ICL is to Britain what Bull is to France - intrinsically associated with the country and its Government, and doggedly trying to shake off its image. The company has been through a difficult period recently, having cast aside traditional product lines and business divisions in an effort to become a fleet-of-foot, forward-looking organisation that can carve out a piece of the e-business market for itself.
The e-services market is ICL's chosen road back to former glories. The rebirth, though, is a painful one, and will culminate in the long-promised flotation of about one-third of the company on the London Stock Exchange later this year. Chief executive Keith Todd accepts ICL has to be seen to have changed. Its many divisions and corporate names - many of which date back to the early 1990s - made it a difficult and confusing organisation to deal with. Now, it can present a single image to the market. "We needed clarity of direction and to be prepared to rip up past practices," he says.
And Todd is confident that the shift to services was necessary to secure future prosperity. "We had to find a new future. It was the only way we were going to survive. We're proud of our product history, but that's where it belongs."
The very lateness of ICL's arrival at the e-services party has made the company all the more determined to be a force to be reckoned with. The difficulty, though, is proving to customers it is better than the many other organisations that have targeted this burgeoning sector, and that it has the international clout to handle global contracts. There is still a feeling of Britishness to ICL that the company has to shake off to compete effectively with IBM, EDS, BT and Andersen Consulting.
This year's financial results have yet to convince analysts that ICL is in a position to float or that it can really make big profits from being a pure e-services organisation. From April 1999 to March 2000 the company lost £69.7m on a turnover of £2.7bn, and its order book barely grew at all. Revenues from e-business services did almost double, but accounted for only £178m of turnover.
Although this represents a modest 6.6% of total turnover, it's still a massive head start on a lot of e-services companies, such as Scient, Viant and the UK's Rubus, which started life with a few enthusiasts and a good idea. Martin Hingley, VP of European systems group at IDC, says: "ICL has got hidden talents. It's done things for years that newer companies come along and brand. But by the time that ICL says it's been doing it for years, it's too late."
ICL needs to convey an entrepreneurial dot-com image that many doubt a straightforward flotation can deliver. Those analysts who believe ICL should be broken up reckon the sum of the company's parts is worth more than the brand. The planned flotation of KnowledgePool, ICL's e-learning business, on the London Stock Exchange and Nasdaq, and its Nordic operation on the Helsinki Stock Exchange were both pulled at the eleventh hour in June. The decision was made, said a spokeswoman, because of problems with the Helsinki Exchange.
Independent analyst Richard Holway says he will happily break open a bottle of champagne if ICL successfully floats this year, but adds: "Everything I know would indicate that, with the marketplace as it is at the moment, getting ICL away at a decent price would be difficult. You can't just suddenly transform yourself into an e-services company when a significant amount of money comes from software, hardware and outsourcing."
Andrew Boswell, chief technology officer at ICL, says the company is determined to see the flotation through. "Not being floated means we lack visibility. If you don't have a share price going up or down it's harder to be newsworthy in the City pages." Shares, he adds, act as a carrot for good staff, and would give ICL the opportunity to raise capital far easier than it can currently.
ICL committed itself to becoming an e-services organisation in April through a combination of flotations, incubator spin-offs and disposals. Like the head of any organisation with ambitions to be a major e-player, Todd realised ICL was not immune to the need for change. He was talking as much about ICL as any other organisation when he recently told delegates attending the CSSA's e-business summit that "the barriers in tackling changes are in our heads, our past and our preconceived views of the world".
Baggage to be disposed of includes product lines that currently bring in more money than ICL's e-services business does. The company also needs to focus firmly on the services sector and undertake a massive training programme to ensure it had the staff numbers and skills. Over the next three years, the company plans to train 5,000 internal staff and 5,000 new recruits in e-business skills. It is also working closely with schools and universities in an effort to increase awareness of ICL as a technology company so it can attract higher calibre graduates.
ICL now has three main activities - electronic innovation, the electronic applications unit and electronic infrastructure offerings. The first, e-innovation, has 1,200 people working on first-time implementations of e-business systems. The second takes existing business applications, looks at the virtual markets on the horizon and keeps those lines up to date as Web-based applications. E-infrastructure is the operational services division, which handles outsourcing, networking, data centres, systems integration and so on.
