Austrian systems integrator Systems Integration & Technology Distribution (S&T) acquires the Information Management Group
12/01/2007
Austrian systems integrator Systems Integration & Technology Distribution (S&T) announced the acquisition of the Swiss-based consulting company the Information Management Group (IMG), for an undisclosed sum. IMG has 653 staff in 27 subsidiaries across the US, Europe, China and Japan, with revenues of €81.6 million in the year to September 2006

OVUM. Cornelia Wels-Maug

Comment:

S&T starts the New Year with an acquisition, which is unprecedented in its history in terms of size, and breadth of skills and geographic range. IMG develops business models in the SAP environment, addressing the needs of internationally operating companies and implementing processes and systems.

IMG seems a good fit for S&T: together, both have a pool of around 1,000 SAP specialists, which represents roughly a third of their combined workforce, with a common focus on manufacturing industries and the financial sector. Both mainly focus on mid-sized companies, aiming at supporting them with their international expansion. However, they are rarely competing directly, since S&T is strong in software delivery and IMG made its name in consulting. Their union only causes little reduplication.

For S&T this move is a great leap forward. It allows it to tap into a rich pool of skills and methods, gain additional industry sector expertise and to enter into prospering new geographic markets in one step. This potentially takes S&T, which began as a low-margin product reseller, much further up the value chain. We approve, assuming S&T can make IMG work closely with its systems-integration operations. Having a credible IT and business consulting capability is becoming more important to IT services providers, because enterprises are increasingly looking for IT to help them grow their revenues, supplementing the established focus on using IT services for cost-cutting.

We call this new focus on using IT for revenue growth the 'Growth Agenda', and it's clear that to ride the Growth Agenda IT services suppliers need to demonstrate an understanding of business dynamics and processes. Just understanding how to implement low-cost IT systems is no longer enough.

Both companies stress the friendly character of the merger, which is certainly a crucial prerequisite of success. For now, the new entity will trade as S&T in Central and Eastern Europe, Germany and Switzerland, and as IMG in the US and Asia.

Though S&T is well-versed in making acquisitions, IMG is a big fish to swallow. The key challenge will be to ensure that IMG's consulting capabilities drive new revenues for S&T's traditional systems-integration and application-management businesses. It's revenue synergies that make this deal so potentially interesting.