Tag Archives: finance

Vincent Bolloré

Posted on by
Reply

I have the chance to be a member of the “Four Seasons Club” (in French: le club des quatre saisons), which is a private business club founded in 2003 and based in Zurich, Switzerland. It is a French-speaking club, gathering personalities from the economical, political, academic, cultural and media worlds.

The number of members is limited to 120. For me, a quite unique opportunity to speak French, my mother-tongue, and not (broken) English or (broken) German!

The Club is also an opportunity to see and to meet extremely interesting people, coming from different horizons, and not “just” the business.

On last Wednesday, we could see, listen to and meet Mr. Vincent Bolloré (wikipedia):

Vincent Bolloré (b. 1 April 1952 in Boulogne-Billancourt, France) is a French industrialist, corporate raider and businessman.

He heads the family investment group Bolloré and is ranked 451st richest person in the world according to Forbes, with an estimated fortune of US$1.7 billion. He is married, with 4 children.

Vincent Bolloré is from a well-off family from Brittany, and he graduated with a Bachelor of Laws (LLB) degree from Université Paris X Nanterre. Bolloré started his investment career as a bank trainee at investment bank Edmond de Rothschild.

His personal investment career began when he took over the reins at his family-controlled conglomerate Bolloré, which deals in maritime freight and African trade, and paper manufacturing (cigarette and bible paper). The company he leads today employs 33,000 people around the world.

He is a well-known corporate raider in France who has succeeded in making money by taking large stakes in French listed companies, in particular the building and construction group Bouygues, where he left with a sizeable capital gain after a power-struggle.

In late 2004, his investment group started building a stake in advertising group Havas, becoming its largest single shareholder. He mounted a coup and replaced Alain de Pouzilhac as Havas Chief Executive Officer on July 12, 2005.

In 2005, through his family company, Bolloré expanded his media interests by launching the Direct 8 television station. Towards the end of 2005, he began building a stake in independent British media planning and buying group, Aegis. As at 19 July, 2006, his stake in Aegis stood at 29%. Direct Soir, a free newspaper, was launched in June 2006. In January 2008, he manifested interest in becoming a shareholder of famed, but troubled, Italian car manufacturer Pininfarina.

He is a close personal friend of French President Nicolas Sarkozy.

I haven’t known any detail about the Bolloré Group before this meeting. Actually very interesting! As Vincent Bolloré, a very charismatic and fascinating person, with quite a lot of distance and humility with his business successes. And a definitely not common strategic approach (“we do what the others don’t want to do”), with a very diversified group founded in 1822!

It was also the last day of the very long Indian Summer in Zurich.

Software maintenance

Posted on by
Reply

via Judith Hurwitz

Judith is bringing, as usual, interesting feeds for thoughts, this time in the field of software maintenance fees.

[…] As the world slowly moves to cloud computing for economic reasons there will be a major impact on how companies pay for software. Salesforce.com has indeed proven that companies are willing to trust their sales and customer data to a Software as a Service vendor. These customers are also willing to pay per user or per company yearly fees to rent software. Does this mean that they are no longer paying maintance fees? My answer would be no. It is all about accounting and economics. Clearly, Salesforce.com spends a lot of money adding functionality to its application and someone pays for that. So, what part of that monthly or yearly per user fee is allocated to maintaining the application? Who knows? And I am sure that it is not one of those statistics that Salesforce.com or any other Software as a Service or any Platform as a Service vendor is going to publish. Why? Because these companies don’t think of themselves as traditional software companies. They don’t expect that anyone will ever own a copy of their code.

The bottom line is that software will never be good enough to never need maintenance. Software vendors — whether they sell perpetual licenses or Software as a Service– will continue to charge for maintance. The reality is that the concrete idea of the maintenance fee will evolve over time. Customers will pay it but they probably won’t see it on their bills. Nevertheless, the impact on traditional software companies will be dramatic over time and a lot of these companies will have to rethink their strategies. Many software companies have become increasingly dependent on maintenance revenue to keep revenue growing. I think that Marc Benioff has started a conversation that will spark a debate that could have wide ranging implications for the future of not only maintenance but of what we think of as software.

Interesting!

Cross-posted on the Innoveo Blog.

Crazy compensation committees and CEO’s

Posted on by
Reply

via Jeff Bussgang

I am just flying into a rage when I hear all these bonus and golden-parachute stories!

All these stories with these crazy CEOs that are doing a very bad job for their companies, which need to be helped by the government and are receiving billions to save their business. And, at the same time, are delivering bonus for themselves and their managers. This is just intolerable! Do not forget, these guys are not alone, there are “great” remuneration committees that are voting these golden-parachutes and crazy bonus. Why not talking also about them?

How can employees accept this kind of behavior? They are not acceptable.

