components Components integration System Integration Services Integration Business Integration Components + Fixed quotes (Specs, Prices, planning CI + 1/3rd parties Systems (minis) Hours + Hourly Rates + Time Sheets Consulting + Build +    "Run" S I + Long term Deals + Embedment 60's 70's 80's 90's 2000's

« SSII » : a short story 60's 70's 80's 90's 2000's 370's Minis CS Components Components integration System Integration Services Integration Business Integration Components + Fixed quotes (Specs, Prices, planning CI + 1/3rd parties Systems (minis) Hours + Hourly Rates + Time Sheets Consulting + Build +    "Run" S I + Long term Deals + Embedment 60's 70's 80's 90's 2000's Mainframes 370's Minis CS Internet

Components integration Projects / Deals size (M€) Towards integration Components Components integration System Integration Services Integration Business Integration Projects / Deals size (M€) > 50 25 10 2

Towards integration Share of prime contractor in Components Components integration System Integration Services Integration Business Integration Share of prime contractor in project /deal value (%) 100 >80 >50? >30? ?

Integration : Competition Components Components integration System Integration Services Integration Business Integration Ernst & Young Cap Gemini…………. Bossard ….. EDS + AT Kearney Andersen Consulting …. Accenture IBM

Competitive fight Components Components integration System Integration Services Integration Business Integration Cost / Prices Free Lances / Temps Remote selling «Commodity» Closeness Added Value Customer’s Core Business Difficulties Dilemma

Strategies’ convergence Editors Outsourcing Microsoft Oracle SAP EDS ADP First Data ATOS Cap Gemini Accenture IBM Bull HP SSII B I Manufacturers Each group builds on its own components, but all seam to move towards BI

Business Integration Components Components Integration System Integration Services Integration Business Integration Services Share (CBR) permanent Actions 365/7/24 Sharing risks & gains In the « digital World » If we stop, our clients stop => 60's 70's 80's 90's 2000's

SSII in the 2000’s Business Integration : 1° What is our (monthly, quarterly...) share of each customer expenditure in C+B+R ? How do we get maximum coverage ? 2° Which strategic functions or information are outsourced to us by each customer ? 3° How do we control (defend) and expand our services share for each customer ? 4° How do we manage not to be substituted in our core offerings ? 5° Offering every possible service, not producing all of them 6° What is our position in each customer’s Galaxy ?

C B R Services portfolio CHANGE Enterprise Effectiveness Enterprise Program Management BUILD (projets) (M&A, Spin Off, ...) Break through Business Architecture Evolution Users Support & Training Components Integration Package Upgrades First Build Roll Out New Modules, New Functions RUN Entreprise Applications Management System-Management , Entreprise infrastructures User Support (Call Center / level 1)

HR and Critical factors Profit sources 60's Programmers 70's AP Cobol 80's Graduates 90's Consultants 2000’s « Information workers » Strategic skills & know how Recruiting, retaining Project management Tools, alliances (VAR…) Methodology, global vision CRM, KM

Another look at Services Segmentation in IT consulting Strategy Technologies Processes H R

In the following slides, companies names may be erroneous M&A, LBOs, Names Changes etc.

From Strategy to Operations We will run it for you ! = Business Integration What to do ? = Strategy How to do it ? = Consulting We will make it for you ! = Services Integration Technologies Processes H R

Group (or family) 1 Anglo-Saxons Strategists : McKinsey, Bain, BCG, AT Kearney Booz Allen, Braxton Mercer Management Consulting Strategy French Strategists : Mars & Co, OC& C, Statorg, Telesis... Technologies Processes H R

Group (or family) 2 French generalists : Eurogroup, Quadran, Algoe Cegos, l'ex Eurequip, Solving Orgaconseil, SV & GM ... Strategy Former accountants or auditors PWC Developpements, Ernst & Young Entrepren. Ineum PMO, KPMG Fidorga Technologies Processes H R

Group (or family) 3 IT integrators: Accenture, CSC IBM Consulting, EDS Cap Gemini : (Skill conseils + Bossard + Gemini + Ernst) CSC + KPMG Atos Consultants Steria consultants Sopra Consultants- Mega Unilog Consultants Oracle Consulting SAP Consulting Microsoft Consulting Services Strategy Technologies Processes H R

Group (or family) 4 HR specialists PA Consulting, William M. Mercer, Hay Management, DDI, Bernard Juilhet, Bernard Brunhes, Cemis, Francis Vidal, HGC, IDRH, Insep, Atefo, Quaternaire Herbemont César, Altedia Stratégie Technologies Processes R H

Growth factors Steady growth Technology breaktroughs and «waves» Globalisation Privatisations M&A Competition Strategy Regular, « soft » growth Cost cutting (Re) Organisation Procedures Coaching Processes Technologies H R

Questions ?