Transcript Arinso 2004

ARINSO in France
Best in France Case Study
September 2003 - May 2004
Team MBA BSi:
• Rachel ROSA
• Martial FEVRIER
• José R. VALENZUELA
• Christophe VANIER
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Purpose
The Best in France case study aims at :
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Identifying what adaptations firms must make when opening business
units in France,
Assisting students, companies and government ministries by identifying
and benchmarking managerial strategies that add value to the French
economy and to firms operating in France,
Creating a database of the detailed studies, available to the
participating firms.
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Executive Overview
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Success Story & Key numbers
Arinso Business Model
Company Products
Operating Strategy
Arinso Clients
Why did Arinso come to France
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Arinso values in France
Constraints in France
Adaptation to France
Key Costs of France
Key Benefits of France
Arinso’s Essential Advice
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Arinso Success Story
 1994 : creation of ARgus INtegrated SOlutions in Belgium
by Jos Sluys (former SAP executive)
 Creation of international subsidiaries
 1996 : France, Nederland
 1997 : USA, Luxemburg
 1998 : UK, Canada and Spain
 1999 : Italy
 2000 : Germany, Portugal, Morocco, Argentina, Mexico,
Brazil, Asia-Pacific (Singapore, Malaysia, Thailand)
 Swiss, Sweden, Finland, Poland (October 2003 )
 Gone public in 2000 (Euronext Brussels: ARIN)
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International Coverage
22 Countries on 5 Continents
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Key Corporate Numbers
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10 years of existence
22 countries of operation
1300 Employees Worldwide (177 in France)
121 M€ turnover * (France #1 with 25M€)
11% EBIT * (to sales)
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* Annual Report 2002
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Arinso Business Model
4%
22 countries, 1 business model,
3 key activities:
10%
10%
• HR systems integration
• HR Operations
• HR Strategy
French affiliate:
• Sales breakdown today
(total sales 25M€)
• Target breakdown
• Market share
89%
7%
45%
45%
1%
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15%
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Arinso Products/Services
HR IS Integration: Arinso is an established
partner of the leading providers of HR
management solutions
 ERP: Establishing the foundations
 Implementation
 Integration
 e-HR: Streamlining administrative processes
 Enterprise Portals: Optimizing work environment
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Arinso Products/Services
HR Strategy: Transforming HRM to deliver Business Strategy
 HR business
analysis
 HR process
improvement
 Transformation
management
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Arinso Products/Services
HR Operations: Helping clients build more HR value
 HR Shared
Service Centers
(HRSC)
 HR Technical
Business Process
Outsourcing
(TBPO)
 HR Business
Process
Outsourcing
(BPO)
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Operating Strategy
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Products:
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Software tools (global offer)
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Bespoke developments (sold in France)
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Design in Belgium
Coding & maintenance in Malaysia (lower labor costs)
Local design
Coding in Morocco, India, Malaysia (lower labor costs)
Services sold in France:
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HR Strategy consulting  Locally
HR Integration consulting  Locally
HR Operations
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HR Shared Service Centers  Atlanta, Brussels
Business Process Outsourcing  US ( Atlanta ), CAN (Montréal ), SPAIN
( Barcelona Call center ) + Shared Service Centers
Technical Business Process Outsourcing  US ( Atlanta ), BEL ( Brussels )
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Clients
 Who are they?
 Big multinational groups
 Local companies
 What do they expect?
 HR Transformation:
 Systems
 Organization
 Processes
 Better value at lower cost
 How a presence on the French ground helps satisfying
customers?
 Requirement to know the French HR regulations
 Minimize cultural gap (for sales & consulting)
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Clients
Arinso counts 90+ clients in Fortune Global 500
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Clients: Some Big Names
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Why coming to France?
