Groupe Open



202 Quai de Clichy
Clichy F-92110
France
Telephone: (+33) 1 40 87 97 97
Fax: (+33) 1 40 87 97 52
Web site: http://www.groupe-open.com

Public Company
Incorporated:
1989
Employees: 800
Sales: EUR 327.8 million ($400 million) (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: OPN
NAIC: 541512 Computer Systems Design Services

Groupe Open is one of France's leading and fastest-growing specialists in information technology (IT) and Web integration infrastructure and services, with a focus on the developing e-business and related interactive information systems. The company operates through two primary subsidiaries, Logix, targeting the IT professional market, and Innetis, which provides systems and services directly to corporations. In late 2004, the company boosted this latter business through the acquisition of a controlling stake in fellow French IT company Teamlog. Through its subsidiaries, Groupe Open provides design, development, implementation and support services that enable its customers to reposition their businesses toward a Web-integrated, e-business model. The company's clients include a number of major companies such as EDF, Air Liquide, Bouygues Telecom, Noos, Bred, Atos-Origin. At the same time, a strong share of Open's sales comes from the small-to-mid-sized market segment. Open has grown strongly since the late 1990s, in large part due to its transition from its original status as an IBM-based infrastructure reseller to a full-fledged IT services provider. Open's strategy calls for the company to double its sales by 2007 from 2004's EUR 328 million ($400 million). As part of this growth strategy, the company has launched an effort to expand internationally, using Logix as its spearhead. The company has also launched a series of acquisitions, notably of Four Leaf Technologies and Commentor in the Scandinavian market in 2004, and CCG in the Netherlands in 2005. Logix is also present in Belgium, Spain, Hungary, Poland, and Morocco. Groupe Open is listed on the Euronext Paris Stock Exchange. Founder Frédéric Sébag is company chairman, and Guy Mamou-Mani is chief executive.

IBM Server Reseller in the 1980s

After earning a master's degree in mathematics, Frédéric Sébag began his career in 1985 as a sales engineer for the French IT services group Cosi. By 1987, Sébag had risen to the position of director for Cosi's sales department. The development of a new generation of server technology by IBM, along with the creation of the UNIX operating system, presented new opportunities in the French IT market. In 1989, at the age of 27, Sébag decided to form his own company, called Open Technologies. Open Technologies acted as a distributor for the sale and implementation of UNIX-based IBM servers in France. Open's relationship with and dependence on IBM remained strong throughout the 1990s. IBM's shareholding in Open reinforced the company's position as a de facto subsidiary of the U.S. computer giant.

Open began expanding its range of UNIX services in the early 1990s. In 1991, for example, the company created a new subsidiary, Open Ingénierie, dedicated toward the development of software for the UNIX system. The following year, the company created another subsidiary for its ASAP publishing and distribution operations, called Open Solutions. The addition of Laurent Sadoun, formerly sales director at Informix France, the previous year also led the way to the creation of Logix, a subsidiary dedicated to the sales and distribution for the group's UNIX software and systems. By the end of 1992, the company had restructured its operations, grouping its various businesses under a new holding company, Groupe Open, which retained direction of Open Technologies.

By then, however, Open found itself surrounded by a growing number of competitors. The company not only faced new rivals in the UNIX market but also new and competing servers and operating systems, especially NT from Microsoft. The economic pressures of this situation, combined with an international recession exacerbated by the first United States-led war against Iraq, led to a collapse of the French IT market.

Open was forced to restructure its operations in the mid-1990s. As part of the restructuring effort, the group refocused its subsidiaries to target specific market segments. Subsidiaries were then given greater autonomy, in order to respond more effectively to their markets. The company reorganized Groupe Open itself as a pure holding company, transferring the operations of Open Technologies to Open Ingénierie, which then changed its name to Open Technologies.

