GFI Informatique SA
GFI Informatique SA
Sales: EUR 1.1 billion ($1.3 billion) (2001 pro forma)
Stock Exchanges: Euronext Paris
Ticker Symbol: GFI
NAIC: 541512 Computer Systems Design Services; 541511 Custom Computer Programming Services; 541330 Engineering Services
GFI Informatique SA is one of the fastest-rising information technology (IT) services companies in France, with its sights set on becoming one of the top companies in the European IT services market. GFI concentrates on the information systems sector and operates in four key areas—Consulting; IT Systems Engineering and Integration; Enterprise Software Development and Implementation; and Outsourcing, including operational services and maintenance—enabling it to bill itself as a total solutions partner. The company has long focused on such core IT areas as intranet, Internet, and the fast-developing telecommunications sector, particularly mobile communications networks. Systems integration, the company’s historic core, remains its largest revenue source, at nearly 60 percent of revenues. The company has been making inroads in stepping up its Outsourcing operations, a growing market offering the added attraction of medium- and long-term contracts, and that division accounted for 18 percent of the company’s 2001 sales of EUR 600 million. At the turn of the century, GFI has been transforming itself from a focus on the French market to a truly international company, with operations throughout western Europe, as well as bridgeheads in Africa and North America. France remains the company’s single largest market, however, at 58 percent of sales; the rest of Europe accounts for 41 percent of the company’s sales. GFI has long grown through acquisitions, and in June 2002, the company made its most significant acquisition yet when it agreed to buy up the Thales IS information systems subsidiary of Thales. The newly merged company claimed the number four spot in the French IT market, and one of the top spots in all of Europe, with combined revenues of more than EUR 1 billion. GFI, led by Chairman and CEO Jacques Tordjman, expects to double and even triple its revenues by 2005.
French IT Pioneer in the 1970s
GFI Informatique’s origins lay in the first wave of the information technology industry in the late 1960s. With the advent of relatively powerful, smaller, and more affordable computer systems, the implementation of information systems quickly became a corporate necessity. GFI Informatique was created in 1970 in order to meet the new demand for developing and maintaining computer systems. One of the earliest entrants in the French IT industry, GFI was bought by Scicon International, a rapidly expanding British software and information systems company, in 1985.
By then, GFI had hired industry veteran Jacques Tordjman to lead the company’s engineering division. Tordjman had started out in the late 1960s as a computer engineer with Philips. In 1971, Tordjman left Philips for a management position at Honeywell-Bull. During the 1970s, Tordjman launched two businesses on his own, before taking on his new position at GFI in 1984. Tordjman brought GFI’s focus to bear especially on the industrial, distribution, and services sectors. By 1985, Tordjman had been named president of GFI Techniques Bull, a division focused on the Bull computer system. That division quickly rose to the top of the market for Bull computer-based systems throughout Europe.
Tordjman’s performance was recognized in 1990, when he was named CEO of the entire Groupe GFI Informatique. Tordjman quickly led GFI on a strong expansion program, making a series of acquisitions, including the information systems division of Carbonnages de France as well as CORI, Infosys, and Proget. By 1991, GFI had more than doubled its revenues.
In 1991, however, GFI’s parent company, then named SD-Scicon, was bought up by the United States’ EDS, at the time a subsidiary of General Motors and also the world’s leading IT services company. EDS’s French assets were combined with GFI’s, creating a new subsidiary, EDS-GFI. Tordjman’s role in GFI’s success was recognized with his appointment as CEO of the newly enlarged company.
By the mid-1990s, EDS-GFI had risen to the number three spot in France’s IT market. Yet EDS, which was regaining its independence from General Motors at the time, had begun to restructure its operations and was preparing to withdraw from the French market. This turn of events gave GFI, and Tordjman, an opportunity. In 1994, GFI formally acquired all of EDS’s intellectual property in France. The following year, Tordjman led a management buyout of EDS-GFI. The company then relaunched itself as GFI Informatique.
Backed by his management team and by a strong portfolio of financial investors, Tordjman drafted the first of a number of three-year plans for GFI, adopting as its core strategy the strengthening of the company’s domestic network to place GFI on a national scale. At the time of the management buyout, GFI had just 900 employees and revenues of FFr 400 million (approximately EUR 60 million) and the entirety of its business was focused on the French market. In its first years as a newly independent company, GFI now began to expand its core competencies into a wider variety of business sectors, boosting its position in the banking, finance, and insurance sectors, as well as the public sector, while adding capabilities for the transportation and logistics markets, and, especially, positioning itself in the soon-to-boom telecommunications sector.
Acquisitions made up a key element in GFI’s strategy. Between 1995 and 1997, GFI picked up a string of companies. The addition of Medianet, Vigiscan, Magellan, Yole, Cotre, and others enabled GFI to boost its share of the enterprise software market. The company strengthened its position in the new technologies arena with the purchases of companies including Promind, Netstar, Antares, and DE3I, an IT services joint venture between Dassault and IBM. In all, GFI made some 30 acquisitions during this period. Accompanying these acquisitions were GFI’s first international growth moves, notably through the establishment of subsidiaries in Luxembourg and Switzerland, and the purchase of the Belgian operations of U.K.-based IT group Sema. International growth was especially important to help the company gain a stronger share of large-scale corporate companies.
