Introduction
United Kingdom is a world leader in the field of Informationtechnology services.
Information technologies have had a great impact on the way inwhich information is gathered and processed, but their impact on the structureof the organizations has been rather limited.
By the end of the twentieth century, progress in informationtechnology (IT) had become the strongest and most pervasive force for strategicchange in businesses throughout the world.[1]
This paper analyzes the strategic development «Computacenter, plc.»Computacenter is Europe’s leading independent provider of IT infrastructureservices.
Computacenter plc is theparent company of a group of European companies which provide computer servicesto public and private sector customers. Despite the spelling of the word «center»,it is a UK company based in Hatfield, Hertfordshire.[2]
The company is listed on the London Stock Exchange and is aconstituent of the FTSE 250 Index.
Set up by British Harvard graduates Philip Hulme and Peter Ogdenin 1981, who are both still involved in the group's management.
Computacenter today has over 10,000 employees across Europe andGroup revenues of over £2.5 billion.[3]
The mission of the company
«To deliver IT services and solutions that enables our customersto achieve their goals».[4]
The strategy of the company
«Our strategy is to achieve long-term earnings growth. To helpmeasure our success, we have five key strategic initiatives against which tobenchmark our performance».[5]
The main activity falls into the broad categories:v Outsourcing:
- Infrastructure management
- Application management
- Service desk
- IT Security
- Managed Hosting
- Dusaster recovery
- Asset management
v Support and Maintenance:
- IMAC
- Resources on Demand
- Datacenter maintenance
v Datacentre Technology Optimisation:
- Datacentre Current StateAssessment
- Infrastructure Discovery andAnalysis
- Data Classification andTiering
- Server and StorageVirtualisation
- Server and StorageConsolidation
- Software Optimisation
v Commercial Solutions:
- Supplier Management andRationalisation
- Web shop and e-CommerceIntegration
- Advanced Order Management
- Leasing and TechnologyFinance
- Capacity on Demand andUtility Infrastructure
Computacenter is ISO 9001:2000 certified by the British StandardsInstitution. The ISO standard provides the framework that underpins the'Service Excellence' commitment and ethos of the organization.[6]
Computacenter has subsidiaries in several countries: UnitedKingdom, France, Germany, Belgium, Luxembourg and Netherlands, and its partner network extending its coverage to over 120 countriesworldwide.
The main customers include: Deutsche Bank, Logica, Marks & Spencer, British Telecom,BAA, Reuters, Unipart, Channel 4, BMW Group, EDF.
Key metrics 2009:
Group revenue £2.50 billion (2008: £2.56 billion)
Profit before tax £54.2 million (2008: £43.1 million)
Earnings per share 27.7 pence (2008: 21.0 pence)
Group annual services contract base grew to £503.6 million,at constant currency
There were two successful acquisitions during the year: ThesaurusComputer Services in UK and become in Germany.
1. Strategic CorporateDevelopment History
History of Computacenter2010 The company received ‘Daimler Supplier Award 2009’ Computacenter won contract with Cisco Enterprise Partner Computacenter receives IBM Certification for Dynamic Infrastructure Skills 2009
Computacenter services contract base grew over 9% to £503.6mln
Computacenter achieved a net profit of £40mln 2008 Computacenter won contract with Marks & Spencer and BMW Group, which increased contract base 7.5% 2007 The company won the five year contact with the largest provider of fixed telephony in the UK «British Telecom». Contract worth £200mln 2006 The company extended their service facilities with different service desk capabilities in Spain and South Africa through the acquisition of Digica Ltd. 2004
Services business continues to grow across Europe.
The company won a five year contract with Finanz Informatik GmbH & Co. KG in Germany, which provides IT services to the banking institutions. 2003
The acquisition with GE CompuNet in Germany and GE Capital IT Solutions Austria
The company won outsourcing contracts.
A five-year contract with Abbey, the main point of which is to manage their desktop infrastructure. This contract valued at £70 mln.
A three-year contract with HBOS, the aim of which to manage 35,000 desktops, it’s 2002
There was launched the new Solution Centre – it was one of the first facility in the UK to offer multi-vendor proof of concept and testing services.
The company became Sun's Service Partner of the Year.
In this year Computacenter became 'Service Partner of the Year 2001' at the Sun Partner Awards ceremony
Computacenter won top Enterprise Accreditation. In this year Computacenter became the first infrastructure services partner to be awarded a new Enterprise Service Delivery Partner (ESDP) by Compaq. 2001
Sun awarded Computacenter its Breakthrough Partner of the Year award for 2000.
The company is awarded BMC's EMEA Partner of the Year for BMC's 2001.
