Logica plc

views updated May 23 2018

Logica plc

68 Newman Street
London
W1A 4SE United Kingdom
(0171) 637 9111
Fax: (0171) 637 8229

Public Company
Incorporated: 1969
Employees: 3,416
Sales: £228 million
Stock Exchanges: London
SICs: 6711 Holding Companies; 3573 Electronic Computing
Equipment; 7372 Computer Programming& Other
Software Services; 7379 Computer Related Services, Nee

Logica plc is the leading independent computing services company in the United Kingdom, and the “most buccaneering and stylish” such company as well, according to the Financial Times. Since its inception in 1969, Logica has played an important role in the fast-growing field of information technology, building a solid reputation for advanced technical know-how and sophisticated, innovative application of that knowledge. The company’s boasts an international portfolio of blue-chip clients, including British Airways, Chase Manhattan Bank, NATO, IBM, Ford, and the Stock Exchange of Hong Kong. Operating worldwide, with offices in 17 countries, Logica is prominent in its three related areas of expertise: consulting, software, and systems integration. Given such strong points, Logica’ s relatively poor financial performance since its flotation in 1983 has been puzzling to analysts and a disappointment to shareholders. In the mid-1990s, however, thanks to an organizational shake-up and a refocusing of corporate goals, Logica appeared to be on track to enjoy rewards commensurate with its talents.

Logica was founded as a private company in London in 1969 by Len Taylor and Philip Hughes, who left their employment at Scicon, a subsidiary of British Petroleum, to start their own enterprise. Building their original team largely from other former employees of Scicon, Taylor and Hughes soon established the fledgling Logica as a company known for its technical excellence in computer services. The company’s first big coup came in the 1970s, when it was awarded a contract to design S.W.I.F.T., a transference network for the international banking community. Thereafter Logica’s growth was quick and consistent, and it built a portfolio of well-known and influential clients. Logica recognized the importance of an international approach from the beginning, establishing its first overseas subsidiary in 1973 in the Netherlands and quickly expanding into the rest of Europe, North America, and the Pacific Rim.

Logica had entered the computer services market at an ideal time, getting in on the ground floor of what was to become the phenomenal growth industry of information technology. Others saw the potential as well, and many similar firms were created at around the same time as Logica. Over the years, however, most of these rivals foundered or were absorbed into large, often foreign, companies, leaving Logica as one of the few, and certainly the dominant, independent U.K. computer services firms.

In the mid-1990s, the range of market sectors to which Logica lent its expertise was extremely diverse. The company prided itself on a cross-market, “multi-disciplined” approach, and over the years had built up specialties in several areas, most notably banking and finance, defense and civil governments, energy and utilities, telecommunications, space, transport, computing and electronics, and manufacturing.

Banking and finance have traditionally provided Logica’s largest market (generating 32 percent of revenues in 1994), with the company’s experience in the sector extending back to its earliest years. Logica was much in demand for payment systems and network services, an area in which the company had excelled since the pioneer days of S.W.I.F.T. Logica was also credited with the creation of CHAPS, the network for the United Kingdom’s Clearing House Automated Payment System. Logica worked on trading and settlement systems for prominent international securities houses, clearing banks, fund and investment managers, and stock exchanges. Stock exchanges themselves were another area of expertise for the company, with Logica being called in to improve and streamline existing systems in London, Hong Kong, Switzerland, Norway, Denmark, Australia, and Italy, and involved in the development of new exchanges in Trinidad and Tobago, Hawaii, Kuala Lumpur, Chicago, and Kuwait.

Retail banking proved a busy and lucrative field for Logica; retail institutions have long been acutely aware of the advantages of increased automation, but not always sufficiently knowledgeable about information technology to implement the most effective system—or, crucially, to be able to integrate a new system with other systems in use. Logica completed some 300 projects harnessing information technology capabilities for retail banking use, including customer information, deposits, credit and debit cards, loans, and branch automation. Logica was also active in the financial sector in the areas of commercial loans and insurance.