International IT Player in the 21st Century
By the end of its first three-year plan, GFI had succeeded in tripling its revenues, nearing the equivalent of EUR 140 million in 1997 and well exceeding its initial target. In 1998, GFI launched a new three-year plan, aimed at boosting the company’s revenues past FFr 2 billion (approximately EUR 300 million) by extending the company’s international reach, while also solidifying its position in France. That position took on new scale in January 1998 when the company acquired AT&T Electronic Commerce and AT&T Istel, the French operations of the U.S. telecommunications giant. These acquisitions were bundled into a new subsidiary, GFI NT, and enabled GFI to gain a position among the top five of France’s nascent e-business market.
GFI went public in May 1998, floating 11 percent of its shares on the Paris Bourse’s secondary market. The company’s stock was quickly added to a number of the Paris exchange’s main indices, and the company won added recognition by being named France’s top IT services company for the year. The stock listing enabled GFI to continue its expansion, backed by a war chest of more than FFr 500 million. The company now targeted southern Europe, notably with an entry into Spain with the purchases of Arcissa, Arcitel, and Advanced Vision Technologies, as well as the acquisition of Atel, a specialist in IT systems and network administration. The company also strengthened its operations in Switzerland that year, with the purchase of IT services company Planet, based in Nyon. Meanwhile, the company gained entry into a new business area, that of consulting, bringing the company closer to its goal of becoming a total IT services solutions provider. The company’s initial foray into the segment came through the acquisition of French company SME Conseil, which had built up expertise particularly in the banking and credit card sectors.
In 1999, GFI’s acquisitions continued, including the purchases of Ceacti and Groupe Gallius, both in France, and the acquisition of a majority share of Atel Group, based in Milan, Italy, giving the company its first operations in that country. The company added to its southern European holdings with an entry into Portugal, while also establishing subsidiary operations in Morocco, from which it expected to base its expansion into the African continent.
In April 1999, the company expanded into the United Kingdom with the purchase of a 60 percent share of ECS Ltd., a company specializing in LAN/WAN systems integration and the leading independent company in the United Kingdom in that market sector. ECS, later renamed GFI Informatics, became the basis of GFI’s expansion into the U.K. market. In France, meanwhile, the company purchased SINORG, which was focused on the public sector, particularly in the integration of systems for local communities.
Strategy: The GFI Informatique Groupe is a major player in the European IT and communication services market.
GFI Informatique provides support for its customers throughout the life cycles of their information systems, and develops value-added solutions primarily for large companies, government agencies and local authorities.
GFI Informatique ‘s specialisations, which include Consultancy, Systems Engineering and Integration, Software Products and Systems Management, are guided and strengthened by new technology and e-business.
These latest acquisitions enabled GFI to complete its second three-year plan some 14 months ahead of schedule—indeed, by the end of 1999, the company’s revenues topped the equivalent of EUR 375 million. In order to finance these acquisitions and to continue its expansion, the company moved its listing to the Parisian main board, completing a successful secondary offering.
GFI now launched its third three-year plan. The company’s new objectives called for it to take a place among the top European IT services companies with revenues of more than EUR 1 billion. To achieve this goal, the company, which had built up a solid position in southern Europe, turned its expansion interest to northern Europe. At the beginning of 2000, GFI made three significant acquisitions, entering Germany with the purchase of SPS, an e-business and intranet specialist; buying ASN in The Netherlands, a network engineering company; and reinforcing its position in Switzerland with Multizoom, which helped the company to become the leading IT services company in the French-speaking region of that country.
GFI also strengthened its holdings in Italy, with the acquisition of Olivetti Information Systems, in 2000. The company then turned its sights toward the North American market. In 2000, the company acquired Proben, based in Canada, as a bridgehead for its eventual expansion into that region, particularly into the important U.S. market.
Yet Europe remained the company’s immediate focus. In 2001, the company reinforced its position in Germany with the acquisition of SKR GmbH, a company with offices in Bremen, Hamburg, and Hanover that focused on the supply chain management sector. The company also acquired IXI Group, based in France, boosting its consulting business. Meanwhile, the addition of Calléo, based in Zurich, gave the company e-business consulting operations in Switzerland, the United Kingdom, and Germany. These and other acquisitions helped the company’s revenues top EUR 600 million by the end of the year.
