Logica

LogicaCMG

File:Logicacmg.png
Company type	Public (LSE:LOG, Euronext:LOG)
Industry	IT Services, Consulting
Founded	1969 (Logica), 1964 (CMG)
Headquarters	UK, Netherlands offices in 36 countries
Key people	David Tyler, Non-Executive Chairman Andy Green, CEO Seamus Keating, Group Finance Director
Products	Business consulting, IT and value-added business process outsourcing, systems integration, telecoms products and solutions
Revenue	£2.7 billion GBP (2006)
Number of employees	~40,000 (2006)
Website	www.logicacmg.com

LogicaCMG (LSE: LOG, Euronext: LOG) is a UK-based global IT and management consultancy company. It is quoted on the London Stock Exchange and Euronext Amsterdam, and is a member of the FTSE 250 index of shares. As of 2007, the company is active in 42 countries and has nearly 40,000 employees. In 2003, it realised a turnover of 2.9 billion GBP (5.6 billion US$ ; 3.9 billion EUR). The company plans to revert to its original name "Logica" in 2008.

Overview and history

Logica was founded in 1969 by Len Taylor, Philip Hughes and Pat Coen with financial support from the US based Planning Research Corporation. The company started life as a systems integration business at approximately the same time as the birth of the mini computer. The majority of projects undertaken at that time exploited the flexibility and power of these machines.

Important projects included;

• the automated clearing system for the UK banks - CHAPS,

• the design of the SWIFT network for international money transfers,

• the development of the first foreign exchange trading platform for the Chase Manhattan Bank,

• the control systems for the natural gas grids in the UK and the Netherlands,

• the development of the software for computer based tomography for the first body and brain scanners for Philips,

• the electronic ticketing systems for the London Underground and the Bay Area Rapid Transit System in San Francisco,

• the computerisation of the new unified stock exchange in Hong Kong,

• the control system for the Eutelsat satellite constellation,

• container management and loading systems for the ports in Bremerhaven and Hong Kong HIT,

• numerous projects for the European Space Agency including the software for the successful Giotto Mission and Huygens mission to Titan.

• ERNIE - the system which randomly generates premium bond numbers,

• the customer service system for British Telecom,

• development of the Teletext system for the BBC, which it sold to broadcasters throughout the world,

• significant product developments for IBM laboratories in both the UK and the United States.

Many of these projects pioneered the use of mission critical and fault tolerant computing. Unlike many of its competitors at the time the majority of projects were undertaken on a fixed price basis.

In 1974, Logica together with the French company SESA set up a joint venture Sesa-Logica to undertake the European Informatics Network development. This project, which was undertaken with the support of partners throughout Europe and with the assistance of Bolt, Beranek and Newman in Cambridge, Massachusetts, brought the core datagram technology of the Arpanet now the Internet to Europe for the first time and established a network linking research centres in a number of European Countries including CERN, the French research centre INRIA and the UK’s National Physical Laboratory.

In 1975, Logica developed the first electronic typing pool – Unicom – for Unilever. This developed allowed the complete functions of a typing pool to be automated into a single system supporting about 50 workstations. With the support of the UK’s National Enterprise Board the company established a new subsidiary to exploit this technology, Logica VTS. A range of stand alone word processors, the VTS 100 and the VTS 2200 were developed within this company and were manufactured at a purpose built factory in Swindon. These machines were sold internationally by BT and by International Computers Ltd and were amongst the first word processers to achieve mass sales. However the advent of the Personal Computer and software such as Microsoft Word lead to the decline of this business and its ultimate closure.

At this time Logica set up operating subsidiaries in the Netherlands, Australia, Sweden, the United States and elsewhere as well as joint ventures in Hong Kong with Jardine Matheson and Italy with Finsiel and one with British Airways. The company was the first software company to be floated on the London Stock Exchange on 26 October 1983.

Following the retirement of the founders, David Mann was appointed chief executive in 1987. Mann continued to grow the company internationally and established a specialised research and development centre in Cambridge working on artificial intelligence, speech recognition and custom arrays. During the economic recession of the early 1990’s the company’s growth slowed and the normally high profit margin of 12% fell to around 7%. This lead to the decision by the non executive directors lead by the non executive chairman Paul Bossonet to recruit a external chief executive officer. Dr Martin Read was recruited from GEC Marconi and appointed CEO in August 1993. His mission was to restore growth profit growth and to increase shareholder value. One of his first acts was to close the Cambridge research and development centre and to reduce low margin business such as that for the European Space Agency. Over the subsequent two years all the line executive directors resigned. Read then concentrated on securing large long term outsourcing contracts largely from the public sector and many of Logica's specialist high technology skills were lost. Company projects include the strategic partnership with the Crown Prosecution Service known as COMPASS, which has included the development of a Case Management System (CMS), a Management Information System (MIS) and Witness Management System (WMS). Read was fortunate that he was able to ride the dotcom boom and in 2001 he became the UK’s highest paid executive with gross remuneration of 27 million GBP. With the dotcom crash Logica’s shares fell by 90% from their peak and Read embarked on an ambitious acquisition spree.

However the spate of acquisitions over the past 5 years failed to increase shareholder value, leading to a drop in market capitalisation of more than 50% . Shareholder pressure following several profit warnings resulted in the early departure of Dr Martin Read the CEO at the time of the acquisitions. During Dr Read's 14 year tenure at Logica, the share price rose by 118% (the FTSE 100 rose over the same period by 122%).

It now has over 40,000 employees operating in 41 countries across the globe. Total turnover of 3.9 billion euros and at present is number one in application management and holds 12th position among all companies in the world.

Mergers and divestments

The Company has made a number of acquisitions in the United States, Germany, Sweden, France and Australia. The company acquitted Precision Software in the US in 1994 subsequently sold. The acquisition of Irish company Aldiscon brought Logica into the text messaging business, which was to prove very lucrative.

In 2002 the Company merged with CMG. The merger of Logica (60%) with CMG / Admiral (40%), on December 30, 2002, represented the union of an established technology firm (Logica) with an established consulting firm (CMG). In 2006, LogicaCMG purchased the French company Unilog and the Swedish WM-data.

On February 20 2007, LogicaCMG Telecom Products was sold for £265m (US $525m), to private investors Atlantic Bridge Ventures and Access Industries and is now known as Acision. The company, based in Reading, UK, employs approximately 1,700 people in 22 countries across six continents. Acision continues as the world leader in independent mobile messaging software systems, including its IP SMSC for mobile operators and service providers.

Activities

LogicaCMG is a prominent IT consulting firm, but does not advertise widely and is shy of general public attention. As a consequence of this relative obscurity, the LogicaCMG marketing literature that does exist lists various 'wow factors' that people may be surprised by:

• LogicaCMG systems supports the missions of over 150 orbiting satellites.
• LogicaCMG solutions handle more than half the world's foreign exchange traffic.
• LogicaCMG systems process two out of every three text messages sent in the world.
• LogicaCMG has delivered one out of every four multi-media messaging centres installed by wireless service providers across the globe.
• LogicaCMG HR outsourcing services process more than $90 billion of salaries globally each year.

Significant recent events include:

• June 2003 LogicaCMG’s software controlled Beagle 2 probe after separation from the Mars Express orbiter.
• 22 Nov 2006 - Laptops containing police payroll data stolen from LogicaCMG
• Dec 2006 - Transport for London (TfL) terminate IT outsourcing contract with LogicaCMG after payment disputes and a failure to meet service level agreements.
• 20 Feb 2007 - LogicaCMG sells its telecoms products division

External links

• Official website

References

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