There was the acquisition with GECITS UK & French business 2000 Computacenter won the 'FMCG and Capital Goods Distributor' of the year 1999
Computacenter renewed its contract with British telecom for the next three years
Computacenter Belgium was established and acquired RDC, a UK-based IT disposal services company 1998 The company successfully floated on the London Stock Exchange. The leading UK company, Proshar, awarded Computacenter as «Best Involvement and Innovation for Employee Share Ownership» in the United Kingdom 1997
Computacenter UK revenues exceed £1 billion
The company was voted European Reseller of the UK, and the most innovative approach to customer support in Europe 1996
Computacenter achieved a UK turnover of £804,5mln with net profit of £25mln.
The company staff levels have increased by 40% from 1,510 to 2,099 and supplies over 245,000 PCs over the year in the UK. 1995
Computacenter achieved a turnover of £500 mln, and employs approx. 1500 people and won one of the largest desktop contract with British Telecom.
Computacenter France became a wholly owned subsidiary of Computacenter.
Despite a partial slow-down in the UK economy, demand for ITsystems and services remained strong in 90’s.
The Comptacenter 's success is the direct result of a strategy ofsustained high investment in the development of the services capability. Thestate-of-the-art facility was intended to be the source of significantcompetitive advantage.
Computacenter commercial success depends on the quality of theservice and that, in turn, depends on the quality, training, and motivation ofthe staff.
Computacenter continued to invest across all of its businesses,consolidating its position as the leading supplier of distributed IT andrelated services to the European corporate and public sector marketplace. During15 years Computacenter won a number of different contracts with major playersif IT industry in Europe.
I want to point out thatthere were a big number of differentacquisitions due to Computacenter became the most significant provider of ITinfrastructure products and services in the United Kingdom and in Europe. Thefocus clearly was and remains on investing for growth in Computacenter existingbusinesses. Much of Computacenter’s growth was due to expanding relationshipswith existing long-term corporate customers. The quality of service that theydeliver to both new and existing customers is the overriding factor in thesuccess of the business.
Computacenter’s ability to deliver value through its entire rangeof services, combined with e-commerce capability, constitutes a significantcompetitive advantage. All things considered, it can be concluded thatComputacenter followed the same strategy during the 15 years. During thisperiod Computacenter made further progress in strategic initiatives aimed atensuring long-term earnings growth.
2. Current Strategic situation
Information technology (IT) industry has become of the most robustindustries in the world. IT, more than any other industry or economic facet,has an increased productivity, particularly in the developed world, andtherefore is a key driver of global economic growth.[7]
Market figures show that in Western Europe in 2009, ITinfrastructure outsourcing increased by 3 per cent and is expected to increaseby 4 per cent in 2010.[8]IT is one of the most rapidly evolving,widely used, and pervasive high technologies in the world today. Understandingthe general trends in the IT industry is important when giving advice on whichtechnology to invest in. The invention, creation and widespread application ofIT effectively spurs the integration of hardware manufacturing with software development,goods production with service management, and the real with virtual economy.
Although the IT industry has been faring better than otherssectors, it is by no means immune to the current downturn.[9] See Appendix 1 worldwidespending on IT.
IT-industryanalysis (Porter’s Five Forces)
Porter’s Five Forces can be used to understand how profitable atarget industry might be and to understand the forces impacting upon thecurrent industry’s profitability.[10]
Appendix 2 shows us the main power of suppliers and buyers, threatof substitute, new entrant threats and supply market rivalry. Comprehending theforces that shape IT-industry competition is the starting point for creatingstrategy. Every organization should know what the average income of its industry is and how that may change over time.
The key to growth and survival, according to Porter, is to useyour knowledge of these five forces to «stake out a position that is lessvulnerable to attack from head – to – head opponents, whether established ornew, and less vulnerable to erosion from the direction of buyers, suppliers,and substitute goods.»[11]
Externalmacro-environment analysis (PEST analysis)
To analyze current situation we can use PEST analysis. The PESTanalysis is a framework that strategy consultants use to scan the external-macro-environmentin which a firm operates.
PEST is an acronym for the following factors: Political, Economic,Social, Technological. PEST factors play an important role in the valuecreation opportunities of a strategy. However they are usually outside thecontrol of the corporation and must normally be considered as both threats andopportunities. We should take in mind that macro-economical factors can bediffer per continent, country or even region, so normally a PEST analysisshould be performed per country.
v Political
International regulations
Concerns about environmental issues
Concerns about energy utilization
The government view the IT sector as an important engine ofeconomic growth
The market may be impacted by lower Government spending on newinfrastructure
v Economic
Currency Fluctuation
Unemployment Rates
Increase of Interest rates
The market is expected to remain highly competitive
Exchange rate movement
Economies of scale for the information technology industry arehigh
v Social
Lifestyle changes
Concerns about ‘disposal society’
IT user population are becoming ever more sophisticated anddemanding in their use of IT technology
Availability and quality of IT talent
v Technological
Change in hardware
Server virtualization
Innovation
Broadband networks are becoming increasingly essential
Competitiveadvantage of Computacenter
When a firm sustains profits that exceed the average for itsindustry, the firm is said to possess a competitive advantage over its rivals.The goal of much of business strategy is to achieve a sustainable competitiveadvantage. According to the Competitive Advantage model of Michael Porter, acompetitive strategy takes offensive position in an industry, in order to copesuccessfully with competitive forces and generate a superior Return onInvestment.
