All systems go in software: Diane Coyle compares the strategies of two companies competing for the biggest international computer projects

PIERRE BONELLI compares business strategy to planting a garden - a French garden. The chief executive of Sema, the Anglo- French software group, says: 'When you are designing Versailles, you build the gardens to plan. You do not let nature burst through.'

The Frenchman's penchant for sticking to a design is explained by the success of Sema's expiring five- year plan. The group last week reported a 34 per cent rise in profits before tax to pounds 14.2m in its first half.

It is putting the finishing touches to its latest five-year strategic plan. Mr Bonelli, on reflection, says there will be room for a little English spontaneity in the Sema garden.

The centrepiece of the design is an emphasis on systems integration. This is computer-speak for linking unrelated systems, enabling the efficient flow of data between them by providing the right mix of hardware and software. It is one of the fastest growing and most profitable areas of computer services.

It was the right seed to sow five years ago, when Sema was formed from the merger of the ailing CAP group of Britain with Sema Matra of France. The systems integration market has since flourished with companies switching from old- fashioned mainframes to networks of workstations.

The projects, nearly always fixed-price, are often huge and complicated. For example, Sema has installed control systems in French nuclear power stations and successfully built the reservation system for the World Cup.

Mr Bonelli says it will remain the group's mainstay - in the first half of this year it provided 63 per cent of revenues of pounds 298m. Spending on systems integration is expected to increase by 20 per cent in 1994/95 in Britain alone.

The area of unplanned English growth Sema envisages in its next five years is outsourcing. In the first six months of this year outsourcing revenues were 153 per cent higher than in the same period last year, at pounds 89.1m.

The huge leap came from the acquisition of a privatised Swedish company carrying out work for the public sector and from natural growth in Britain. Sema won the contract to run the Home Office's information technology services, the British government's biggest market-testing project so far.

The spontaneous growth was not part of the plan, but Mr Bonelli says: 'If outsourcing grows at 40 per cent, I won't mind.'

Yet the big systems integration projects will remain the group's biggest area. Systems integration, especially for the defence industry, was what the technicians of Sema Matra knew best how to do.

Mr Bonelli says: 'It was a question of culture. Other companies sold clients their people and hired in expertise from outside. We sold an entire project and took on fixed-price contracts as early as 1980.'

It paid off, and Sema reckons it is still the key to success. It can market its expertise in defence, energy, finance and, increasingly, telecommunications anywhere in the world. It has relatively few competitors in Europe that can bid for the same types of contract. Rivals include the big international consulting groups and companies such as Logica.

Ross Jobber, a computer sector analyst at UBS, points out that Logica has recently adopted a similar approach to Sema. One of Britain's biggest independent computer services companies, Logica has posted disappointing results and underperformed its sector for the past four years.

Hit by a US acquisition disaster and the recession, Logica places more emphasis than Sema on software products. About half of Logica's business is fixed-price, including the same kind of big systems integration contracts as its trans-manche competitor.

Logica acquired a new chief executive in Martin Read, brought from GEC Marconi to sort out the problems just over a year ago. Mr Jobber of UBS says: 'Martin Read has to develop Logica as a truly international company able to take on the biggest projects because its traditional markets are being eroded by the power of packaged software. Sema is already a long way down that track.'

This is the strategy Martin Read has spent the past year implementing. He says: 'We are concentrating on the markets where we can be truly international, in finance, telecommunications and our space business, for example.'

The change of strategy has already begun to pay off. Yesterday Logica reported a 50 per cent rise in pre-tax profits, to pounds 13.5m, in the year to 30 June.

Sema is sticking to its design but switching its sector emphasis from defence and energy.

Mr Bonelli is gambling on telecommunications. A customer care and billing system for mobile phone networks has taken Sema's revenues from this market from pounds 9.1m in the first half of 1993 to pounds 19.4m in the first six months of this year - still only 6.5 per cent of the total.

Sema also brought in France Telecom as one of its biggest shareholders in mid-1993. France's state-owned phone company holds a stake of nearly 20 per cent.

In the meantime, he argues that Sema is in a strong position with new telecoms operators, who are in a hurry to buy a system that already works. 'Their biggest worry is how soon they can start invoicing.'

Logica, with 10 per cent of turnover from telecoms last year, also has high hopes of growth. It already has multimedia expertise through a home-shopping contract with a US television network.

Mr Read speaks the Anglo- Saxon managerial language of delayering and leveraged revenues rather than Mr Bonelli's Gallic image of planning and design. However, Logica has joined Sema in its view that profits will come to those who are international experts in the biggest computer projects.

(Photograph omitted)