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Demand from global clients for Arinso to roll-out projects for
all of their affiliates  international expansion plan
Belgian market would have quickly become too small
French market was big & new (and need to be in France to
deal with French customers)
Proximity
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Geography
Language
Being in France seemed a must for a company with
international ambitions
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Company values
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Core values:
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Value creation
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Harmony
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Humility
Anticipated conflicts with France: Humility vs French culture
Verified good fit with France: Value creation (from the
education system obviously ; French university)
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Company values
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Values instilled in France the same way as anywhere else:
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Through the personality of the charismatic founder & CEO
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Customer-oriented, efficient, hardworking, …
Academy-type management, clear communication, …
Close to the base, always flying in economy class, …
Jos Sluys
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Through the structure of the organization
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Flat, reactive, identifying & rewarding potentials, dropping dead
weights, …
Homogeneity in organizational structure, business model and bonus
plan structure across countries, …
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Constraints in France
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Expected constraints: Costs
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Structure
Labor
Some more discovered after settlement
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Rigidity of labor regulations (increased even more since 1996)
Employer-Employee relation not easy to manage
Poor language skills of French professionals (even young grads)
More requirements from young graduates:
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compensation & benefits (1999-2001)
little flexibility (still true)
Backing of the value “labor” in the French society
Worst constraints
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Labor costs (35hrs/week)
Lack of of flexibility and decrease of professional commitment
Operations management made more complex from 35 hrs/week
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Constraints in France
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Difference with other locations
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Labor costs: Profit margin
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France/Luxemburg = 1/5
France/Belgium = 1/4
France/Holland = 1/4
215 workdays/yr in France vs 240 in the majority of the rest of
Europe
Far better flexibility in the UK, Holland, Belgium…
Labor regulations and social environment better than France
anywhere else apart from Italy and Germany
Lost opportunities outside France? Why?
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Not competitive on labor costs
Poor language skills
Low flexibility of employees and need more coaching abroad
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Adaptation to France
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Recruitment/Selection
Errors cost much  recruitment process kept internal
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Compensation
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Management Development
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Implementation of attractive packages (company car, stock-options, profitsharing)
Increase of the variable part of remuneration for some positions
Setup of a middle management
Good technical culture need to be more Project cultured (most projects are
fixed-price nowadays)  Training on Project Management
Workforce Planning
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Recruitment: Quarterly plan
Management succession: No planning
Delocalization of low-margin activities abroad (near-shore / off-shore)
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Adaptation to France
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Motivation
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Initiation of a career plan process
Communication policies
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External: PR agency
Internal
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International transfers, use of expatriates
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Formal “Company” or “Business Unit” meetings
Informal get-together evenings (restaurant, bar, cultural event, …)
20 French employees abroad / 180
Lots of impatriates (international projects on the French ground)
Training of Moroccan technical engineers in France
Training
Quite substantial training budget (Structural & cultural expectation for training
and career development in France)
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Key Costs of France
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HR type costs
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Structural Costs
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Hiring
Paying
Training
Dismissing
Offices
Taxes
Communication constraints
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Poor foreign language skills
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Key Benefits of France
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Product/Service quality
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Very high productivity (education, mindset, behavior)
“Must” country for customer image
Revenue/profit
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Revenue increase
Profit decrease
 Re-positioning on high value-added activities
 Watch out for structure costs
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Location benefits
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quality of life (impatriates do not wish to leave France)
Market Potential
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customer demands for cultural adaptation of product(s)
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France vs Corporate
France
Corporate
Net Sales
19,4%
100%
Sales / head
153 085 €
96 646 €
Operating profit / Sales Not communicated
8,2%
EBIT / Sales
Not communicated
11,0%
EBITDA / Sales
Not communicated
12,6%
Net Result / Sales
Not communicated
2,7%
Figures of 2002
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Essential Advice
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Before coming to France
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Project & analyze profit margin (operating costs
: costs of sales + other expenses )
“Paris vs. rest-of-France ?”
Adaptation while in France
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Capacity to adapt to regulatory constraints
Prudence and anticipation (small errors can have
greater consequences than in any other country)
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We Thank
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Denis TOURNESAC, Managing Director Arinso France,
[email protected]
Catherine AIELLO, Finance & HR Director France,
[email protected]
Olivier CARPENTIER, Operations Director France,
[email protected]
ARINSO France
Espace 21
31, Place Ronde
F-92986 Paris La Défense 7
Tel: +33 (0)1 49 00 31 31
http://www.arinso.com
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Bibliography
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References:
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Arinso website
http://www.arinso.com
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Arinso Annual report 2002
http://www.arinso.com/Downloads/annual_report_2002_eng.pdf
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Appendix
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Questionnaire
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Our Team
 Rachel ROSA, [email protected]
 Martial FEVRIER, [email protected]
 José Ramon VALENZUELA, [email protected]
 Christophe VANIER, [email protected]
HEC School of Management
1, Rue de la Libération
78351 - Jouy en Josas Cedex
Tel: +33 (0)1 39 67 70 00
http://www.mba.hec.fr
http://www.hec.fr
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