Transcript TELELOGIC

TELELOGIC in France
Best in France Case Study
Philip Tabbah, Ryan Connor, Hyun-Sang Choo
HEC MBA January 2005 intake
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Executive Overview
The Telelogic Group
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The company
The culture
Mission, Vision & Strategy
Market & Customers
Products
Telelogic France
– History
– Why France?
Advantages
Disadvantages
– Managerial differences
– Adaptations made
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Executive Summary
Telelogic, a publicly listed Swedish IT-company with offices in 17
countries, set up its activity in France in 1996.
The main reasons were to gain access to know-how, to strategic
customers and to prepare a south European expansion in line with
the company’s growth targets.
After a successful start, the French operations encountered
numerous problems and Telelogic had to restructure the business.
Doing so they encountered several costly and unforeseen
difficulties, including closing a development lab, that had to be
managed quite differently in France compared to in other market
divisions.
Despite this, Telelogic’s French sales division, is today a growing
and profitable business unit. Some of their customers, large
French multinationals, are strategic customers to the Telelogic
group.
We advice companies that want to set up a business in France to
investigate not only the business potential but also the legal, cost,
organizational and cultural constrains.
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The Telelogic Group
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The Company
Telelogic is a world-leading supplier of development tools and
solutions for advanced systems and software development that help
customers automate their development lifecycle.
Telelogic's solutions make development of systems and software
faster, less labor-intensive, and more cost-effective and reliable.
Telelogic had sales of SEK 1037 million (M€ 110) in 2004, and
employs more than 750 people throughout the world.
Telelogic has offices in 17 countries in North America, Europe and
Asia.
The company was founded in 1983 and was listed on the Stockholm
Exchange in March 1999. It is included on the Attract-40 O-List.
In 2004 Telelogic Ranked as the 7th Most Influential Company in
Application Development according to Computer Business Review,
right after giants as Microsoft, IBM, Oracle and Sun.
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The Culture – five fundamental
principles
Passion
We give 100 percent! We take full responsibility and we deliver what we
have promised, in time. We take personal initiative and learn from both our mistakes
and our successes.
Speed
The business environment is changing rapidly and we must change with it.
Accordingly, we have a sense of urgency in everything we do. Speed is a
necessity. Our definition of speed is: Faster than yesterday and faster than
the competition.
Do the right thing
We do the right things. Doing the right things is a matter of survival. Our
definition of right: That which gives added value to our customers and
stockholders.
Quality
We do everything with quality. Quality is a way of life and an attitude.
Quality must permeate everything. To us, quality means that the things we deliver
work, are correct and are better than anything the competition can achieve.
Excellence and fun
We constantly look for the fun and the unique. To us, work isn't just a
job; it is something that enriches us as individuals. Creating an
environment that feeds ingenuity and job satisfaction is one of our greatest
challenges.
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Mission statement, Vision and Strategy
Mission
– We help each customer to succeed the first time by automating the
systems and software development lifecycle, through proven, state-ofthe-art tools that reduce time-to-market and improve quality.
Vision
– To be the choice of solutions for companies and engineers developing
advanced systems and software.
Strategies
– To provide requirements driven solutions to help automate the
development lifecycle
– To strengthen the position of DOORS, SYNERGY and TAU as the
leading tools in their respective fields
– To target customers requiring extended functionality for large-scale
and distributed development challenges
– To build strategic relationships with key accounts
– To build strong partnerships to extend our offering and the channels to
market
– To continue improve the organization’s productivity
– To implement concrete growth strategies in selected areas
– To attract and develop individuals with exceptional attitude and skills
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Global organization
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Organizational design
Decentralized control and local responsibility are key factors
in Telelogic's organizational model which places demands
on management, both centrally and locally, but also
provides room for individual initiative. Telelogic's operations
are divided into three major groups: Market divisions,
Products & Technology, and Corporate functions.
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The Market
Telelogic is presently one of just three companies in the world that
can provide tools and solutions for the entire development lifecycle.
Telelogic has a market leading position in the area of advanced
systems and software development. Telelogic DOORS is the market
leader in all markets. Telelogic TAU and Telelogic SYNERGY have
strong positions in the areas of advanced software development.
Distinguishing characteristics of Telelogic's tools are that they are
especially well-suited for large-scale development projects for highly
complex, advanced systems and software, often with geographically
dispersed development teams.
Traditionally, Europe has generated the bulk of the revenues. Major
expansion and strong growth in the US and Asia in recent years have
reduced Telelogic's dependence on individual markets. In 2003, 51%
of the revenue was generated in Europe, 38% in Americas and 11% in
Asia.
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The Customers
Telelogic's core customer base is composed of leading companies
within a number of sectors at the forefront of technological
development. These customers conduct advanced development
projects using the latest technology, thus placing considerable
demands on Telelogic's products.
