Incorporated:1969
NAIC:541511 Custom Computer Programming Services; 541512
SIC: 7371 Computer Programming Services; 7373 Computer Integrated Systems Design; 7379 Computer Related Services Nec; 8999 Services Nec
London-based Logica plc provides information technology services, including management consulting, software development, systems integration, product innovation, and managed services, to clients around the world. Though Logica is involved with a number of industries, including energy and utilities, financial services, and industry and transport, the company has its strongest presence in the telecommunications sector. Growth through acquisitions and continued expansion are among Logica's focuses in the early part of the 21st century.
Logica was founded as a private company in London in 1969 by Len Taylor and Philip Hughes, who left their employment at Scicon, a subsidiary of British Petroleum, to start their own enterprise. Building their original team largely from other former employees of Scicon, Taylor and Hughes soon established the fledgling Logica as a company known for its technical excellence in computer services. The company's first big coup came in the 1970s, when it was awarded a contract to design S.W.I.F.T., a transference network for the international banking community. Thereafter Logica's growth was quick and consistent, and it built a portfolio of well-known and influential clients. Logica recognized the importance of an international approach from the beginning, establishing its first overseas subsidiary in 1973 in the Netherlands and quickly expanding into the rest of Europe, North America, and the Pacific Rim.
Logica had entered the computer services market at an ideal time, getting in on the ground floor of what was to become the phenomenal growth industry of information technology. Others saw the potential as well, and many similar firms were created at around the same time as Logica. Over the years, however, most of these rivals foundered or were absorbed into large, often foreign, companies, leaving Logica as one of the few, and certainly the dominant, independent U.K. computer services firms.
Since its flotation in 1983, Logica struggled with its bottom line, and the company's share price remained static for the next ten years. Logica's weakness was such that it was nearly scooped up by the American company Electronic Data Systems in 1985. The takeover was avoided, but conditions worsened in the late 1980s. An unwise acquisition in 1988 of the American banking and telecommunications company Data Architects, intended as a foothold in the American market, turned out instead to be what Financial Times bluntly termed a "financial black hole." This setback, combined with the recession that swept the United Kingdom and elsewhere, damaged Logica, and matters were not improved by the departure of the firm's two founders.
Perhaps Logica's most severe drawback, however, was its own mix of corporate strengths. Noted since its inception for its technical excellence, Logica was less well-endowed with business acumen. Financial commentators delighted in painting an amusing picture of Logica as a company populated by absent-minded computer nerds so immersed in the arcane joys of information technology that they neglected the "real world" of sound business principles and competitive spirit. In any case, it was an irrefutable and uncomfortable fact that Britain's largest independent computer services company, highly respected though it was, did not even figure in the European top 50 such companies.
In 1993 new chief executive Martin Read appeared, intent on what Financial Times described as "injecting a cool measure of market realism into Logica's technological hot-house culture." Read immediately set about dramatically realigning and restructuring the company. "Logica is 25 years old," commented Read, "and could be described as having a mid-life crisis." One high priority was to transform Logica into a truly international concern. Although Logica had operated in international markets for years, with subsidiaries and representative offices worldwide, each country's Logica functioned as a separate entity; Read aimed to convert this system to a seamless, global whole, whereby technical expertise and staff experience could be accessed as, where, and when needed.
Unusual for a company in the throes of restructuring, Logica did not shed staff, although management layers were simplified and administrative functions trimmed. (Indeed, the company maintained--as it had maintained, even throughout the recession--a substantial annual intake of recent graduates: one key, many believe, to Logica's continued position at the forefront of technological advancement.) In the new global Logica, staff could expect to be assigned to any country where their skills would be most useful.
Another of Read's first moves was to beef up Logica's sales and marketing team, a needed effort, as the Sunday Times commented: "Logica can be a difficult firm to identify. It does almost no advertising. ..." The company was also thought to suffer from a lack of focus, which promoted a tendency to become involved in too many small or dead-end projects when it should have been considering each project as a stepping-stone to other opportunities. Logica had pursued a short-term consulting job or single installation project with enthusiasm equal to that with which it greeted, say, a several-year contract involving customized applications and complex systems integration. Under Read's direction, the company began to refocus its priorities--for example, axing its involvement with healthcare in Italy, but making a push into new geographical areas such as eastern Europe and the Middle East, where opportunities for future growth were likely to arise.