Logica’s work in the fields of defense and civil government ranged from fairly standard administrative and operational systems to specialized intelligence, weapon, and sensor systems. Logica undertook projects in communications, data processing, pattern recognition, image and signal processing, computer simulations, machine intelligence, monitoring, and surveillance for its government clients, which included the United Kingdom, Australia, Belgium, the Netherlands, and the European Commission.

Logica also developed a specialty in energy and utilities. Many of the company’s contracts in these fields arose from the needs of newly privatized companies, in the United Kingdom and elsewhere, which recognized the need for improved efficiency in a more competitive environment. For clients in the oil, gas, electricity, and water industries, Logica worked to supply and install systems for better customer service, asset management, maintenance, materials, logistics, and assessment of environmental concerns.

Logica’s expertise in the telecommunications sector dates back to the 1970s, when the company developed the software for the first teletext system. In the mid-1990s Logica offered services and products in broadcasting and video technology, digital image storage media, data communications, control systems, intelligent scheduling, and studio automation. Among the company’s more ambitious projects was a long-term venture with Ameritech that was begun in the early 1990s and scheduled to be completed by the year 2000. Logica was charged with developing an interactive, multimedia information and entertainment service that would allow Ameritech’s six million customers to access shopping, games, news, education, movies-on-demand, and travel arrangements through their television sets.

In the field of space exploration, Logica created sophisticated experimental space systems for such clients as the British National Space Centre and the European Space Agency. The company’s commercial applications included satellite control centers to provide information about the weather, forecasts of crop yields, and earth observation programs.

In transportation, Logica was involved in projects relating to traffic control systems via air, road, rail, and water. Speedwing Logica, established jointly with British Airways in 1990, was a provider of applications software and services to the international air transport industry. In addition, Logica helped with a number of high-profile transport projects including the Channel Tunnel, the London Underground, the Dutch highway network, and Bologna’s public transportation service.

Logica found natural clients in computer companies such as IBM, Digital, AT&T, Tandem, and Microsoft, developing systems and applications software for use with those companies’ hardware systems. In industry, Logica’s experience encompassed the manufacturing, pharmaceutical, and automotive markets. Here the company supplied help with business applications including customer service, streamlined procedures, and systems integration for business operations from stock ordering through to distribution.

To each sector it serviced, Logica offered expertise in three areas: consulting, software, and systems integration. Some 25 percent of the company’s revenues derived from consulting. Logica enjoyed a solid reputation for its consulting work, the result not only of years of experience in the field of information technology itself, but also of the company’s thorough understanding of the business nature of the specialist sectors its served.

Detailed knowledge of its clients’ particular business environments also aided Logica in providing software: many of the company’s software applications, originally developed for a specific use by a particular customer, became available as generic packages which, depending on the individual case, could either by used as they came or modified to meet individual needs. Alternatively, Logica could supply products for entirely new applications, either developed in-house or by other computer companies.

Systems integration played an increasingly important role in Logica’s business as clients, already possessing a computerized infrastructure, sought to make use of the latest technology to expand their automation. Logica’s role was to harmonize new hardware, software products, systems applications, and developing technologies with existing capability, and serve as project manager for the whole operation.

Logica occupied a unique position as an independent computer services firm. Tied to no computer product vendor but conversant with the attributes of all, Logica was free to offer advice and aid in the implementation of the most suitable combination of hardware, software, and systems applications available.

Continuing research and development was obviously vital to maintain Logica’s position in the forefront of information technology. The company’s technology center in Cambridge, acting as consultant to the rest of Logica as well as directly to clients, fulfilled the allied functions of formulating new technologies and developing practical applications for these innovations. In 1994 the company’s spending on research and development was £5.7 million.

