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December 2006
Executive opinion

The growth momentum in Eastern European countries
By Daniel Le-Coguic, Vice President International Operations,
Central & Eastern Europe and European Affairs

In the wake of events following the fall of the Berlin wall, Eastern European countries have engaged in extensive development programs as part of their pre-accession to European Union (UE) strategies, to grow their market economies and privatize public institutions. Information technologies have made a major contribution to the changing dynamics of these countries, as key drivers for modernization. The IT sector has recorded growth rates of between 8-15% a year depending on the country, an average rate higher than those recorded in Western European countries.

Bull has a long history of co-operation with Eastern European countries. We have been making substantial investments there since the beginning of the 1990s, and notably in the Czech Republic, Hungary, Poland, and Russia. A key player in both transition and in modernization, Bull is recognized as a reliable and open partner, with proven expertise in running PHARE projects1. Our business is based on two major activities: large-scale integration projects for modernizing public services, and infrastructure solutions, notably with our NovaScale servers that are continuing to win over new customers. This year alone we are registering two-digit growth.

Vitality and diversity

Meanwhile the pace of development is going at a very diverse rate in different Eastern and Central European countries. When it comes to computerization, there are really four main groups of countries:

  • New EU member states are experiencing sustained momentum. On 1 May 2004, ten countries – the Czech Republic, Slovakia, Slovenia, Poland, Hungary, Cyprus, Malta, Latvia, Lithuania, and Estonia – joined the fifteen member states of the European Union. The development model for these countries is similar to that of Western European countries, with very strong growth for [systems] integration services, and notably in the private sector.
  • EU candidate countries currently benefit from Community programs and have embarked on major restructuring programs to modernize their administration. In these candidate countries also – Bulgaria, Romania2 , Turkey and Croatia – it is the public sector that calls the tune.
  • Emerging countries – among them some of the Balkan states3 and member states of the Central European Initiative, or CIS4 , have a very strong public sector, and an embryonic private sector, with privatization not having yet progressed to any significant level. CIS modernization projects are sponsored by TACIS (Technical Assistance to the CIS or Commonwealth of Independent States), which are regional co-operation grants (thematic or vertical sector multi-national programs). These markets consist essentially of hardware and infrastructure provisioning.
  • Finally Russia, which is a whole continent apart, and one of the richest countries in the world in terms of natural resources. This is a country requiring a particular kind of business approach.

Bull, at the heart of their modernization and openness

With regard to these different degrees of computerization and paces of reform, Bull takes an appropriate approach in each case, focusing on major integration projects and complex infrastructure solutions in the most developed countries, and for the most part, hardware and equipment projects in developing countries. This is combined with a strategy sharply focused on our key areas of expertise in the public sector – representing 30-50% of the market depending on the country –telecoms operators and the banking sector.

  • Bull is a major player in public sector modernization projects linked to pending EU membership. We also have centers of expertise based in Poland and Bulgaria for this type of project. We are champions of customs management system modernization: seven of the ten countries that joined the EU in May 20045 chose our solutions, which help them meet the standards required for European membership. We also have numerous customers in the fiscal area in Ministries of Finance, Home Offices (for border police forces and homeland security) and Ministries of Education, most notably in Poland, the Czech Republic, Romania and Turkey.
    These projects are central to the structural reforms being undertaken by these countries.
    We are now tackling social areas, for example with the Bulgarian Health Ministry and local governments who are embarking on modernization with great determination, such as the Polish town of Rybnik that has asked Bull to implement its ambitious citizen card project.
  • Our second strategic sector is telecommunications operators. In 2006, we decided, with the support of our Worldwide Telecommunications and Media entity, to consolidate and extend our capabilities while strengthening our dedicated centre of excellence in Poland by acquiring, a Polish consulting and integration company specialized in advanced and open-ended computing solutions for telecommunications and finance sectors, in March 2006. As a result, we are fully equipped and ready to address the needs of telecoms operators in Eastern and Central Europe.
    Telekomunikacja Polska, Poland’s leading operator, recently chose Bull teams in Poland to implement its data warehouse. In the Czech Republic, the country’s leading Internet service provision portal, Seznam, chose our NovaScale blade servers to host its advertising applications.
  • Banking is a sector in which Bull has long enjoyed a significant presence, notably with its payment systems solutions used in the deployment of ATM6 terminals and bank cash dispensers . Most notably, we are the market leader in the Czech Republic with an 80% share of the payment systems market.

This strategy has proved its worth this year – as we have succeeded in winning some 40 new customers – and will be pursued in 2007, along with three major challenges (outlined below) that need to be tackled.
First priority will be given to developing our systems integration business activity. We intend to increase capacity at our centers of excellence in Poland and Bulgaria, and develop our training and recruitment of new skills. We are also launching a strategic Open Source initiative to deploy our Open Energy family of services across all our geographic areas, and this move is already being met with approval in many quarters.
The second priority is to consolidate on-going server projects, not only with our large AIX customers but also with the sustained growth of our NovaScale customer base.
Finally, 2007 heralds the return of Bull to the market represented by European Union institutions. Through our close collaboration with the EU as part of pre-accession aid programs, Bull, in cooperation with its strategic partners, is ideally placed as a key player in Brussels for EU projects themselves.

With its ambition as the new ‘Architect of an Open World’, Bull is well placed to meet the challenges to come in 2007.

1 PHARE is the European Union’s financial instrument for assisting candidate countries prepare their entry into the EU.
2 Membership will take effect for Bulgaria and Romania on 1 January 2007.
3 Serbia Montenegro, Bosnia, Kosovo and Macedonia.
4 Commonwealth of Independent States include: Armenia, Azerbaijan, Belarus, Georgia, Kirghizstan, Kazakhstan, Moldavia, Tajikistan, Turkmenistan, the Ukraine, Uzbekistan
5 Bulgaria, Cyprus, Hungary, Lithuania, Malta, Poland and the Czech Republic (infrastructure). Romania and Ireland have also chosen Bull solutions.
6 ATM (Automated Teller Machines)

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