Part of the new plan involved a policy of strategic acquisitions, and Logica made its first significant purchases in a number of years. In 1994 alone the company acquired Precision Software Corp., a Virginia-based provider of commercial loans systems to prominent banks; the software division of Houston's Synercom Technology Inc.; and the Dutch company Fray Data International. The acquisitions were designed to further Logica's goal of widening its product offerings and consolidating its place in chosen geographical markets.
Logica's new strategies, calculated to promote a happy marriage of Logica's traditional technological distinction with a new, sharpened business instinct, soon showed signs of paying off. In 1994 the company's pre-tax profits were up 50 percent. Activities in the United States, unprofitable for years, returned to a small but heartening profit. Operations in the United Kingdom and continental Europe showed continued improvement.
In the mid-1990s, the range of market sectors to which Logica lent its expertise was extremely diverse. The company prided itself on a cross-market, "multi-disciplined" approach, and over the years had built up specialties in several areas, most notably banking and finance, defense and civil governments, energy and utilities, telecommunications, space, transport, computing and electronics, and manufacturing.
Banking and finance traditionally provided Logica's largest market (generating 32 percent of revenues in 1994), with the company's experience in the sector extending back to its earliest years. Logica was much in demand for payment systems and network services, an area in which the company had excelled since the pioneer days of S.W.I.F.T. The company was also credited with the creation of CHAPS, the network for the United Kingdom's Clearing House Automated Payment System. Logica worked on trading and settlement systems for prominent international securities houses, clearing banks, fund and investment managers, and stock exchanges. Stock exchanges themselves were another area of expertise for the company, with Logica being called in to improve and streamline existing systems in London, Hong Kong, Switzerland, Norway, Denmark, Australia, and Italy, and involved in the development of new exchanges in Trinidad and Tobago, Hawaii, Kuala Lumpur, Chicago, and Kuwait.
Retail banking proved a busy and lucrative field for Logica; retail institutions had long been acutely aware of the advantages of increased automation but were not always sufficiently knowledgeable about information technology to implement the most effective system--or, crucially, to be able to integrate a new system with other systems in use. Logica completed some 300 projects harnessing information technology capabilities for retail banking use, including customer information, deposits, credit and debit cards, loans, and branch automation. Logica was also active in the financial sector in the areas of commercial loans and insurance.
Logica's work in the fields of defense and civil government ranged from fairly standard administrative and operational systems to specialized intelligence, weapon, and sensor systems. The company undertook projects in communications, data processing, pattern recognition, image and signal processing, computer simulations, machine intelligence, monitoring, and surveillance for its government clients, which included the United Kingdom, Australia, Belgium, the Netherlands, and the European Commission.
Logica also developed a specialty in energy and utilities. Many of the company's contracts in these fields arose from the needs of newly privatized companies in the United Kingdom and elsewhere, which recognized the need for improved efficiency in a more competitive environment. For clients in the oil, gas, electricity, and water industries, Logica worked to supply and install systems for better customer service, asset management, maintenance, materials, logistics, and assessment of environmental concerns.
Logica's expertise in the telecommunications sector, which began in the 1970s when the company developed the software for the first teletext system, grew steadily, and in the mid-1990s Logica offered services and products in broadcasting and video technology, digital image storage media, data communications, control systems, intelligent scheduling, and studio automation. Among the company's more ambitious projects was a long-term venture with Ameritech began in the early 1990s. Logica was charged with developing an interactive, multimedia information and entertainment service that would allow Ameritech's six million customers to access shopping, games, news, education, movies-on-demand, and travel arrangements through their television sets.
In the field of space exploration, Logica created sophisticated experimental space systems for such clients as the British National Space Centre and the European Space Agency. The company's commercial applications included satellite control centers to provide information about the weather, forecasts of crop yields, and earth observation programs.
In transportation, Logica was involved in projects relating to traffic control systems via air, road, rail, and water. Speedwing Logica, established jointly with British Airways in 1990, was a provider of applications software and services to the international air transport industry. In addition, Logica helped with a number of high-profile transport projects including the Channel Tunnel, the London Underground, the Dutch highway network, and Bologna's public transportation service.