With such a successful and varied portfolio to its credit, it is the more surprising that Logica was underperforming in the 1980s and early 1990s. Despite a proven track record of success, a strong reputation, and enviable relationships with its clients— in 1992, some 60 percent of the company’s most lucrative contracts were with customers of at least fifteen years’ standing—Logica had consistently shown a rather disappointing bottom line since its flotation in 1983: indeed, the company’s share price remained static for the next 10 years. Logica’s weakness was such that it was nearly scooped up by the American company Electronic Data Systems in 1985. The takeover was avoided, but conditions worsened in the late 1980s. An unwise acquisition in 1988 of the American banking and telecommunications company Data Architects, intended as a foothold in the American market, turned out instead to be what the Financial Times bluntly termed a “financial black hole.” This setback, combined with the recession that swept the United Kingdom and elsewhere, damaged Logica, and matters were not improved by the departure of the firm’s two founders.

But perhaps Logica’s most severe drawback was its own mix of corporate strengths. Noted since its inception for its technical excellence, Logica was less well-endowed with business acumen. Financial commentators delighted in painting an amusing picture of Logica as a company populated by absent-minded computer nerds so immersed in the arcane joys of information technology that they neglected the “real world” of sound business principles and competitive spirit. In any case, it was an irrefutable and uncomfortable fact that Britain’s largest independent computer services company, highly respected though it was, did not even figure in the European top 50 such companies.

In 1993 new chief executive Martin Read appeared, intent on what the Financial Times described as “injecting a cool measure of market realism into Logica’s technological hot-house culture.” Read immediately set about dramatically realigning and restructuring the company. “Logica is 25 years old,” commented Read, “and could be described as having a mid-life crisis.” One high priority was to transform Logica into a truly international concern. Although Logica had operated in international markets for years, with subsidiaries and representative offices worldwide, each country’s Logica functioned as a separate entity; Read aimed to convert this system to a seamless, global whole, whereby technical expertise and staff experience could be accessed as, where, and when needed.

Unusually for a company in the throes of restructuring, Logica did not shed staff, although management layers were simplified and administrative functions trimmed. (Indeed, the company maintained—as it had maintained, even throughout the recession—a substantial annual intake of recent graduates: one key, many believe, to Logica’ s continued position at the forefront of technological advancement.) In the new global Logica, staff could expect to be assigned to any country where their skills would be most useful.

Another of Read’s first moves was to beef up Logica’s sales and marketing team, a needed effort, as the Sunday Times commented: “Logica can be a difficult firm to identify. It does almost no advertising....” The company was also thought to suffer from a lack of focus, which promoted a tendency to become involved in too many small or dead-end projects when it should have been considering each project as a stepping-stone to other opportunities. Logica had pursued a short-term consulting job or single installation project with enthusiasm equal to that with which it greeted, say, a several-year contract involving customized applications and complex systems integration. Under Read’s direction, the company began to refocus its priorities—for example, axing its involvement with healthcare in Italy, but making a push into new geographical areas such as eastern Europe and the Middle East, where opportunities for future growth were likely to arise.

Part of the new plan involved a policy of strategic acquisitions, and Logica made its first significant purchases in a number of years. In 1994 alone the company acquired Precision Software Corp., a Virginia-based provider of commercial loans systems to prominent banks; the software division of Houston’s Synercom Technology Inc.; and the Dutch company Fray Data International. The acquisitions were designed to further Logica’s goal of widening its product offerings and consolidating its place in chosen geographical markets.

Logica’s new strategies, calculated to promote a happy marriage of Logica’s traditional technological distinction with a new, sharpened business instinct, soon showed signs of paying off. In 1994 the company’s pre-tax profits were up 50 percent. Activities in the United States, unprofitable for years, returned to a small but heartening profit. Operations in the United Kingdom and continental Europe showed continued improvement.

Logica’s refocused corporate philosophy is set forth in a document entitled The Logica Way, in which it is confidently proclaimed: “Working as one global company, there is no limit to what we can achieve.” Logica’s goal is therefore to pursue its interests in the global applications of technology. The company certainly has the experience, having completed some 10,000 separate projects in over 50 countries. In 1994, however, fully 50 percent of Logica’s clients were based in the United Kingdom, and the company plans to redress this imbalance. Intending to concentrate on sectors that are more international in scope—finance, telecommunications, and space, for example—Logica intends to marshal its technical superiority and loyal client base to establish a worldwide network of service.

