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  1. Technology
June 2, 1994

FINSIEL FACES UP TO A VERY DIFFERENT FUTURE IN THE BRAVE NEW WORLD OF BERLUSCONI

By CBR Staff Writer

Together with positive 1993 financial results, Finsiel SpA, Italy’s largest software and systems integration company, last week announced a reorganisation into a SuperFinsiel, or Finsiel SpA Consulenza e Applicazioni Informatiche. The new core company, which comprises its formerly separate subsidiaries Italsiel, Agrisiel and Tecsiel, boasted 1993 revenues equivalent to about $375m and has 3,000 employees. Finsiel has historically made the lion’s share of its business by hanging onto the government’s coat-tails. Despite the professed intention of Silvio Berlusconi to reduce Italy’s legendary government largesse, neither Finsiel president Vittorio di Stefano or managing director Pier Paolo Davoli appeared worried about the future of its enormous and lucrative public administration business.

Intense period

Finsiel’s more-than-respectable 1993 results were produced in an intense period of change, which saw Finsiel pass under the wing of telecommunications holding company STET SpA and conclude a key agreement with Microsoft Corp, and were derived from an Italian market that suffered a decline in growth in 1993. While the total computer market shrunk 1,8% according to IDC Italia and 0,8% according to computer industry association Assinform, revenues for the entire Finsiel group of 15 subsidiary companies grew 9.2% to about $1,000m. Finsiel’s growth is also higher than the national rate for the software and services sector, which is rated at between 5,5% (IDC) and 6,5% (Assinform). It should be noted that the company’s results for last year have been drawn up to conform to European Union regulations and no longer include those of some associated companies. After-tax profits totalled $33m, a 45% increase over 1992. Its new shareholding arrangement is: STET 74.4% (and STET would like to decrease its holding), Bankitalia SpA 14.4%, IBM Italia SpA 2.7%, Ing C Olivetti & Co SpA, 1.6%, and on, in descending order, with Generali Assicurazioni SpA, state television company Rai and others. The immediate future will see a comprehensive reorganisation of the group’s core company, in which Finsiel will absorb Agrisiel, Tecsiel and Italsiel and add the subtitle Consulting and Information Systems Applications. The change thus mandates the disappearance of the glorious brand name Italsiel, which was created 25 years ago and was always the apple of the organisation’s eye (Italsiel, in fact, accounted for about 72% of the core group’s revenues). There is no single, eternal mode to regard the organisation of a company, said di Stefano, president of the group since last July.

By Marsha Johnston with Leo Sorge

Some time ago there were financial justifications for a separate group structure, but today it is more convenient to merge them. But the changes appear minimal, as the various activities remain subdivided into business units. The only doubt concerns its staffing. The new core group of the four formerly separate divisions will 3,000 employees, out of a group total of 7,990. Observers believe the 3,000 will prove to be too many for the new Finsiel, but managing director Davoli says cuts will be made only if they cannot be avoided. Already since 1992 we have initiated an internal process of selection and requalification of personnel, and thanks to the internal mobility accepted by our professionals, we have laid the foundations of our current operation, from which we hope not to lay off anyone, Davoli said. Excluded from the reorganisation was Sogei, the biggest division of the group and which billed approximately $318m in revenues with the Ministry of Finance. Officially, Sogei was not included in the reorganisation because its different internal organisation made it difficult to incorporate, but in reality it may be that the decision was influenced by the current political climate. Already, several months ago, the head of the government’s new Informatics Anti-trust Authority, Guido Rey, said that he would have reduced the number of computer contracts bought by the government. It was precisely the effects of the new course of

Italian politics that comprised the most fundamental argument in a give and take between di Stefano and Davoli and journalists last week. Journalists persistently probed the possible negative effect on every aspect of the reorganisation: a possible invalidation of the fusion, the untenable position of Sogei, the future course of multi-year public contracts on which rests much of Finsiel’s business, and the functioning of the new government Authority for Informatics. In the few days before he presented his list of ministers, in fact, Prime Minister-elect Berlusconi met with some anti-trust chiefs, but Rey was not among them. On the significance of that, however, Di Stefano and Davoli were calm and convincing, demonstrating their comfort with their organisational choices, optimism for an ever-more-private-sector future and a certain disappointment in the attitude of the Authority. Finsiel says it will seek new opportunities in order to absorb any shock resulting from the sun setting on bespoke public contracts. For instance, with the Italian facilities management market growing significantly, Finsiel believes itself well positioned, since Italsiel and others in the group have offered the service for the last 20 years.

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More and more apparent also is the share of the banking market in particular, and the private sector in general, that Finsiel has managed to acquire. The real news from the group, however, is its move to strategic consulting, an undertaking which is as much a consequence of the decline of the public sector as a means to open up multinational contracts and international markets. The group has certainly not won a lot of international laurels, although it participates admirably in handful of European Community projects. At the contract level it has acquired only marginal deals, in Cyprus, Kenya, and Greece, while now, waiting to realise new synergies with STET – which is certainly international – Finsiel is proposing to attack foreign markets more decisively. It remains, therefore, to be seen what the immediate future of Finsiel brings: in particular what will happen to its multi-year public contracts, which would be concentrated between Italsiel, Agrisiel and, above all, Sogei and the 3,000 employees of the new Finsiel, and to what extent the stewardship of STET can substitute for that of the state. In the area of strategic consulting, on the other hand, a much longer period will be needed to assess Finsiel’s success and to produce results.

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