Speaking at its new 100m euro ($114m) training and education university Les Fontaines in Chantilly, France, Hermelin said there is not going to be any quick fix to the company’s current troubles.

In April we said we were betting on stabilization in the US and the UK, and deteriorating conditions in France. However, two weeks ago we decided things are marginally worse than we had thought. We haven’t found a massive blockbuster that will change the industry, he said.

Hermelin said Paris, France-based CGE&Y is now attempting to drive new revenue opportunities focusing on a two-pronged strategy based around its idea of the adaptive enterprise. Here the company sees its successful clients increasingly investing in IT to pre-empt change and avoid potential downsides of poor economic conditions. Top of the group agenda is the distributed delivery model and portfolio management, he said.

One of the key reasons behind the shift in focus has been the fact that customers have effectively frozen investment in new discretionary consulting projects, and so CGE&Y now sees the opportunity to invest in developing packaged tools for specific industries, which it can then sell surrounding consulting and integration services.

Portfolio management is all about push and pull. We have brought together companies like Shell that will push innovation, and on the pull side we have companies that need to innovate. It is all about how a business can adapt, and here we think the market is welcoming standard solutions, he said. Hermelin said the company does not intend to move away from its traditional focus on providing consulting, integration and outsourcing. We are not turning ourselves into a packaged provider, and will fight the temptation for each business unit to create its own solution, he said.

CGE&Y said its portfolio management strategy shows that the cost of developing packaged applications for specific vertical markets initially rises, then falls as the initial template is replicated. Bjorn-Erik Willoch, global deputy for consulting services, said portfolio management involves a heavy up-front capital investment, which is offset by revenue growth as the products start to sell, and this is where the company hopes to differentiate itself creating specialized bespoke projects.

The first of of these new projects is CGE&Y’s CRM Loyalty Factory, where the company is providing outsourced analytics and business intelligence services around CRM and marketing systems for the retail sector, using tools from SAS and Terradata. Through the project CGE&Y performs the analytics on a data warehouse, and it claims in a recent deal to have cut a client’s marketing costs by 20% and increased sales by between 15% to 20%. Second, CGE&Y has developed a bespoke CRM tool for the pharmaceutical sector based on Siebel 7.5 called FastPharma, which enables sales forces to input data directly from the personal digital assistant across to their databases, to monitor the success of the sales force.

The strategy fits into CGE&Y’s plan announced last month to build up its low-cost software development resources, and here it will use its near-shore and offshore development facilities in Madrid, Montreal and Mumbai. By the end of 2003, CGE&Y aims to have grown headcount in India to between 1,500 and 2,000 people organically, and expects this to continue in 2004.

Global leader for technology services Chell Smith said that CGEY will develop these bespoke applications using the offshore model. Currently 25% to 30% of work offshore is in the application management space, with 60% in emerging work, and 5% in innovative projects. We want to push the work to the innovate space to around 35% in the next two years, and then this will drive new business in higher volume application management services.

Source: Computerwire