In July 2002, GFI took a major step in achieving its goal of positioning itself among the top European IT services companies when it reached an agreement to acquire Thales IS, the IT services wing of Thales SA, eager to refocus itself on its core defense electronics business. For a purchase price of EUR 150 million, as well as the transfer of 25 percent of GFI’s stock to Thales—in a deal worth a total of EUR 350 million—GFI’s pro forma revenues now neared EUR 1.1 billion. The Thales IS addition strengthened GFI’s European presence—giving it a ranking in the top ten, and the number three spot in France behind leaders Cap Gemini and Atos Origin. Through Thales, GFI also gained operations in Latin America and Asia.
With more than 40 percent of its sales now achieved outside of France, GFI had become a truly international IT services company. The company now began preparing the launch of its fourth three-year plan, to go into effect in 2003. Among the features of the new plan was a focus on developing the company’s outsourcing operations, that is, the development of long-term and recurring services and maintenance contracts. Already in 2001, the company had succeeded in boosting the share of outsourcing operations in its overall revenues to 18 percent, enabling the company to gain greater mid- and long-term visibility over its business. The thrust into outsourcing, combined with the company’s history of strategic operations, suggested that GFI was well placed to achieve its newest growth goals, that of doubling, and perhaps tripling, its revenues by 2005.
GFI Informatique; GFI ISS GFI NT; GFI New Business; Informatique et Services; Tekhne; SCI Gifimo; Financière Sinorg; GFI Progiciels; GIE Anis; SME Conseil; Némausic; SCI Via Domitia; Acteam; Image & Promotion; Eccla; GFI Consulting; SCBF; CIPM; SNCI; IXI Group; GFI Benelux (Belgium); GFI NB Belgium; GFI Luxembourg; ASN (Netherlands); ASN West (Netherlands); GFI International (Switzerland); Groupe Calleo (Switzerland; 52%); Grupo Corporativo GFI Informatica (Spain); Arcisa Levante (Spain); Arcitel (Spain); GFI Web Espagne (Spain); Docutex (Spain); Euskalsoft (Spain); Gastinfo (Spain); 3B Norte (Spain); GFI IT (U.K.); GFI Informatics (U.K.); GFI Informatica (Italy); GFI Technology (Italy); GFI Consulting Italy; Integra (Italy); Datability (Italy); GFI Consulting 2000 (Italy); GFI OIS (Italy); Engisanità (Italy; 50%); Soluzioni (Italy; 60%); Compuquali (Portugal); GFI Holding GmbH (Germany); GFI SPS AG (Germany); SPS UB Kom (Germany); SPS PB GmbH (Germany); UBS (Germany); IT Media (Germany); SKR System (Germany); SKR & Co (Germany); Professional System (Morocco); Archos (Morocco); GFI Africa (Ivory Coast); GFI Canada Inc.; La Gestion Proben (Canada).
- GFI, one of the earliest French IT services companies, is founded in Paris.
- GFI is acquired by Scicon International, based in the United Kingdom.
- Jacques Tordjman is appointed CEO of GFI and leads the company on a series of acquisitions that double the company’s sales.
- EDS acquires Scicon in a hostile takeover and combines GFI with its French operations to form EDS-GFI.
- Tordjman leads a management buyout of GFI, including all of EDS’s intellectual property, and relaunches the company as GFI Informatique; GFI goes on an acquisition drive, acquiring 30 companies by 1997 and entering Belgium, Luxembourg, and Switzerland.
- GFI lists on the Paris stock exchange’s secondary market; GFI enters the Spanish market through several acquisitions; GFI begins consulting services.
- GFI acquires SINORG, Ceacti, and Groupe Gallius in France; GFI enters Italy with the acquisition of Atel Group; GFI enters Africa with the purchase of two companies in Morocco; GFI acquires ECS in England.
- GFI acquires Olivetti Information Systems in Italy; GFI enters North America with the purchase of Proben, in Canada; GFI enters Germany with the acquisition of SPS; GFI acquires Multizoom in Switzerland and ASN in The Netherlands.
- GFI acquires SKR in Germany and IXI in France.
- GFI acquires Thales IS to become one of the top three IT services companies in France and one of the top ten IT services companies in Europe.
Cap Gemini Ernst & Young; Atos Origin PF; Getronics NV; Logica plc; CMG; WIM Data; Tieto Enator; Steria SA; Unilog SA; Sopra SA; Transiciel SA; Sylis SA.
“Acquisition Fever in French IT Services,” Computergram International, February 19, 1999.
Dalongeville, Fabrice, “GFI Informatique prépare sereinement 2002,” Distributique, May 2001.
Moreh, Michael, “ ‘Une fusion d’envergure courant 2002,’ Jacques Tordjman, président-directeur général de GFI Informatique,” Newsbourse, January 13, 2002.
Morel, François, “INTERVIEW: Jacques Tordjman PDG GFI Informatique,” Journal du Net, February 9, 2000.
Ruello, Alain, “Jacques Tordjman, PDG de GFI Informatique: ‘Il n’y aura pas de restructuration,’” Les Echos, June 19, 2002, p. 16.
Tillier, Alan, and Renee Cordes, “GFI Wins Thaies Bidding,” Daily Deal, June 19, 2002.
—M. L. Cohen