Siemens IT Solutions and Services, Inc.

THE SCOOP

From many, one

Formed from the merging of several existing business, IT and consulting lines within parent company Siemens AG in January 2007, Siemens IT Solutions and Services (SIS) is a full-service, one-stop shopping service provider in the technology field.  Encompassing an ability to provide solutions and services at every stop along the IT chain, the firm's core competency is in outsourcing and consulting.  Around these competencies, SIS offers two main business linesâ€"business solutions and IT outsourcingâ€"with individual solutions available for every client, from the consulting and design phase right through building, operating and maintaining the systems. In terms of specific solutions and services, the firm's offerings include strategic IT consulting, systems integration, application management, SAP consulting, integrated service desk and desktop, vertical industry solutions, and migration and server consolidation.

The SIS division counts its parent firm as its biggest customer, but also operates in a further seven industrial fields, which range from the manufacturing sector to telecommunications, media and the public sector.

Parental payoff

With 41,000 employees in 42 countries serving some 10,000 customers, SIS is a growing global player in its field. Its largest presence is in its home markets of Germany (where the unit does 42 percent of its business) and greater Europe (a further 42 percent, not counting Germany), although it is also well represented in the Americas, with 12 percent of its business coming from that region. The remaining 4 percent is split evenly between Asia and Africa. In 2008, the unit pulled in almost $6.9 billion globally, a slight decrease from 2007's figure. Of that $6.9 billion, some $4.95 billion came from what the company refers to as "external revenue"â€"companies other than Siemens. Still, that does leave some 28 percent of the unit's revenue coming directly from its parent company.

SIS' profits also suffered in 2008, falling more than 43 percent to $185 million. But that won't worry its parent too much: The $4.95 billion in external revenue is a shade under 5 percent of the record $100 billion revenue Siemens AG posted for 2008, with a $7.6 billion profit. And, quite apart from that, the unit is of significant strategic import to Siemens; a significant portion of the company's revenues (well over 50 percent, according the firm) depend on software and IT servicesâ€"both trends that are increasing and likely to continue on an upward trajectory. Having an in-house IT solutions and services provider, especially one with a specialty in software engineering, is of critical importance to the company as a whole.

Pulling it all together

As mentioned above, SIS was created in January 2007, when Siemens AG grouped its worldwide IT solutions, services and software capabilities under a single umbrella. The forerunner to SIS was Siemens Business Services (SBS), an entity formed in 1995 to serve as an in-house provider of IT services to its parent company.

Within a year of its founding, SBS had doubled its headcount and set up shop in North America and Europe. By 1997, with responsibility for all of Siemens' business engagements, the global firm employed nearly 17,000 staffers. It sailed into the new millennium, expanding its horizons to new customers and boosting its presence outside its home country. In 2000, the firm acquired ENTEX, a leading IT infrastructure services provider, and hired former ENTEX head John McKenna as CEO of the North American division.
SBS began struggling around 2005, however, posting a loss of $884 million for that year. In an attempt to turn things around, Siemens AG began farming out some maintenance services to partners, laid off staff, and appointed Christoph Kollatz as chairman of the unit. Still, the unit couldn't turn it around and, with customer requests for integrated services ringing in its ears, Siemens took positive action, merging SBS and four more of its business divisions into a single entity: Siemens IT Solutions and Services. The other four divisions were the business innovation center, development innovations and projects, program and system engineering, and Siemens Information Systems Ltd. Christoph Kollatz remained as the head of the new division, while John McKenna maintained his position as head of its North American operationsâ€"that is, until 2008, when he left the firm to head up communications and data solutions provider ConvergenceOne. In November 2008, John E. Evers Jr. was revealed as McKenna's successor. Having most recently served as vice president of worldwide outsourcing sales at Hewlett-Packard, Evers should have something of an understanding of the role he has adopted: SIS is one of the 10 largest providers of outsourcing in the world, deriving around 60 percent of its revenue from operating IT systems for its customers.

Speeding up, slowing down

After a solid showing in 2007 on the deal-making front, it would probably be safe to say that SISâ€"like many firmsâ€"had a tough 2008 when it came to announcing new contracts. Indeed, for the first half of the year, the division saw fit to announce just one new deal to the public: a five-year outsourcing contract with sportswear firm NIKE. Under the terms of the contract, SIS will supply personalized infrastructure outsourcing services for NIKE that leverage Siemens' proprietary SieQuence® solution, a customizable suite of services that align IT and business strategy. Among SieQuence's cost reduction and performance improvement initiatives is a network of call centers around the world that assist somewhere in the region of 30 million callers per year, in 19 different languages. Those "competence and service centers" will also be at NIKE's disposal in the coming years.

Murky dealings

Following a high-profile investigation into its business practices, parent company Siemens AG parent company Siemens AG entered into settlements with the U.S. and German governments under which it agreed to pay around $1.6 billion in fines and disgorgements.  The reason?  The firm had been accused of bribing government officials around the world to win contracts on infrastructure projects.  The U.S. government cited Siemens’ cooperation and remediation efforts in agreeing to a deal that did not include a conviction for bribery.  Through the terms of the settlement, SIS was not disqualified from government business in Europe and retains its "responsible contractor" status with the federal Defense Logistics Agencyâ€"so the firm can still bid on public contracts in the U.S.

All told, the company is said to have paid in the region of $1.4 billion in bribes since the mid-1990s, a figure that led the head of the FBI bureau in Washington to describe the bribes as "standard operating procedures for corporate executives who viewed bribery as a business strategy.†Needless to say, the firm has since professed deep regret over its actions, with Siemens Chairman Gerhard Cromme commenting that the firm "is closing a painful chapter in its history."
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Siemens IT Solutions and Services, Inc.


101 Merritt 7
Norwalk, CT 06851
Phone: (203) 642-2300
Fax: (203) 642-2399
www.usa.siemens.com/it-solutions

STATS


  • Employer Type: Public
  • Stock Symbol: SI
  • Stock Exchange: NYSE
  • Group President: Dr. Christoph Kollatz
  • 2009 Employees: 41,000

Major Office Locations

  • Norwalk, CT
  • Munich, Germany

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SALARY FINDER

SALARY FINDER

Health Service Administrator

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  • 100+
Yearly Salary Range (US$ Thousands)