Siemens to make stronger U.S. push
The German giant plans to boost its North American computer services and consulting business in an initiative to secure a larger presence on U.S. soil.
As earlier reported, Siemens said that as of June 1, Entex Information Services, which the conglomerate acquired last year, will be formerly folded into its own computer services and consulting arm, SBS (Siemens Business Services).
The goal is to develop a more solid foothold in the U.S. market, creating a $600 million services company with approximately 5,000 employees, said John McKenna, the newly appointed head of SBS North America. McKenna, who was formerly CEO of Entex, said Siemens had only about 500 employees serving in the U.S. division of SBS before the marriage.
The move is part of a broader strategy by Munich, Germany-based Siemens to drive substantial growth in its U.S.-based business, aiming to reach roughly $25 billion in revenue growth over a four-year period. Since 1998, the company has poured about $8 billion into U.S.-based acquisitions, including the purchases of Entex, Westinghouse's power business, Unisphere Networks and Efficient Networks.
Siemens, whose SBS division worldwide has annual revenue of $5 billion, recently began trading on the New York Stock Exchange. The company's U.S. expansion plans also include aggressive efforts to tackle other markets, including the U.S. handset market, where it has set a goal of toppling Motorola from its No. 3 spot.
The efforts by Siemens to strengthen its SBS business come amid gloomy times in the U.S. services market, as more companies are reluctant to make new technology investments. Most of the smaller Internet consulting companies--which primarily focused on selling Web development and design services--have been badly bruised by the downturn, along with their dot-com clientele.
McKenna said that although times are challenging, the division plans to continue landing larger, more traditional technology services contracts that tend to be more lucrative and stable. Most of its projects range from $20 million to $40 million apiece.
"The good news is that in the whole world of e-business, large customers are still in the early stages" of technology spending, McKenna said. Although growth rates will not be as grand as they have been in the past two years, "there'll be a steady increase in spending" by larger clients over the next two to three years, he said.
By combining SBS and Entex, which boasts clients such as Microsoft, MetLife, Dell Computer and Morgan Stanley, customers will gain help in a wide range of categories, including network systems management, help-desk support, software services and management consulting.
Under the newly revamped SBS North West division, customers will also receive help on implementing products from some of the biggest names in software, including SAP, Siebel Systems and i2 Technologies, which have all formed partnerships with SBS.