Principal Subsidiaries

Logica BV (Netherlands); Logica GmbH (Germany); Logica Informatik AG (Switzerland); Logica Limited (Hong Kong); Logica North America Inc. (U.S.A.); Logica Pte Limited (Singapore); Logica Pty Limited (Australia); Logica SA (Belgium); Logica Sdn Bhd (Malaysia); Logica Svenska AB (Sweden); Logica U.K. Limited.

Logica plc

views updated May 14 2018

Logica plc

Stephenson House
75 Hampstead Road
London NW1 2PL
United Kingdom
Telephone: (20) 7637-9111
Fax: (20) 7468-7006
Web site: http://www.logica.com

Public Company
Incorporated: 1969
Employees: 8,115
Sales: £847.4 million (2000)
Stock Exchanges: London
Ticker Symbol: LOG
NAIC: 541511 Custom Computer Programming Services; 541512 Computer Systems Design Services; 54169 Other Scientific and Technical Consulting Services

London-based Logica plc provides information technology services, including management consulting, software development, systems integration, product innovation, and managed services, to clients around the world. Though Logica is involved with a number of industries, including energy and utilities, financial services, and industry and transport, the company has its strongest presence in the telecommunications sector. Growth through acquisitions and continued expansion are among Logica’s focuses in the early part of the 21st century.

Late 1960s: Entrepreneurial Beginnings

Rough Times in the 1980s and Early 1990s

Since its flotation in 1983, Logica struggled with its bottom line, and the company’s share price remained static for the next ten years. Logica’s weakness was such that it was nearly scooped up by the American company Electronic Data Systems in 1985. The takeover was avoided, but conditions worsened in the late 1980s. An unwise acquisition in 1988 of the American banking and telecommunications company Data Architects, in-tended as a foothold in the American market, turned out instead to be what Financial Times bluntly termed a “financial black hole.” This setback, combined with the recession that swept the United Kingdom and elsewhere, damaged Logica, and matters were not improved by the departure of the firm’s two founders.

Perhaps Logica’s most severe drawback, however, was its own mix of corporate strengths. Noted since its inception for its technical excellence, Logica was less well-endowed with business acumen. Financial commentators delighted in painting an amusing picture of Logica as a company populated by absent-minded computer nerds so immersed in the arcane joys of information technology that they neglected the “real world” of sound business principles and competitive spirit. In any case, it was an irrefutable and uncomfortable fact that Britain’s largest independent computer services company, highly respected though it was, did not even figure in the European top 50 such companies.

Innovation and Growth in the Mid- to Late 1990s

In 1993 new chief executive Martin Read appeared, intent on what Financial Times described as “injecting a cool measure of market realism into Logica’s technological hot-house culture.” Read immediately set about dramatically realigning and restructuring the company. “Logica is 25 years old,” commented Read, “and could be described as having a mid-life crisis.” One high priority was to transform Logica into a truly international concern. Although Logica had operated in international markets for years, with subsidiaries and representative offices worldwide, each country’s Logica functioned as a sepa-rate entity; Read aimed to convert this system to a seamless, global whole, whereby technical expertise and staff experience could be accessed as, where, and when needed.

Unusual for a company in the throes of restructuring, Logica did not shed staff, although management layers were simplified and administrative functions trimmed. (Indeed, the company maintained—as it had maintained, even throughout the recession—a substantial annual intake of recent graduates: one key, many believe, to Logica’s continued position at the forefront of technological advancement.) In the new global Logica, staff could expect to be assigned to any country where their skills would be most useful.

Another of Read’s first moves was to beef up Logica’s sales and marketing team, a needed effort, as the Sunday Times commented: “Logica can be a difficult firm to identify. It does almost no advertising….” The company was also thought to suffer from a lack of focus, which promoted a tendency to become involved in too many small or dead-end projects when it should have been considering each project as a stepping-stone to other opportunities. Logica had pursued a short-term consulting job or single installation project with enthusiasm equal to that with which it greeted, say, a several-year contract involving customized applications and complex systems integration. Under Read’s direction, the company began to refocus its priorities—for example, axing its involvement with healthcare in Italy, but making a push into new geographical areas such as eastern Europe and the Middle East, where opportunities for future growth were likely to arise.

