The only way Computer Associates will be successful in the services market is to keep out of it, believes the head of its European services arm.
?The reason CA failed to acquire Computer Sciences (CSC) was not a question of money but because it has the wrong culture,? said Jacques Reboul, European senior vice president of Global Professional Services (GPS).
As a result, in April, CA established GPS as a separate entity, run as an autonomous company, with its own internal structure, human resources function, financial director, and so on.
Even so, Reboul acknowledges it is still very much seen as part of CA. ?My subjective criteria when I look at any company I want to acquire is how many people will leave if this company is taken over by CA?? he admits.
GPS currently employs 1400 people worldwide, with 400 in Europe. Reboul?s task is to grow this figure to between 3,000 and 4,000 through organic growth and acquisitions.
The GPS division is currently in due diligence process with four services companies in Europe, Reboul said, and he hoped to name the first purchase, probably in the UK, by the end of the year.
The aim is to acquire one or two companies in the UK, France, and Germany respectively, as well as outfits across Italy, Spain, and Holland, depending on opportunities, making a total of between five and eight purchases, from an original shortlist of more than 1,500 prospects.
?I need to make acquisitions every three to four months, if I?m to meet my growth targets,? Reboul said.
Reboul?s task is made easier, as he doesn?t have to go for market dominance in any sector. ?We?re not trying to be in the top three services companies anywhere,? he said. ?The aim is to ensure that we have enough critical mass in each company we operate in to implement our software.?
Not that GPS will just focus on providing services for CA products, Reboul argues. ?As we buy up companies, they will inevitably provide more services for non-CA business than for CA,? he said.
As well as providing more support for CA products and helping to increase their market share, services are increasingly seen as a strong revenue source in their own right.
While rival companies SAP and Oracle claim to do between one-third and one-half of their business, respectively, in services, GPS contributes less than 12 cents in the dollar to CA?s revenues, a figure that will have to more than double, if it is to make good on its aim of making a $1 billion a year in this area.
Reboul has other criteria for buying a services company. Firstly it must be a medium-sized company, employing 300 to 1,200 people. ?Clearly, trying to buy a company the size of CSC is too big a fish to swallow in one go,? he said.
The next criterion is that it must be profitable: ?I?m not interested in spending any time with a company, however good it is, in turning it around.? Finally, it has to do at least a quarter of its business in IT consulting.
?If I?m projecting 3-4,00 people across Europe, then we should have roughly one-third working on CA products, and two-thirds working on solutions services,? Reboul said.
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