In keeping with M. Porter, the basic of above-average performancewithin an industry is sustainable competitive advantage. There are two basictypes of competitive advantage: cost advantage and differentiation advantage.Cost advantage exists when the firm is able to deliver the same benefits ascompetitors but at a lower cost. And this is also one of most importantcompetitive advantages for Computacenter.
Cost leadership is perhaps the clearest of the generic strategies.The sources of cost advantage are varied and depend on the structure of theindustry. Computacenter drives down cost as low as possible to ensure thatprice are the most attractive to their customers. And in order to achieve thisadvantage, the company combines services and solutions to best practiceprocesses. In the other words, Computacenter helps their clients make businesssharper by removing cost, complexity and barriers, using over 25 years’ ofpractical IT ‘know how’. The company is an above-average performer in itsindustry, at equivalent or lower prices than its rivals.
Appendix 3 illustrates how the company positioning themselves.
Competitive advantage of Computacenter:
ü Delivers the right solutionfor consolidation. has considerable track in delivering consolidation projects.
ü Can implement migrationprojects at lower cost, with less risk and more quickly than competitors
ü Has consultants accreditedto the highest level with all major datacentre vendors such as IBM, SUN,Oracle, HP, Redhat, SuSE, Veritas, VMware, EMC, NetApp and HDS[12].
ü Knowledge, experience ofdeploying infrastructure management, skills and flexible methodology
ü Vendor-independent organisation
ü Consultancy capabilitiescover all leading software and infrastructure vendors in the field of data
ü Direct relationships withover 1,100 software vendors
ü Hold more than 200accreditations.
For several years the Group’s strategy remains unchanged. Thegroup’s success is the direct result of a strategy founded of high investmentin the development of the services capability over a number of years. Ongoinginvestment in staff reflects commitment to their goal – maintaining theposition of market leader.
Computacenter sticks strategy that is stable and flexible, and canrespond to the changing needs of the market. The company is continuing topursue a strategy of growth in their activities to achieve economies of scale.
A leading presence in each of the major European markets for ITproducts and services, Extending presence in markets that offer greatest growthopportunity remains a core priority of Computacenter’s strategy.
3. Strategic direction for thefuture
In a world where IT is increasingly important to business success,today’s organizations look for a trusted partner to help them realizecompetitive advantage from technology. It is fact that there needs to be a goodquality product to successfully growth any product. Quality control andcustomer service are important to increase sales volume to grow a company.
Based on the research and analysis in the previous chapters, I’lltry to explore a limited range of choices available to the company for thefuture. Firstly I want to consider the opportunities and threats forComputacenter.
Opportunities
v Constantly growing demand for a IT service and occurrence of newclients
v Development of new products and introduction of new types ofservice both for constant clients, and in order to attract of the new clients
v High ability of the employees to improvement of professionalskills that allows to introduce quickly new technological decisions in aproduction cycle.
v To investment in a programme to expand current facilities
v Extending presence in those markets that have the greatest growth
v Potential for disruptive innovation
Threats
v An inability to adapt service offerings to customers that may leada failure to compete
v Wrong definition of customers needs
v Compete successfully with the current off-shoring trend
v Threat of slowdown in demand from corporate customers
v Growth impairment of the market
v Occurrence in the IT market of new competitors with more favorableconditions of service
v Falling of demand for separate types of service
Information technology industry represents both a threat andopportunities. Take into account history development of the company and currentstrategic situation we can conclude that all strategy that the company followsis build on organization’s own capabilities. Organic development was theprimary method of strategy development.
Computacenter should continue to follow the same method ofdevelopment, because there are a lot of supporting evidence. Firstly, highlytechnical products and services available for themselves. May be someacquisitions are necessary in order to create new market opportunities.Secondly, knowledge and capability development. And lastly, the company investsover time, reinvesting profit into business, thereby avoiding the need foroutside investments.
Recommendations for the future strategic direction:
v Expanding business and increasing turnover by carrying on doingwhat you are doing.
Computacenter may move to new different regions but still usingoriginal business model. In this way growth rate is natural.
v Computacenter should selling products in new geographic areas, orusing new sales channels.
v Continue to Improve customer service
v Defending the relationships with existing customers
v Expanding the range of product offerings
v Investing in technology to assist with growth
v Expanding and optimizing the distribution network
v Improving overall efficiency
Conclusion
The goal of the assignment was to explore strategy of theComputacenter.
By considering corporate development history and current situationstrategy, it became possible to identify direction for the future. Opportunitiesand threats for Computacenter have been estimated, basing on the analysis of IT-industry (using Porter’s Five Forces) and macro-environmentalanalysis (using PEST framework). Accordingto the results of researches were given recommendations for the futurestrategic direction.analysis strategic computacenter threat
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