We shouldn’t wonder why CEOs have such bad reputations today, when some are acting in this way, and just impacting all the other CEOs in a very negative way…

Very nice post from Jeff expressing this point of view more in detail:

Perhaps the most successful venture capitalist in history, Sequoia’s Mike Mortiz (backer of Google, Yahoo, Paypal, to name a few reasonable wins), said in a recent interview that one of the ways he decides whether to invest in an entrepreneur is how much they plan on paying themselves. Moritz views high salaries with immense suspicion. If the founder takes a modest salary (in start-up land, that’s typically $100-200k per year – well below even President Obama’s $500k cap), he knows they believe in the future value of their business. […]

Remember, entrepreneurs aren’t saints or selfless do-gooders. They typically work 80-100 hours per week for two reasons. First, they are PASSIONATE about their venture for the sake of the business and its impact on the world more than the money (“Ask me about my business and you can’t shut me up,” confessed my friend Scott Savitz, CEO/founder of Shoebuy.com, the other day). […]

They want to prove to their investors and employees that the risk they took in investing in them and joining their cause will pay off. Why don’t Fortune 500 CEOs feel the same way? Why is it that they don’t view their role in life to prove to the shareholder that buys their stock in the public market that they took a worthy risk and they’ll be darned sure it pays off? Instead, they think it’s culturally acceptable to take outsized pay packages and perks that no educated, rational shareholder would ever approve if given the chance. […]

The behavior is in such stark contrast to what’s going on in the small business, job-creating end of the economy, it’s absurd. The public is understandably outraged. I am too. That’s why I’d fire all the compensation committee heads and turn the reigns over the start-up CEOs. […]

International IT market is resisting the downturn

Posted on by
Reply

via EITO

Despite the weakness in the international economy, demand for information technology (IT) will continue to increase in the coming year. According to the new forecast of the international market research institute EITO, turnover of computers, software and IT services in Western Europe will increase by 2 percent in 2009, to a round 315 billion Euro. “IT expenditure of businesses will continue to grow even in an economic recession”, said EITO chairman Bruno Lamborghini. “Information technology is of strategic importance for companies in a crisis situation because it makes operations more efficient and more economic.” Increasing demand for IT was also to be expected from contractors working in the public sector, where investment has limited dependence on economic fluctuations. According to the latest forecast, providers of software and IT services in Western Europe will achieve a substantial increase in turnover of 3.2 percent in the coming year, to 228 billion. In comparison, manufacturers of IT hardware are facing a loss of 1.3 percent, to 87 billion Euro.

The EITO market researchers are expecting development of the IT market in Western Europe, which includes the 15 core countries of the EU with the addition of Switzerland and Norway, to be more robust than in the USA. IT turnover in the United States is forecast to grow by 0.8 percent to 347 billion Euro. Before the global financial crisis became more acute, EITO was assuming growth of the IT market at a level of 4.4 percent in the USA.

The global IT market for the year 2009 will grow, according to the EITO forecast, by 2.7 percent to 983 billion Euro. As in Europe, suppliers of software and IT services around the world are growing particularly strongly. Their turnover world-wide is forecast to grow by 3.4 percent to 677 billion Euro in the coming year. The hardware market is increasing by 1.3 percent to 305 billion Euro. The driving forces are emerging markets like China, India and Russia, which still have some ground to make up in developing their IT infrastructure.

So, summarized, concerning turnover forecast for 2009

  • Worldwide:
    • Overall: +2.7%
    • Software and IT services: +3.4%
    • IT Hardware: +1.3%
  • Western Europe (15 EU countries, Switzerland, Norway)
    • Overall: +2.0%
    • Software and IT services: +3.2%
    • IT Hardware: –1.3%
  • USA:
    • Overall: +0.8%
  • Western Europe more robust than in the USA
  • Driving forces internationally: China, India, Russia (generally speaking: emerging markets)

Scenarios For 2009: How CIOs Should Prepare (Forrester research)

Posted on by
Reply

via Ed Cone

Ed is pointing to a very interesting document from Forrester about the reactions of CIOs, classified by sectors. Including the Finance &  Insurance industries.

For the Insurance Industry, the analysis of Forrester is quite aligned with what we are perceiving at Innoveo.

The analysis is very recent and was presented during a webinar on December 11, 2008.

What is the insurance industry doing to address the downturn?

  • Anticipating more cut backs for 2009.
  • Insurance has already made significant cuts in IT spending early in 2008.
  • Growth in IT purchases for Finance & Insurance:
    • 2007: +8%
    • 2008: -2%
    • 2009: -3%

How will the recession affect the Insurance Industry?

  • Shallow recession: GOOD
  • Deep recession: NEUTRAL

What are firms in these sectors doing to address the downturn?