Logica found natural clients in computer companies such as IBM, Digital, AT & T, Tandem, and Microsoft, developing systems and applications software for use with those companies' hardware systems. In industry, Logica's experience encompassed the manufacturing, pharmaceutical, and automotive markets. Here the company supplied help with business applications including customer service, streamlined procedures, and systems integration for business operations from stock ordering through to distribution.
To each sector it serviced, Logica offered expertise in three areas: consulting, software, and systems integration. Some 25 percent of the company's revenues derived from consulting. Logica enjoyed a solid reputation for its consulting work, the result not only of years of experience in the field of information technology itself, but also of the company's thorough understanding of the business nature of the specialist sectors its served.
Detailed knowledge of its clients' particular business environments also aided Logica in providing software: many of the company's software applications, originally developed for a specific use by a particular customer, became available as generic packages which, depending on the individual case, could either by used as they came or modified to meet individual needs. Alternatively, Logica could supply products for entirely new applications, either developed in-house or by other computer companies.
Systems integration played an increasingly important role in Logica's business as clients, already possessing a computerized infrastructure, sought to make use of the latest technology to expand their automation. Logica's role was to harmonize new hardware, software products, systems applications, and developing technologies with existing capability, and serve as project manager for the whole operation.
Logica occupied a unique position as an independent computer services firm. Tied to no computer product vendor but conversant with the attributes of all, Logica was free to offer advice and aid in the implementation of the most suitable combination of hardware, software, and systems applications available.
Continuing research and development was obviously vital to maintain Logica's position in the forefront of information technology. The company's technology center in Cambridge, acting as consultant to the rest of Logica as well as directly to clients, fulfilled the allied functions of formulating new technologies and developing practical applications for these innovations. In 1994 the company's spending on research and development was £5.7 million.
Heading into the second half of the 1990s, Logica continued to concentrate on growth through acquisitions to position itself strategically as the dominant information services provider. In late 1996 Logica acquired Paris-based Axime Ingenierie, a software consulting firm, from parent Groupe Axime for about £18.4 million. Axime had a staff of about 1,000 and became Logica's biggest overseas subsidiary. The deal prepared Logica for the anticipated increase in computer systems spending in Europe as the information technology field continued its rapid growth.
In August 1997 Logica made another significant buy when it purchased Aldiscon, an Irish telecommunications software company, for about £57 million. Aldiscon provided network systems and services, including systems for mobile phones, to the telecommunications industry worldwide. A year later Logica purchased French information technology consultancy Delog Conseil for about £3.7 million. Delog catered to the financial services and insurance markets. A month later, in July 1998, Logica made two additional acquisitions. The company bought Belgian information technology consultancy Administra/CIM-Hardi. The company also provided systems development and enterprise resource planning (ERP) services and served multinational industrial customers. Logica's second acquisition in July was of the Quaestor product and development team. Based in Bangalore, India, the Quaestor team focused on the development of electronic retail banking solutions.
Continuing its flurry of acquisitions, Logica closed the 1998 year with four more purchases. In October Logica paid about $35 million for the Carnegie Group, a U.S.-based consultancy and designer of customized software systems primarily for the telecommunications sector. Carnegie Group's clients included US West and BellSouth. In December Logica acquired FCC Folprecht, a software and services company in the Czech Republic, for about £6.3 million. FCC Folprecht focused mostly on the utilities, finance, and industrial markets. Also in December Logica purchased Aethos Communication Systems, a provider of calling solutions for mobile operators, and DDV Group, a European telecommunications and new media consultancy. Logica paid about £47.6 million for Aethos and £15 million for DDV Group. During fiscal 2000, which ended June 30, Logica acquired consultancy Team 121 as well as the Dutch information technology project management firm Contigo.
In addition to growth through acquisitions, Logica focused on strengthening operations and building business through lucrative contracts. In the late 1990s Logica boosted its energy and utilities operation with several new contracts, including one with the New Electricity Trading Arrangements (NETA) in England and Wales worth more than £50 million. Logica was also awarded a two-year contract, worth about £60 million, with British gas utility company Transco, and a contract with utility company Electricité de France. In the United States, Logica secured a five-year contract to provide a Market Data ClearingHouse (MDCH) service to support American Electric Power, which had operations in eleven states.