Historically the majority of Telelogic's revenues have derived from
the telecom sector. In recent years however, Telelogic has
broadened its customer base to include industrial segments with
similar demands for the development of complex systems and
software, such as the aerospace/defense industry, the automotive
industry, and the banking, finance and insurance industry.
Telelogic has a strong customer base of the leading companies in
each respective industry segment. These include Alcatel, BAE
SYSTEMS, BMW, Boeing, DaimlerChrysler, Deutsche Bank,
Ericsson, General Motors, Lockheed Martin, Motorola, NEC, Nokia,
Philips, Siemens and Thales.
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Customer Development Issues
“Too much of our development is manual and unpredictable;
how far can we automate the development process?”
“We can’t afford a system crash at 35,000ft;
is 100% reliability realistic?”
“Business changes drive our development process;
can we gain greater visibility over the whole lifecycle?”
“Too many projects overrun and over-spend;
can we accelerate end-to-end development times?”
“Every team works isolated from the others; how do we improve
communication throughout a project?”
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Key factors in a challenging market
Productivity
“Time-to-market was cut from 15 months to 3.”
“Regarding the quality of implementation, it can
hardly get any better than zero faults.” Ericsson
Reliability
“We have not found a single error.” Motorola
Predictability
“Telelogic saves developers 20 hours each week and improves the
quality… It is solid, dependable and we’ve been able to set up
automated, repeatable processes.” Hewitt Associates
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A Telelogic Customer’s Vision
VP of major manufacturer
says it takes 18-26
months today from
specification to
manufacturing
His vision is to reduce
that to:
– 6 months within the
next 1-2 years
– 1 month within the
next 3-5 years
– 1 day within the next
5-8 years!
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Customers per segment
Communications
Military/Aerospace
Automotive
Finance, IT and more
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Breakdown of business (by industry)
25%
26%
6%
Telecom
Defense/Aerospace
Auto
Finance
Others
10%
33%
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Products & Services
Telelogic DOORS - The world's leading requirements
management tool for capturing and managing all the
requirements that define the developed product.
Telelogic TAU - A complete development environment for
analysis, design, modeling and implementation of advanced
systems and software.
Telelogic SYNERGY - A tool family for managing changes,
various versions and configurations as well as documentation of
development projects.
Services - Telelogic also offers consulting and training services to
make it easier for customers to quickly begin using the tools and
implementing them in their development environments
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Breakdown of business (by product)
29%
48%
Doors
TAU
Synergy
23%
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Total Revenue
in SEK
License & Maintenance Revenue
at constant exchange
rate
•FY Revenue 1039.3 MSEK; +11% in SEK, +15% in local currency
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Telelogic in France
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History
December 1996
– Sales branch established
January 1999
– Establish a subsidiary (Société Anonyme) through
acquisition of Objectif SA which becomes Telelogic France
SA
December 1999
– Telelogic acquires Verilog SA based in Toulouse and
creates Telelogic Technologies Toulouse SA
2001 Telelogic France SA merges with QSS EURL
and Continuus SARL and moves from La Defense
to the current premises in Courtaboeuf.
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Telelogic’s French organization
Telelogic France SA
– Sales division of Telelogic
responsible for selling all
of Telelogic’s products
and services in France,
Belgium, Luxemburg and
French speaking
Switzerland. Telelogic
France has the exclusive
distribution rights for
these markets
Telelogic Technologies
Toulouse SA
– Previously competitor
called Verilog SA acquired
from Groupe CS by
Telelogic in Dec 1999.
– Becomes one of two
development sites that
developed the 2nd
Generation of Telelogics
modeling and designing
tool family – TAU G2
– Site was closed in 2003
for restructuring purposes
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Evolution
Today 10% of Group sales
South European Headquarter
Know how in modeling development tools
Strategic Customers in
– Telecom (Alcatel, Sagem)
– Aerospace/Defense (Airbus, Thales)
– Automotive (PSA, Valeo)
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Evolution within the French
Market
Telelogic's Evolution of Revenue
per Employee(in '000 euros) Since
Inception into France
Telelogic's Evolution of Revenues
Since Inception into France
12000
10000
8000
'000 Euros
6000
4000
300
2000
0
20
20
20
20
20
19
04
03
02
01
00
99
98
97
200
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19
250
Telelogic's Evolution of Employees
since inception into France
150
90
100
80
50
50
# of
Employees 40
70
60
30
20
-
10
24
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
0
Why France? – Key Benefits
1. Acquire Technology & Know how
2. Support current strategic customers
French operations
3. Local sales office necessity to address
French strategic accounts
4. Step 1 in South European roll-out
5. Coherent with growth strategy
6. Governmental subsidies
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1. Acquire technology and knowhow
In 1999 Telelogic acquired a French
competitor called Verilog in order to:
– Gain access to state-of-the-art technology in
terms of existing products
– Gain access to highly skilled software
development engineers to participate in the
development of the 2nd generation of its
modeling and designing tools.