Groupe Open completed its restructuring with the creation of a new subsidiary in 1996, called Open Multimedia. That subsidiary was meant to enable Open's entry into the booming market for multimedia applications, which had become the fastest-growing segment of the computer industry in the late 1990s. Multimedia not only propelled the adoption of personal computers in the consumer retail sector, it also paved the way for significant development of Internet-based operations. Although the emerging importance of the Internet later led Open to reinvent itself to its advantage, the company's entry into the multimedia market proved to be a less fortuitous move. In 1997, Open shut down Open Multimedia, transferring its operations to Open Technologies.

In the meantime, Open had found a new vehicle for growth. In 1997, the company, through both Logix and Open Technologies, signed a new series of contracts with IBM for its new Risc System 6000. The contracts gave Open the top spot in France as a distributor of IBM's server technology, and the number three spot in the IBM server integration segment. The new IBM contracts launched a period of extraordinary growth for the company, helping it expand by some 370 percent between 1997 and 2000.

Meanwhile, Open had also initiated a new strategy to reduce its reliance on IBM. In 1997, Logix created a new subsidiary, Openway, launching the distribution of Sybase/Powersoft software products for both the UNIX and NT operating systems. Open also acquired a 17.5 percent stake in SIP, a company specializing in Microsoft Front Office applications for the financial market.

Services Focus in the Late 1990s

Toward the end of the 1990s, Open moved to shed its image as effectively an IBM subsidiary. In 1998, the company went public, listing its shares on the Paris Bourse's Secondary Market. The public offering enabled the company to launch a new strategy, that of expanding into the services market. This direction offered a number of advantages for Open. An extension into the services sector helped reduce the group's reliance on its distribution and integration component, while also reducing its dependence on IBM for the major share of its revenues. Services also represented one of the fastest-growing segments of the IT market, and at the same time offered the prospective of far higher margins than the group's integration and distribution businesses.

The implementation of Open's services strategy crystallized with the arrival of Guy Mamou-Mani in 1998. Mamou-Mani had founded and led Manugistics, a French subsidiary of CSCGo International, in 1995, while also becoming a top executive at CSC France.

Mamou-Mani took charge of creating a new Integration and Services division at Groupe Open. In 1999, the company acquired SQL Tech, a leading developer of Internet and intranet software. The company then reorganized its operations, bundling Open Technologies, Open Solutions, and SQL Tech into its Integration and Services division. The following year, that division was restructured into a new subsidiary, called Innetis, with Mamou-Mani as its CEO.

Innetis quickly began beefing up its range of services. Toward this end, the subsidiary made two strategic acquisitions in 2000. The first was that of Actinfo, which permitted the company to expand its services to the small-and-mid-sized market as well as giving it control of Actinfo.net, boosting its online services offering. The second acquisition, Value Add Consulting, allowed Innetis to begin providing consulting services as well.

Groupe Open's restructuring produced a new growth spurt for the company into the 2000s. Between 2000 and the end of 2004, the company had doubled its annual sales. While the Innetis services component provided part of this growth, the company's Logix unit remained a solid performer.

In particular, Logix provided Groupe Open with its spear-head into the international market. By the late 1990s, the company had recognized that in order to remain a force in the IT market, it would have to respond to the trend toward the increasing internationalization of the market. The company first entered Belgium in 1998, followed by Spain and Poland in 1999. At the same time, Logix moved to expand its Internet presence, launching its successful Logix.fr business-to-business portal. This fit in with Groupe Open's decision to focus on the e-business market for the new decade.

A new collapse in the international IT market in the early 2000s led Open to place further international expansion on hold. Nonetheless, the company's strong list of recurrent customers, which represented some 75 percent of the group's revenues, shielded Open from the worst effects of the IT market slowdown.

Company Perspectives:

Groupe Open's Engineers/Consultants master the new technologies related to the e-business concept and have numerous certifications covering UNIX and Windows NT environments, Systems and Networks architectures, data storage and consolidation products as well as e-commerce tools. In addition, this team is made up of operational and organisational ERP experts whose aim is to integrate market solutions in order to deliver a full e-business information system, an on and/or off-line integrated management medium.