The rapidly growing telecommunications arena proved beneficial to Logica, and the company enjoyed a 69 percent growth in sales in its telecommunications division during fiscal 2000. Logica worked with more than 200 telecommunications companies in more than 60 countries at the end of the century and continued to offer innovative solutions and technologies to clients. The company, for instance, introduced a wireless Internet gateway designed to support mobile services. Logica won contracts with Cable & Wireless Communications in the United Kingdom and with Bahrain-based telecommunications operator Batelco, among others.
Fiscal 2000 marked the seventh consecutive year of record profits for Logica, and the company hoped to continue the streak. Logica's revenues of £847.4 million in fiscal 2000 marked a 28 percent increase over the previous year. Profits before tax reached £97.4 million, a 54 percent rise. Logica planned to continue its acquisitive strategy, which it demonstrated in October 2000 with the purchases of MITS, an Australian information technology services company focused primarily on the utilities market, and PDV Unternehmensberatung GmbH, a German information technology services firm.
As Logica ventured into the 21st century, the company remained confident in its ability to provide its customers with cutting-edge, technological solutions. With more than 90 offices in 24 countries and a work force numbering more than 8,000, Logica hoped to dominate the global information technology sector and solidify its leadership position in what was increasingly becoming a digital world.
Principal Subsidiaries
Logica U.K. Limited; Logica Mobile Networks Limited; Logica Mobile Networks Inc. (U.S.A.); Logica SA (France); Logica S.a.r.l. (Luxembourg); Logica BV (Netherlands); Logica Consulting BV (Netherlands); Logica GmbH (Germany); Logica Consulting AG (Switzerland); Logica SA/NV (Belgium); Administra-Cim/Hardi SA (Belgium); Logica Svenska AB (Sweden); Logica s.r.o. (Czech Republic); Logica Inc. (U.S.A.); Logica Carnegie Group Inc. (U.S.A.); PT Logica Indonesia; Logica Pty Limited (Australia); Logica (Malaysia) Sdn Bhd (Malaysia); Logica Pte Limited (Singapore); Logica Limited (Hong Kong); Logica Synectics Private Limited (India); Team 121 Holdings Limited.
Principal Competitors
Cap Gemini Ernst & Young; Misys plc; Sema Group plc.
Further Reading
About Logica, London: Logica plc, 1994, 8 p.
"All Systems Go in Software," Independent, September 16, 1994.
"Bearbull," Investors Chronicle, June 17, 1994.
"Doing It the Logica Way," Independent, March 23, 1995.
Head, Beverley, "After France, Logica Looks At Australian Takeover Targets," Australian Financial Review, December 9, 1996, p. 34.
"Kudos for Read as Logica Scales £7m," Observer, March 12, 1995.
"Logica Embraces Corporate Positivism," Observer, April 23, 1995.
"Logica Learns to Sell Itself," Sunday Times, April 3, 1994.
"Logica on a High Note," Evening Standard, July 15, 1994.
"Logica Profit Surges, but Stock Can't Keep Up," Wall Street Journal Europe, February 25, 1999, p. 7.
"Logica Revamp Costs £2m," Independent, March 11, 1994.
Mathieson, Clive, "Logica Stretches Run of Profits," Times of London, September 7, 2000, p. 25.
Newman, Michael, "Carnegie Group Bought for $35 Million," Pittsburgh Post-Gazette, October 2, 1998, p. D1.
O'Keeffe, Barry, "Shareholder Windfall As Logica Buys out Aldiscon," Irish Times, August 1, 1997, p. 60.
"People: Mann's Long Stint at Logica Comes to an End," Financial Times, February 25, 1994.
"Shopping-Mad Logica Grabs £13.5m Profit," Daily Mail, September 16, 1994.
"UK Company News: Logica Advances to £13.5m," Financial Times, September 16, 1994.
"UK Company News: On Course against the Odds," Financial Times, May 31, 1994.
— Robin DuBlanc; Updated by Mariko Fujinaka