"Having worked on some 700 e-business projects around the world," says Boswell, "we have moved from the stage where e-infrastructure was an exciting part of ICL to where it *is* now ICL. All our activities are being aligned for the e-business push."
ICL describes its three critical success factors as speed of implementation, designing and building systems that work, and having the right skills. Each is laudable, but find a services supplier that doesn't have these on its list of reasons why you should place your money in its hands. And that is one of ICL's key problems - it just doesn't shout louder than the other suppliers in this rapidly expanding market.
It does, however, have a loyal customer base that pushes repeat business its way and has won some impressive contracts of late, the most recent being a £350m, 10-year deal to provide consultancy and e-business services to the Home Office. In partnership with PricewaterhouseCoopers and Global Crossing, ICL will replace incumbent supplier Sema Group, and own, run and develop the Home Office's IT infrastructure and phone systems.
But this year has also seen embarrassments, such as the Pathway project to computerise benefits payments at the Post Office. The project promised much but failed to deliver as ICL and the Post Office disagreed over what technologies should be used. A Commons select committee described the project as 'blighted from the outset', and it was rejigged into a £900m fixed-price deal, in which ICL will computerise the Post Office counters network. According to reports, ICL wrote off £180m on Pathway.
As to the future, ICL has partnerships with universities and organisations that are working on a number of research projects. It has set up a mobile centre of excellence in Helsinki which takes existing e-business practices and looks at how they will change as the world moves towards using third-generation mobile technology. Experts from Japan are working with ICL on speech recognition technology, an area that will grow in importance over the coming years. At Surrey University, ICL is working with the psychology department to design and build better Web sites that appeal to users from all sections of society.
As the company's chief technology officer, Boswell's role is not only to set the vision of areas that ICL will focus on in the future, work with research organisations and bring in technology, but also to raise the organisation's profile. "I'm working with major corporations and government to foster ICL's reputation as a leading technology company. That's provides input or feedback on what we are trying to do. I'm trying to get new ideas from the outside world and use it to challenge people inside the company."
Within two years Boswell believes ICL will focus more heavily on services for the mobile market. Like many commentators, he believes the market will have consolidated by then, as weaker brands fall by the wayside, and ICL, he hopes, will be a big player in running organisations' e-services. "By then there will be a smaller number of very strong Internet brands. And there's a good chance that post offices will be the banking centres of towns and villages across the UK."
The final few months of this year will be something of a white-knuckle ride for ICL, because it has made promises that the market now expects it to keep. It has made a lot of noise about its intention to float, so to postpone that now would be embarrassing, and it must push hard to build its e-services business. But even if that doubled again, it would still be only a £360m slice of a £3bn empire.
Justice in time
In its manifesto, the Government promised to create a better community legal service that was easy to use and aimed at people who couldn't afford to pay for expensive advice. Following a period of research, the Lord Chancellor's Department decided that this had to include an Internet site, because it wanted to create a virtual community of experts and agencies, as well as provide links to other sites that could help those facing legal issues.
The site also needed to reflect Britain's diverse make-up, so it had to be multilingual and easy to use by all sections of society. It currently handles the eight most widely spoken languages in the UK, and has plans to add more. The site gets about 2,000 hits a day, holds a searchable list of about 15,000 solicitors and has links to some 300 other Internet sites.
But the biggest problem was time, with the site having to be launched by Spring 2000. ICL got the contract last December to build and manage the site. Site manager Jonathan Freeman says he was looking for a company the department felt comfortable working with, but which could also get the project completed very quickly, because of its high-profile launch. "We didn't have the skills to do this in-house. We wanted a site we could manage and update the content of without the need for technical support, because we don't have technical people working here."
|1968||ICL formed by merger of computer manufacturers English Electronic Computers and International Computers and Tabulators|
|1984||Standard Telephones and Cables (STC) acquires ICL for £430m - the last year ICL was listed on the London Stock Exchange|
|1990||Fujitsu pays £743m for 80% stake in ICL|
|1995||Keith Todd appointed chief executive|
|1996||ICL closes its last manufacturing site with the sale of D2D computer manufacturing business to Celestica of Canada|
|1998||Fujitsu buys Nortel's remaining 20% in ICL to take full ownership|
|2000||ICL commits entire company to e-business services strategy|
|November 2000||ICL plans to float on the London Stock Exchange|