www.cybercomgroup.com/2007
Global reach
2007 annual report
Introduction
Cybercom in brief 1
The year in brief 2
CEO's report 3
Business concept, goals, and strategies 4
Director’s report
2007 operations 7
Sales and profit 9
Market 10
Cybercom’s areas of operation 12
Organisation 14
Business processes 15
Employees 17
The share 19
Risk management 21
Outlook 23
Proposed appropriation of profit 24
Accounts and notes
Income statement 25
Change in equity 27
Balance sheet 29
Cash flow statement 31
Key figures 33
Financial performance summary 34
Definitions 36
Summary of important accounting principles 37
Notes 44
Auditor's report 63
Corporate governance report
Corporate governance report 64
Internal control 65
The board 66
Executive team 67
Auditors 68
Information
Annual general meeting 69
Addresses 71
Cybercom in brief
The Cybercom Group is a high-tech consultancy that offers global delivery for international business. The Group is an established world-class supplier in these segments: portals, mobile solutions, embedded systems, e-commerce, and busi- ness support systems (BSS).
Thanks to its extensive industry and operations experience, Cybercom offers strategic and technological expertise to these markets: telecom, Internet, and media (TIM); banking and financial services; automotive;
national defence; and the public sector.
As of December 2007, the Group has 1,300 employees and runs pro j
ects worldwide. The Group has offices in Denmark, Poland, Singa pore, Sweden, and the UK – plus a joint venture in India. As of 1 January 2008, Cybercom has 1,850 employees after acquisition of Plenware, a Finnish IT consultancy, which has 550 employees and operations in China, Estonia, Finland, and Romania.
Cybercom was founded in Sweden in 1995 and has been listed on the OMX Nordic Exchange, Stockholm since 1999.
Cybercom's proposition? Global delivery capacity for:
Portals and mobile solutions
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Ecommerce and BSS
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Embedded systems
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frame agreements 64%
42% turnkey projects
consulting 58%
services
Frame agreements are crucial for Cybercom and for the industry as a whole, because customers place increasing volumes of work with fewer consultants. Cybercom now has frame agreements for all major business relationships.
Cybercom runs turnkey projects, carries out management assign- ments, and offers expertise in consultancy, testing, and develop- ment. It can deliver services globally – onshore, nearshore, or offshore.
Cybercom's revenue by industry
Most of Cybercom’s revenue comes from telecom, although its customer base expands continuously to enable spin-off deals in its specialist expertise areas.
Telecom 56%
State & municipal 14%
Automotive 7%
Banking & finance 6%
Retail 5%
Industry 3%
Defence 1%
Other 8%
Telekom 58%
Offentlig sektor 11%
Fordon 7%
Bank & finans 4%
Handel 6%
Industri 4%
Försvar 3%
Övrigt 7%
Powerful expansion characterised Cybercom in 2007 when the number of Group employees tripled to 1,850. Cybercom ex- panded geographically and successively broadened its market scope. Today it has 27 offices in 11 countries. So the year was filled with key strategic initiatives via the Varchar, auSystems, and Plenware acquisitions plus continued focus on interna- tional delivery capabilities and administrative undertakings to keep pace with the continued globalisation trend.
Intensive expansion
Heavy expansion characterised Cybercom in 2007 – particularly via the Varchar, auSystems, and Plenware acquisitions.
Varchar
On 22 December 2006, Cybercom signed an agreement to acquire Varchar, an IT consultancy with about 25 employees and operations in the Öresund region (starting 2 January 2007). The acquisition strengthens Cybercom’s Java and .NET offerings, plus testing and verification.
auSystems
On 20 April 2007, Cybercom signed an agreement to acquire auSystems' Danish, Polish, and Swedish subsidiaries, including about 700 employees
(starting 1 May 2007). Cybercom paid SEK 730 million in cash for the debtfree companies.
