Roger Gilbert took over as CEO of Fujitsu UK & Ireland about 18 months ago. Since then the parent company has merged its UK operations with Fujitsu Telecommunications, bought out German electrical engineering firm Siemens' share of Fujitsu Siemens, the jointly-owned IT hardware supplier, and restructured its products and services to compete more vigorously as a global supplier of cloud-based and managed services.
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In this, the second of a two-part series Gilbert discusses Fujitsu UK relations with customers. In the first part he dealt with his approach to the new government and its call for a 20% cut in its IT bills.
Computer Weekly: Fujitsu is still investing in VME, its flagship operating system from the 1970s and 1980s. Why is that?
Roger Gilbert: We are fundamentally a risk-bearing prime contractor for major corporates and governments. That's our heartland. As such as we remain committed to customers who are still using VME, but we have updated it to run on today's server platforms. Increasingly you'll see VME running as an application on a server.
CW: The Ministry of Defence is one of those VME users, and you are also involved in the Atlas consortium to provide the military with a single information infrastructure for back-office and battlefield information systems. How is it going?
Gilbert: The MoD is a VME user for some back-office systems, but not a very big one. And Atlas is not concerned with VME. I think we are making good progress against the challenges and aspirations that MoD has for Atlas. I think it's delivering substantial cost-benefits against the legacy systems that it is replacing. The challenge for the MoD is to move towards the Atlas infrastructure in such as way that it starts to enjoy those benefits.
It's also demonstrated our ability to work with EDS and more recently Hewlett-Packard to jointly deliver what is a very important system for the MoD. We're quite good at partnering, if you look at some of the complicated systems out there apart from Atlas, such as Inspire with HM Revenue and Customs and the Driver and Vehicle Licensing Agency consortium with IBM.
CW: In light of consolidation, datacentres and the like, it seems in future that it is going to be 'winner takes all'. How do you think Fujitsu is positioned to cope under those circumstances?
Gilbert: Government has said it wants to increase the number of suppliers it uses. My own view is that that will be quite a challenge in practice because it demands that companies take quite severe terms and conditions that increase the risk for smaller firms. So I think winner won't take all. The government will still have a lot of competitive suppliers, and that will be healthy for them to maintain value for money.
CW: Don't you think that government and enterprises will simply move contracts around, you this year, EDS the next, just to keep you on your toes?
Gilbert: Sometimes they do, other times they don't. When I come to a rebid as an incumbent, my main concern is to show that I can come in with fresh eyes, new energy and new ideas, while maintaining my position as the low-risk bidder because of my prior knowledge of the client and the work. As a competitor to the incumbent, the challenge is to do this without introducing additional risk. The customer will balance his need for new ideas against his risk of taking on a new supplier.
CW: It's obviously crucial for you to maintain your share of the government market, but what is happening in the commercial market?
Gilbert: The analysts didn't predicted this, but I am seeing a big increase in the number of deals available in the private sector. In the past six months we've seen a lot of activity in mergers and disaggregation, there's a renewed look at outsourcing, there's also a closer scrutiny of existing supplier relationships, and this is fuelling activity.
Even though government is 60% of my business, in the first quarter I took three times as many new orders from the private sector than I did from government. My order rate is now running ahead of revenue, so I'm winning far more than I'm burning through existing contracts.
Looking at the future pipeline, this appears to be reasonably stable for the next year or two. That gives us a chance to rebalance our portfolio to 50/50 rather than 60/40, which would be good for Fujitsu.
CW: What are companies buying now?
Gilbert: If I look at the three big deals that we signed in the past quarter, one is for desktop managed service, one is global deal for engineering support and logistics, and one is for front- and back-office IT support for a major retailer. If you add them together, they are not far short of £200m, and they were all signed in the first quarter. I wouldn't have predicted that six months ago.
CW: The activity comes after almost three years of virtually no purchasing, so they need the technology refresh. But are they looking for something different now?
Gilbert: They are much more demanding about the quality of their relationship with their suppliers. With the kind of deals that we're doing, there's an obligation to be an integral part of their strategy and to support their strategy. They expect us to be flexible and to adapt to their changing needs.
When we are competing for business, it's very important to match the cultures of the organisations, (to see) whether the senior executives on both sides of the table are able to work together. These softer issues are becoming very very important.
CW: So are customers seeing IT as integral to the business, or do they see IT as a black box that provides services?
Gilbert: In the kind of deals we are talking about here, the chief executive is heavily involved in the procurement, and expects to see and hear how it will contribute to his plan or strategy. Especially if it's linked to a merger or a disaggregation, IT is a main board issue.