  • Most firms focus on IT’s traditional cost-cutting tactics.
  • New investments (30% of the overall costs):
    • Portfolio segmentation
      • Use commodity / low-cost resources
      • Eliminate large-sized efforts
      • Focus on short-term returns
    • Adopt lean thinking, reduce complexity
    • Shorten planning horizons
  • Operational costs (70% of the overall costs):
    • Consolidation/standardization, consistent with the business model
      • Data centers, server/storage virtualization
      • Consolidate and squeeze vendors
      • Centralization of IT contracts
    • Lean thinking — reduce complexity,
    • Staff and asset utilization optimization
      • Delay upgrades and refresh
      • Downgrade for lower volumes
      • Automate where it makes sense

The Finance & Insurance sectors are considering to invest in the following actions in 2009:

  • Retiring older applications or technologies to save support costs 50%
  • Adjusting project portfolios to increase near-term return on investment 55%
  • Assessing the IT organization structure to improve efficiencies 60%
  • Investing in technologies such as automation to reduce IT operating costs 70%

Leading firms take multiple alternative approaches:

  • Traditional IT tactics to deliver short-term results
  • Agility to offer alternatives in the long run — providing a lasting ability to rapidly shift partners, customers, and markets
    • Focus on increasing ability to change: adding/removing services, reselling services from third parties, channel integration
    • Focus on external interfaces to data and systems
      • Apply SOA for strategic flexibility
      • Look to third parties for flexible interfaces
    • Increase flexibility of contracts
    • Employ agile development methodologies
  • Innovation to accelerate out of the downturn — new business models and product/service offerings in addition to operational improvements
    • Accelerating out of the downturn requires a strategic focus, but without higher overall costs
    • Use a portion of CapEx for innovative ideas
    • Focus innovation criteria on business strategies
    • Use Web 2.0 technologies to farm ideas from across your Innovation Network — internal and external
    • Employ a different idea pipeline / steering committee
    • Keep investment performance metrics

Summary for the Finance & Insurance sectors:

 

summary forrester

2009 will be a complicated year for software

Posted on by
1

via Judith Hurwitz

One of the first “predictions list” for 2009 for software companies.

Very interesting insights!

  1. Software as a Service (SaaS) goes mainstream. It isn’t just for small companies anymore. […]
  2. Tough economic times favor the big and stable technology companies. […] The only way emerging companies will survive is to do what I call “follow the pain”. In other words, come up with compelling technology that solves really tough problems that others can’t do. They need to fill the white space that the big vendors have not filled yet. […]
  3. The Service Oriented Architecture market enters the post hype phase. […]
  4. Service Management gets hot. […]
  5. The desktop takes a beating in a tough economy. When times get tough companies look for ways to cut back and I expect that the desktop will be an area where companies will delay replacement of existing PCs. […]
  6. The Cloud grows more serious. […] Just as companies are moving to SaaS because of economic reasons, companies will move to Clouds with the same goal – decreasing capital expenditures.  Companies will start to have to gain an understanding of the impact of trusting a third party provider. […]
  7. There will be tech companies that fail in 2009. […]
  8. Open Source will soar in this tight market. […] Companies that offer commercial open source will emerge as strong players.
  9. Software goes vertical. I am not talking about packaged software. I anticipate that more and more companies will begin to package everything based on a solutions focus. […]
  10. Appliances become a software platform of choice for customers. […] More software solutions will be sold with prepackaged solutions to make the acceptance rate for complex enterprise software easier.
  11. Companies will spend money on anticipation management. […] Companies will need to understand not just what happened last year but where they should invest for the future. They cannot do this without understanding their data.

Wow, good food for thoughts!

I am excited also to be able to read the new version of the book “SOA for Dummies”, written, among others, by Judith Hurwitz. Innoveo should have there its own chapter, hopefully ;-)

Research & Development investments in 2007

Posted on by
Reply

via ITRmanager.com (in French)

An interesting study showing the amount of the investment in R&D; at different technology-oriented companies.

Besides the amount of investments, I think that it is interesting to have a look at the investment in R&D; as a % of the revenues of the company. This % is showing how far R&D; and innovation is central or not for these companies.

Company Revenues 2007 (in mio EUR) R&D; 2007 (in mio EUR) R&D; in % of the revenues
Symbian 264 128 48%
IONA 53 14 26%
Dassault Systems 1’259 292 23%
Adobe 2’160 419 19%
Alcatel-Lucent 18’005 3’368 19%
Yahoo! 4’767 818 17%
Intel 26’219 3’936 15%
SUN 9’489 1’384 15%
SAP 10’256 1’458 14%
Microsoft 41’325 5’584 14%
Cisco 23’885 3’077 13%
Google 11’350 1’450 13%
Oracle 15’341 1’875 12%
Nokia 51’058 5’281 10%
SunGard 3’352 203 6%
IBM 67’566 3’931 6%
Apple 16’419 586 4%
HP 71’130 2’470 3%
Swisscom 6’699 45 1%

 

Some surprises, no?