Siemens Nixdorf Informationssysteme AG may be suffering heavy losses back home in Germany (CI No 2,050), but business at the UK end is booming and the subsidiary expects to be in profit by the end of this year. According to UK managing director Richard Bearpark, the company has spent two years absorbing the costs of merger between the data and communications divisions of Siemens and the computer activities of Nixdorf. Although he realises there is still a long way to go, he does believe that the UK’s second year results indicate a sustainable turnaround, adding that last year’s performance was very close to budget. Though some 98 employees were made redundant 15 or 16 months ago, Bearpark forsees no more in the near future. In fact, he claims that as he achieves his aim of doubling turnover, he will actually take on more staff, particularly in services, which is labour-intensive. While he could provide no time scale for this, he did say that he expects the business to grow at 20% per annum. For the year ending September 30, UK turnover was up 14% to UKP122m. Bearpark stated that the UK is a key market for Siemens Nixdorf, with an estimated value of between UKP8,000m and UKP10,000m. According to his calculations, therefore, the firm must have a 1.2% market share.

Losses after interest

Trading profit was about UKP110,000, but losses after interest amounted to UKP2.2m. In Bearpark’s opinion, it was significant that revenue per employee increased 27% to UKP117,000 because last year, the focus was on reducing costs to sustain growth. This policy of ‘cost optimisation’ will be continued into the current year, he said, and should be helped by the relocation of Siemens Nixdorf’s parent company, Siemens AG, into UK headquarters in Bracknell – Siemens’ lease on it’s former site in Sunbury has now run out. In contrast to operations in Germany, where 70% of revenues are now generated from software, services and hardware maintenance, the UK earns between 5% and 8% from selling software products, 40% from hardware, and between 52% and 55% from software services, maintenance and support. Bearpark expects the most rapid growth to come from services and systems integration, particularly in the open systems arena. He is also keen for the company to become known as a specialist in project management – he is prepared to undertake such work either alone or with third parties. And although he is adamant that the hardware business will not be run down, he did say that in future the firm will carefully weigh up whether it is more more cost-effective to manufacture products and components itself or buy them on the open market. Siemens Nixdorf already resells top-end Unix boxes from Pyramid Technology Corp, in which it has an 8% stake, and lap-top personal computers from Panasonic Communications & Systems Co. The decision to buy in or not is particularly relevant to personal computer sales where margins are tight, but Bearpark reckons that the company can remain competitive because it has huge purchasing power and can buy components at volume discounts – especially in Germany as the Deutsche Mark is very strong at the moment. Also, it is able to supply kit within five days in line with current market requirements; it has a UK stockpile of components for repairs and maintenance; its pricing is right, and it is starting to get distribution right. To this end, Bearpark is examining the feasability of direct sales via retail outlets or catalogues, instead of selling to the end-user as in the past. While he is not actively developing a third party dealer network because no-one is making money out of simply shifting boxes any more, he did say that systems integrators or value-added resellers have more appeal as people still want computers. They just expect software and networking capabilities added in. As for mainframes, the only one Siemens Nixdorf actually has installed in the UK is a 7.000 BS2000 Model H120-R – the Police National Computer. But Bearpark is convinced that the mainframe is not dead; in fact, he is sure that he ‘can and will take IB

M head on’.

By Catherine Everett

Roughly translated, this means he is seriously thinking about setting up an IBM mainframe sales team to poach disaffected IBM customers. While Siemens Nixdorf still spends a total UKP600m or 13% of revenues on research and development, and is certainly still investing in mainframes, Bearpark would provide no indication of how much. In line with its parent company’s strategy, the UK subsidiary has now reorganised into seven business units. The aim, according to Bearpark, is to provide a more focussed approach to the areas in which they operate, which should enable a faster time-to-market. The units comprise commercial systems; retail; finance; high speed printers; systems and services integration; large business development, and two separate areas of government. First, via the commercial systems unit, Siemens Nixdorf provides hardware and services to 600 customers, including general business and niche markets, such as housing, manufacturing, and automotive sectors. It has an installed base of 1,100 sites, and customers include Gillette, London Weekend Television and the Family Housing Association. The company also has 50 former proprietary 8870 sites, although users now have the option to migrate old Comet applications to Unix machines via the Cross Basic tool. Second, Bearpark attests that Siemens Nixdorf is a significant player in the retail market, supplying everything from warehouse to point-of-sale equipment. It claims to have 51% of the cash-and-carry market, 47% of the gas and electrical goods market and 18% of the large supermarket sector. In fact, Bearpark said all the top retailers in ‘every high street in every town’ use Siemens Nixdorf kit. Customers include Tesco, Dixons, and Shell. Third, the company supplies hardware, software, automatic teller machines, and services to the financial sector, mainly building socities, insurance companies, and financial securities firms. Customers include Charterhouse, Midland Bank, and the Nationwide Building Society.

High-speed printer

Fourth, high speed printers make up 30% of UK revenues. Siemens Nixdorf claims that it has 40% of the European market, with an installed base of 500 in the UK. Such customers include British Telecommunications Plc, Marks & Spencers Plc and Whitbread Breweries. Fifth, the systems and services integration unit covers ten areas: hardware; networking; applications; consultancy and integration; maintenance and support; training; environmental services; business protection services; facilities management, and financing. Over 70% of Siemens Nixdorf’s staff are involved in these activities, and Bearpark said that it is working ever more closely with other Siemens companies to secure a whole range of contracts. Sixth, Bearpark is eager to develop the large accounts division, with the aim of generating sales on the back of business from existing customers. Seventh, and most important is central and local government – the single largest single fee-earner for the subsidiary. In 1991, it claimed to be the biggest supplier of Unix kit to the government, working either alone or as a member of a consortium. It has even dedicated a whole business unit to the Department of Social Security and Employment Services’ Single Terminal Access Project, STAP. STAP is based on an open systems procurement policy and Siemens Nixdorf has already made UKP25m from the deal. It heads a consortium including ACT Logsys and Coopers & Lybrand Co, and provides open systems expertise, software, communications and support, acting as systems and services integrator. The other government unit deals with every other part of the public sector, including defence, with the Department of National Savings, the Royal Air Force and Eastern Electricity among its customers.