Banking and finance traditionally provided Logica’s largest market (generating 32 percent of revenues in 1994), with the company’s experience in the sector extending back to its earliest years. Logica was much in demand for payment systems and network services, an area in which the company had excelled since the pioneer days of S.W.I.F.T. The company was also credited with the creation of CHAPS, the network for the United Kingdom’s Clearing House Automated Payment System. Logica worked on trading and settlement systems for prominent international securities houses, clearing banks, fund and investment managers, and stock exchanges. Stock exchanges themselves were another area of expertise for the company, with Logica being called in to improve and streamline existing systems in London, Hong Kong, Switzerland, Norway, Denmark, Australia, and Italy, and involved in the development of new exchanges in Trinidad and Tobago, Hawaii, Kuala Lumpur, Chicago, and Kuwait.

Retail banking proved a busy and lucrative field for Logica; retail institutions had long been acutely aware of the advantages of increased automation but were not always sufficiently knowledgeable about information technology to implement the most effective system—or, crucially, to be able to integrate a new system with other systems in use. Logica completed some 300 projects harnessing information technology capabilities for re-tail banking use, including customer information, deposits, credit and debit cards, loans, and branch automation. Logica was also active in the financial sector in the areas of commercial loans and insurance.

Logica’s work in the fields of defense and civil government ranged from fairly standard administrative and operational systems to specialized intelligence, weapon, and sensor systems. The company undertook projects in communications, data processing, pattern recognition, image and signal processing, computer simulations, machine intelligence, monitoring, and surveillance for its government clients, which included the United Kingdom, Australia, Belgium, the Netherlands, and the European Commission.

Company Perspectives:

People who work for Logica are people with a real flair for technology. People who aren ’t just fascinated by intellectual problems, but who strive to find solutions to help businesses perform better. From our beginning, Logica has broken technical barriers to help people and organizations make a quantum leap in what they can achieve.

Logica also developed a specialty in energy and utilities. Many of the company’s contracts in these fields arose from the needs of newly privatized companies in the United Kingdom and elsewhere, which recognized the need for improved efficiency in a more competitive environment. For clients in the oil, gas, electricity, and water industries, Logica worked to supply and install systems for better customer service, asset management, maintenance, materials, logistics, and assessment of environmental concerns.

Logica’s expertise in the telecommunications sector, which began in the 1970s when the company developed the software for the first teletext system, grew steadily, and in the mid-1990s Logica offered services and products in broadcasting and video technology, digital image storage media, data communications, control systems, intelligent scheduling, and studio automation. Among the company’s more ambitious projects was a long-term venture with Ameritech began in the early 1990s. Logica was charged with developing an interactive, multimedia information and entertainment service that would allow Ameritech’s six million customers to access shopping, games, news, education, movies-on-demand, and travel arrangements through their tele-vision sets.

Heading into the second half of the 1990s, Logica continued to concentrate on growth through acquisitions to position itself strategically as the dominant information services provider. In late 1996 Logica acquired Paris-based Axime Ingenierie, a software consulting firm, from parent Groupe Axime for about £18.4 million. Axime had a staff of about 1,000 and became Logica’s biggest overseas subsidiary. The deal prepared Logica for the anticipated increase in computer systems spending in Europe as the information technology field continued its rapid growth.

Key Dates:

1969:: Logica is founded as a private company.
1973:: Company expands internationally with a subsidiary in the Netherlands.
1983:: Logica goes public.
1993:: Martin Read joins Logica as CEO.