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2. Closeness to new strategic
customers
Telelogic created a local presence in
France in order to penetrate global
accounts who are French based such as
Alcatel and France Telecom
Through the Verilog acquisition Telelogic
expands both its geographical and
industrial presence in France to include
Toulouse and the Aerospace/Defense
sector. In Toulouse customers like Airbus,
Astrium and Alcatel Space are located.
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3. Closeness to current strategic
customers
Telelogic’s clients who are all large
international enterprises all have
numerous development site across the
world. Therefore they all demand local
support to their local development labs.
Local presence is therefore an important
parameter in order for Telelogic to satisfy
customer needs of world wide support.
In France Teleogic is working very closely
with the local development labs of several
multinationals such as HP, Philips, Texas
Instruments and Siemens.
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4. Step 1 in South European
expansion
For a Swedish company the natural
geographical expansion to South Europe
goes via France. It is important to first
gain market knowledge in France as the
closest Latin market to Sweden. It was
thus important to establish a European
base camp in France that would support
local sales offices in Italy and Spain.
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5.Growth
Telelogic was looking at rapid
expansion to reach critical mass,
which is important in their Industry.
Geographical expansion into France
and South Europe was a lead in this
strategy
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6. Governmental subsidies
Telelogic received Governmental
subsidies from European and French
organizations such as the ITEA or
DGITIP
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Group culture vs local culture
Cultural differences France vs
Sweden
– Hofstede model of culture- Modal
personality – dominant values in a
country
Sense of Urgency
Excellence & Fun
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Cultural Differences
France vs Sweden
The Swedish Manager
Democratic/Consensus seeking
Informal
Gives recommendations or
guidelines
Delegates
Status professional experience,
Self made man
Specialist
Linear active (one task after the
other, organizes the agenda).
Works fixed hours
Punctual
Introvert
Gets information from data
The French Manager
Autocratic
Middle management consultative
Decision based on logic
Makes decisions – errors tolerated
Formal (Greeting, addressing)
Expect that staff knows what to do
since logic is evident.
Status: Age, Education, Family,
Professional Qualification,
Eloquence
High Academic Education level
Generalist
Multi active (handles several
issues at the same time)
Extrovert
Gets information orally
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Adaptations
Swedish manager
Commission plan
Go through Works Council
Motivation – “above and beyond”
HR policies
– Annual reviews
– Recruitment:Attraction – selection cycle
Individual pay not collective
Communicate in English
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Constrains – 3 types
1.Structural cost constrains
2.Organizational & legal constraints
3.Cultural constraints
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1. Structural cost constrains
Cost of living / Rent
Social charges
Management - Expats
35h week
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2. Organizational and legal
constraints
Labor law
– Mobility clauses, organizational
flexibility
– Non competition clauses
– Restructuring plans
– Harmonization of work contracts when
merging
Labor inspection /Ministry of Labor
– Protected employees
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3.Cultural constraints
Settling conflicts
– Works council
Practices
– Negotiate Departures
– Notice period paid but not executed
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Conclusions, Learnings and
Advice
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French Success story –
Thales’ Experiences with Telelogic
Telelogic has helped in the development of a
powerful requirements management
strategy that will save us time and money.”
Thales is one of the world’s leading supplier of
electronic systems, active in aerospace, defense
and IT solutions. The Thales Optronics division
deployed Telelogic DOORS to help establish best
practice systems engineering processes. DOORS
has made requirements management more
visible, improved requirements traceability and
reduced the time from requirements to design.
The company is now benefiting from increased
control, better visibility and enhanced client and
user confidence across a variety of key projects.
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Learnings from France to Telelogic
group level
Trainings
Job descriptions
Company policy and employee hand
book. (Reglement interieur)
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Advice before setting up a business
Look at issues related to work conditions and
labor law before
– Work contracts
– Syndicates and Works council
– Working hours
Calculate real cost of labor
– Include social charges, health insurance, trainings, meal
allowances, various taxes, working hours…
Know and respect cultural differences
– Don’t save in on expertise advise (legal, tax, labor)
Subsidiaries
– Taxes reductions, employment
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Future investments in Europe
Eastern Europe (Russia,Romania)
– Subcontracting contracts for specific software modules
– Cheap and relatively skilled labor
Ireland
– European support centers
Sweden
– Project management
Close to HQ
Close to Universities
Skilled labor
Scotland
– Doors lab
Few or No new recruitments planned. However, in 2004 a 4th
development lab was set up in bangalore India.
– Easy access to skilled labor
– Very low costs
– Flexible labor laws
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We thank:
Hakan Tjärnemo – CFO Telelogic
[email protected]
Eric Lundquist – Senior VP Telelogic South Europe
[email protected]
Armel Etienne – Finance & HR Director Telelogic
France
[email protected]
Me Pierre-Henri D’Ornano (Telelogic Legal advisor
in France)
[email protected]
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Bibliography
When Cultures Collide - Richard
Lewis
Organizational Behavior – Henry Tosi
Telelogic Annual Reports – 19992004
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