Science: After 25 years, Logica still makes sense: Steve Homer examines the outlook for one of Britain's flagship computing firms whose activities stretch from the London Underground into space
Monday 18 April 1994
The company was founded by Philip Hughes and Len Taylor in 1969. They wanted a company name that would 'travel well'. Even at the outset, Logica had international aspirations.
The company wanted to help others with their computing needs, looking at the hardware and software available, making recommendations and writing new programs.
Logica's breakthrough came when PRC needed a company to design and construct the European end of a huge hotel reservation system being built in the US. It was a difficult, high-profile job that provided a useful springboard for the fledgling company.
In 1971, the company won its first defence work, developing a system for war games. Two years later, in the face of stiff competition, it won the contract to develop Swift, an international electronic bank currency exchange system.
Logica's first overseas base was opened in the Netherlands in 1973. Within a year the company was working on a project to control the Dutch gas system, based on work done for the UK national gas grid, and the exploitation of its UK experience was one of the key factors in its growth.
In 1974, Logica developed a system for the BBC to process and display election results. The following year the company developed an automated typing system for Unilever which later became VTS, a pioneering office automation product which was one of the first software set-ups in the world to show the sort of networked word processing that is commonplace today.
In 1983, with a turnover of pounds 42m, Logica was floated on the London stock exchange. It continued to attract impressive contracts. In 1984, it was employed to complete the largest computer contract in Europe, the pounds 1bn BT Customer Service System. In 1986, it was awarded a pounds 500,000 contract for work on the European Space Agency's Columbus orbiting laboratory and a further contract to supply the telemetry and control software for the Giotto spacecraft, which was sent to rendezvous with Halley's Comet.
In 1987, it was responsible for the introduction of London Underground's automated ticketing system. The following year, it unveiled the new Ernie, the machine that chooses the Premium Bond winners every week.
But in the late Eighties and early Nineties the remarkable growth of the company began to slow. In 1985, Logica had a turnover of pounds 62m; by 1987 it had grown to pounds 109m; in 1989 it had risen to pounds 180m. But two years later it had only grown to pounds 198m and last year it was just pounds 217m.
For Martin Read, brought in seven months ago to shake up the firm, the problem was to turn a big small company into a small big one. 'This company is technically very strong, with a great client list and clients that have been with us for many years,' he says. 'They like and trust us. But the profits have not been where they should be.'
The City expected Dr Read to shake up the company, but he is taking a gentler approach, concentrating on maximising the profitability of the existing operations rather than fundamentally changing its business focus. For example, the company recently landed a major water industry contract in Australia mainly on the strength of its UK operations - Anglia Water is a long-standing client. Repeatability could be an important trend.
'When Logica started out, the computer department in an organisation was like a mystic god, and no one could get any computing done without going through these monolithic organisations,' he says. 'This was largely because that was the way the technology drove it. In some ways Logica was fortunate because it was part of the god-like syndrome at the start. There were few people around with the skills, so in many ways a company like Logica that had these skills and insisted on quality had a good chance to establish itself.'
Now, with a personal computer on almost every manager's desk, people want a quick solution to their problems for the right price. This means building on work done before and relying on pre-written software developed either by Logica or standard commercial packages.
Dr Read is keen to develop the company's business overseas. 'I want to make sure we have a better international balance. The UK is important for us, but we ought to use our international offices more. I think Logica will be a better balanced company if it does that.'
Logica is evolving quickly. Dr Read says he wants to convey his enthusiasm for the company and the diversity of its work. Major projects include software for the Huygens satellite, the latest command and control system for a collaborative European military project, an interactive television interface with a US telecommunications company and designing for the interface for the Civil Aviation Authority's new en-route centre.
The test for Logica is to make use of its diversity. Many companies emerging from the recession are focused on their core businesses. In Logica's case that is knowing how to apply computing to business - no matter what the business happens to be.
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