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Press Room, 26. June 2008

Interview with Günther Meyringer, CEO of Romsys, for the E-Finance Magazine

In 2007, New Frontier Holding acquired the Romanian IT company Romsys, as its first investment in the country. Why did New Frontier invest in Romania and why did it choose Romsys?

1. In 2007, New Frontier Holding acquired the Romanian IT company Romsys, as its first investment in the country. Why did New Frontier invest in Romania and why did it choose Romsys?

- New Frontier's strategy, as a holding, is to acquire one strong IT company in each country of Central and Eastern Europe, and Romania was one of the first markets we looked into, based on the fact that it is one of the fastest growing economies in CEE. Many investments come here, also the joining of the EU brought a lot of attention to Romania, this is why we focused a lot on the country. Why we selected Romsys? We had a certain screening process, we analysed different companies in different markets, we screened across CEE a lot of IT companies, we analysed in Romania specifically around 20-30 companies and we picked Romsys because it fits best the profile of type of company we were wishing for. The things that made us very much interested in Romsys is first the long track record of the company, so well established on the market, marking this year its 15th anniversary. The second is the size of the company, being one of the top 5 system integrators in Romania. The third thing why it was attractive to us is the business portfolio having a part based on infrastructure and another part based on high value software services for customers. So adding all these components made Romsys the preferred choice in Romania.

2. In what state did you find the company upon coming here? What is your experience of the last months?

- I found Romsys in a solid state. A lot of the processes inside Romsys are already based on European-style processes; we have a sales forecasting system, a solid pricing process, we use a CRM system, we had an understanding of the profitability of each business we are doing, so in this respect I found a very solid company, with two main open gaps. The first is putting Romsys back on the growth path. Romsys is a very successful business but in very specific segment of the market and in order to grow we need to expand the business. So, the first objective is to expand the business and generate incremental growth opportunities. The second objective is to improve the people processes inside the company such as training, people development, management development etc. We have around 250 employees inside Romsys and our target is a growth rate of 25% year on year. In order to achieve that, we plan to add about 30 to 50 people this year.

3. Currently, Romsys is covering a wide area of activities, like banking automation, networking, IT infrastructure and support, ERP solutions, complex IT system integration. Are you planning to keep all of them active, or will you emphasise some, while dropping others?

- If you look at Romsys before we acquired the company, the company was an overall  system integrator with a wide range of offerings and limited focus on key partnerships or key solution segments. Our strategy is to change this in a sense that we keep the principle approach of System Integrator but we strengthen our Partner / Porfolio offering so we can have stronger relationship to our business partners and provide deeper value for our clients. As an example, Romsys is the leading provider of SAP ERP services on the Romanian market, we want to expand this offering into more industries as well as expand our SAP offering by CRM and related solutions. On the banking side, we are the leading ATM provider to Romanian banks with our business partner Wincor Nixdorf, but together with Wincor Nixdorf solutions we are able to address more business issues in banking then just ATM, so we are increasing our skillset and capabilities to help our clients also with branch optimization, full branch self-services and related areas. All our offerings are providing more capabilities for our clients to control and automate their business and such providing business value to improve their business performance. We are also strengthening the capabilities in the area of business solutions, we are able to help clients with eBusiness, Performance management but also if required custom developed solutions that provide unique competitive advantage. On the other side we do continue to support our clients to run their critical business processes, and therefore we continue to provide core data center solutions and infrastructure. Clients see value to get both sides, infrastructure and solutions from one partner, and we are one of the few companies in Romania providing this capabilities.

4. Speaking of the future, what are the long term objectives set by New Frontier Holding for Romsys (strategic and financial, as well)?

- Whenever we look at an investment, the basic premise to do an investment is if we can double the value of the investment in 3 to 5 years. Our plans are built around that and this means a target growth of 25% year on year for the business. If you take this from where we are today and where we want to be in 3-5 years, we target to be a 60M euro company by 2011-2012. In terms of profitability you can see in IT mainly 3 types of businesses: distribution, system integration, and software development, with distribution being the lowest and software development being normally the highest in profitability. We want to have a good mix of infrastructure, business solutions and software integration and development to have margins above the market for system integrators that are typically in the range of 5% to 10%. The current split in Romsys is around 50 percent in infrastructure, 50 percent in software and services, and we don't want to change this split, we want to grow both parts approximately the same way. For this year I think we will see a good growth in the infrastructure space and some growth, but not so fast, in the solution space, and in 2009 we will see accelerated growth in the solution side.

5. What will be your major initiatives here in 2008 and beyond?

- We have, on one side, internal initiatives, which we split into three areas: they refer to sales development, people development, and business partners and portfolio. On the other side, linked to this, we have initiatives towards the customers - we want to keep all existing customers and win around 10 more high-potential  customers this and next year. Our current business is coming from 10 to 20 customers, but in 2 years it should come from 20 to 30. The main growth areas we are looking at in order to enlarge our customer base are industries, utilities, the financial and telecommunication and high-tech sector. Romsys is also known to be well placed in the public sector, we have a long track record to provide unique solutions in the public and defence area and we continue to provide such adjusted solutions.

6. You are Chief Technology Officer at New Frontier Holding (NFH), in charge with technology, solutions and partnership strategy and marketing of the group. Also your bio states that you have long-term management experience in the field of startup and business launch, especially in emerging markets, as well as extensive experience in professional services, consultancy and managed services. How will this background help you bring value to Romsys clients and in which solution areas?

- If you look at Romsys, the business comes primarily from two segments: software & services solutions and infrastructure. I have a strong background in both of them. I worked the last seven years for EMC, which is one of the largest infrastructure providers, but I also worked in consulting and services. So I understand both worlds, which I think is very important, because they operate differently and address different client needs. It also helps me that I have worked for the last 10 years in emerging and developing markets, especially in Central and Eastern Europe, so I understand the dynamics of the market and the requirements of local Romanian clients as well as global clients acting in CEE. I see a lot of market potential in Romania overall and IT remains one of the key change catalysts in such developing economy. Romsys team and myself look very much forward to support the growth and transformation of our clients and grow therefore with them.

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