In 2002, the company reached a cooperation agreement with a new major player in the international IT market, Business Objects. Also in that year, the company's Innetis subsidiary boosted its range of services through the acquisition of fellow French group Owendo. Soon after Innetis unveiled the final version of its new software tools, WCM and XRP, providing Web site content management and back office applications. Innetis began building up its client list, with more than 50 packages sold by the end of 2004.

International Presence for the 2000s

In that year, Open renewed its international expansion effort, establishing a new Logix subsidiary in Amsterdam in April. Open also began looking for acquisition candidates to boost its European presence. This led the company to the Scandinavian market, where it acquired 80 percent of Denmark's Four Leaf Technologies. That company, which specialized in data storage solutions for the IT professionals sector, had established itself as a leader in the Nordic region, with operations in Denmark, Finland, Norway, and Sweden. Four Leaf became part of Logix. By the end of 2004, Logix had reinforced its Scandinavian operations with the purchase of Commentor, also based in Denmark, which was then placed under Four Leaf.

Setting itself a goal of doubling in size by 2007, Open continued its acquisition drive into 2005. The company acquired a stake in France's Teamlog in early 2004. This move led to an agreement giving Open a controlling interest in the company before the end of the year. In December 2004, Innetis acquired Obbisoft, a company that specialized in the development and distribution of logistics and transport support applications. By the beginning of 2005, Open had found its next target, buying up CCG Europe, a Netherlands-based developer of storage software. While France remained Open's primary market, at 62 percent of its sales of nearly EUR 328 million in 2004, the company had successfully asserted itself as a rising star in the European IT services and integration markets.

Principal Subsidiaries

Commentor (Denmark; 67.93%); FINOVIA; Four Leaf Technologies (Norway; 79.92%); Four Leaf Technologies AB (Sweden; 79.92%); Four Leaf Technologies AS (Denmark; 79.92%); Four Leaf Technologies OY (Finland; 79.92%); GROUPE OPEN S.A.; IP Vista; LOG.X Maroc; LOGIX Benelux; LOGIX Iberia; LOGIX Nederland; LX Polska; OPENWAY SAS.

Key Dates:

1989:
Frederic Sébag founds Open Technologies, a specialist in UNIX server implementation.
1991:
Open Ingénierie is formed and begins developing software.
1992:
Open Solutions and Logix distribution subsidiary are created; Open Ingénierie restructures under the holding company Groupe Open.
1998:
Groupe Open goes public on Paris Stock Exchange's Secondary Market.
2004:
Groupe Open agrees to acquire a controlling share of Teamlog.

Principal Competitors

Volvo Information Technology AB; T-Systems GEI GmbH; gedas AG; Transiciel S.A.; Terra Networks S.A.; Sopra Conseil et Assistance en Informatique; GFI Informatique; Oberthur Card Systems; Computacenter France.

Further Reading

"Les ASP, cible du Groupe Open," 01 Informatique , March 31, 2000.

Drothier, Yves, "La distribution d'infrastructure exige d'avoir une taille européenne," JDN Solutions , January 17, 2005.

"Frédéric Sebag vous a répondu," Boursorama , March 5, 2002.

"Groupe Open convoite Teamlog," Vie Financiere , January 7, 2005,p. 22.

Marquelty, Fabio, "Trois questions à Guy Mamou-Mani," Le Journal des Finances , January 22, 2005, p. 15.

"M. Sebag détient désormais 33,2% du capital de GROUPE OPEN," Boursorama , August 5, 2005.

Ruello, Alain, "Groupe Open va prendre le controle de Teamlog," Echos , January 25, 2005, p. 29.

Siccat, Armelle, "Groupe Open se porte bien," Décision Distribution , April 7, 2003.

Sounack, Laurent, "Le groupe Open accélère sa diversification dans les services," Décision Micro , February 7, 2000.

"Teamlog-Groupe Open," Figaro Economique , January 25, 2005, p. 6.

Thorel, Jérôme, "La deuxième chance d'Open Technologie," Expansion , May 14, 1998, p. 119.

—M.L. Cohen



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