In August 1997 Logica made another significant buy when it purchased Aldiscon, an Irish telecommunications software company, for about £57 million. Aldiscon provided network systems and services, including systems for mobile phones, to the telecommunications industry worldwide. A year later Logica purchased French information technology consultancy Delog Conseil for about £3.7 million. Delog catered to the financial services and insurance markets. A month later, in July 1998, Logica made two additional acquisitions. The company bought Belgian information technology consultancy Administra/CIM-Hardi. The company also provided systems development and enterprise resource planning (ERP) services and served multinational industrial customers. Logica’s second acquisition in July was of the Quaestor product and development team. Based in Bangalore, India, the Quaestor team focused on the development of electronic retail banking solutions.

Continuing its flurry of acquisitions, Logica closed the 1998 year with four more purchases. In October Logica paid about $35 million for the Carnegie Group, a U.S.-based consultancy and designer of customized software systems primarily for the telecommunications sector. Carnegie Group’s clients included US West and BellSouth. In December Logica acquired FCC Folprecht, a software and services company in the Czech Republic, for about £6.3 million. FCC Folprecht focused mostly on the utilities, finance, and industrial markets. Also in December Logica purchased Aethos Communication Systems, a provider of calling solutions for mobile operators, and DDV Group, a European telecommunications and new media consultancy. Logica paid about £47.6 million for Aethos and £15 million for DDV Group. During fiscal 2000, which ended June 30, Logica acquired consultancy Team 121 as well as the Dutch information technology project management firm Contigo.

In addition to growth through acquisitions, Logica focused on strengthening operations and building business through lucrative contracts. In the late 1990s Logica boosted its energy and utilities operation with several new contracts, including one with the New Electricity Trading Arrangements (NETA) in England and Wales worth more than £50 million. Logica was also awarded a two-year contract, worth about £60 million, with British gas utility company Transco, and a contract with utility company Electricite de France. In the United States, Logica secured a five-year contract to provide a Market Data Clearing-House (MDCH) service to support American Electric Power, which had operations in eleven states.

The rapidly growing telecommunications arena proved beneficial to Logica, and the company enjoyed a 69 percent growth in sales in its telecommunications division during fiscal 2000. Logica worked with more than 200 telecommunications companies in more than 60 countries at the end of the century and continued to offer innovative solutions and technologies to clients. The company, for instance, introduced a wireless Internet gateway designed to support mobile services. Logica won contracts with Cable & Wireless Communications in the United Kingdom and with Bahrain-based telecommunications operator Batelco, among others.

Fiscal 2000 marked the seventh consecutive year of record profits for Logica, and the company hoped to continue the streak. Logica’s revenues of £847.4 million in fiscal 2000 marked a 28 percent increase over the previous year. Profits before tax reached £97.4 million, a 54 percent rise. Logica planned to continue its acquisitive strategy, which it demonstrated in October 2000 with the purchases of MITS, an Australian information technology services company focused primarily on the utilities market, and PDV Unternehmensberatung GmbH, a German information technology services firm.

As Logica ventured into the 21st century, the company remained confident in its ability to provide its customers with cutting-edge, technological solutions. With more than 90 offices in 24 countries and a work force numbering more than 8,000, Logica hoped to dominate the global information technology sector and solidify its leadership position in what was increasingly becoming a digital world.

Principal Subsidiaries

Logica U.K. Limited; Logica Mobile Networks Limited; Logica Mobile Networks Inc. (U.S.A.); Logica SA (France); Logica S.a.r.l. (Luxembourg); Logica BV (Netherlands); Logica Consulting BV (Netherlands); Logica GmbH (Germany); Logica Consulting AG (Switzerland); Logica SA/NV (Belgium); Administra-Cirn/Hardi SA (Belgium); Logica Svenska AB (Sweden); Logica s.r.o. (Czech Republic); Logica Inc. (U.S.A.); Logica Carnegie Group Inc. (U.S.A.); PT Logica Indonesia; Logica Pty Limited (Australia); Logica (Malaysia) Sdn Bhd (Malaysia); Logica Pte Limited (Singapore); Logica Limited (Hong Kong); Logica Synectics Private Limited (India); Team 121 Holdings Limited.