Plenware
On 18 December 2007, Cybercom signed an agreement to acquire Plenware, a Finnish IT consultancy, with about 550 employees and opera
tions in China, Estonia, Finland, and Romania (starting 1 January 2008).
Cybercom paid EUR 32.7 million and assumed EUR 14.2 million in debts and liabilities in Plenware; the deal includes an additional pur
chase price of maximum EUR 8 million.
New CEO
Patrik Boman assumed his position as new president and CEO in May 2007. From 2000–2006, he was MD of HiQ's Stockholm operation, which is the largest within that Group. Before HiQ, he held prominent marketing and salesoriented positions at international businesses such as Telia and AT&T Unisource.
Peter KellerAndreasen, acting president and CEO until May 2007, was appointed vice president.
Key figures for 2007
+117%
SEK 1,165 m
+90% SEK 67.0 m
+123%
SEK 113.7 m
+168%
1,290
+3.2%
9.8%
Sales Operating profit EBIT
Profit No. employees
CEO's report
Patrik Boman interview
Mr Boman, you're a new CEO at Cybercom with a hectic year behind you. For example, the company went from 400 to 1,850 employees.
How would you describe 2007?
A fantastic, exciting year for me and the entire company. We took this company from being a medium-sized Swedish consultancy to one of the leading Nordic consultancies.
Considering your market and its trends, what's happening there?
We've seen various trends. One is heavy demand within IT and technological development in general. And two: there's heavy demand for global service deliveries. The Nordics' large consulting purchasers place many projects outside Sweden. To participate on this market and compete for large projects and assignments, we need delivery capacity in Asia, eastern Europe, and India – plus a few other places.
What key changes in the operation would you like to highlight?
The biggest changes are really about building a totally new com- pany, for which we developed a new vision, new strategies, and new objectives. We work much better and more consistently in teams among the companies, countries, and offices.
What does the new Cybercom look like today?
We have 27 companies in 11 countries. We have a strong pres- ence in Finland and Sweden, and Cybercom is one of the largest consultancies in the Nordics. We have an office in China, which is one of the larger growth markets in the world. And we have operations in the Middle East, Africa, and in several locations in eastern Europe.
What did acquisitions in 2007 contribute to the operation?
Delivery capacity improved, our skills base is larger, and we're able to make greater commitments and take on much larger projects in general. The acquisitions have greatly enhanced our market visibility, improved our position, and strengthened our trademark.
The largest acquisition last year was auSystems operations in Denmark, Poland, and Sweden. How did integration go?
I'm very satisfied with how auSystems was integrated into the company. We began in June of last year and were finished in late autumn – after implementing joint localisation of the larger op- erations in Stockholm, Malmö, and Linköping. We made cultural analyses to look, for example, at the industrial fit of customers, values, and staff issues.
Do the operations function together?
The operations meshed very well. There was no overlap among customer bases. And in a purely operational and cultural sense, there was uniformity in working methods, engineering skills, CRM, and HR management – so it worked incredibly well.
What lessons learned apply to the next integration?
We will definitely integrate more quickly and efficiently. We learned a lot in a large integration. The next integration will be Plenware – which we recently bought – and that one will go even more smoothly.
Regarding last year's objectives, did you achieve them?
Absolutely. During 2007, we doubled sales and profit. We wid- ened our margins and reported 12% organic growth. We made a large acquisition and implemented a successful integration.
We strengthened our market position. And we generated greater national and international market recognition.
How would you summarise the year?
We created lasting value for our customers, employees, and shareholders.
Going forward, what is the outlook for Cybercom?
I think it’s good. Strong underlying demand characterises the market. We'll see more internationalisation, extensive interna- tional growth, and continued expansion.
“We created lasting value for our
customers, employees,
and shareholders.”
From its shareholders' perspective, Cybercom is charged with creating the right conditions for value development. This main task forms the foundation of its vision, business con- cept, objectives, and strategy.
Business concept
Through worldleading global delivery capacity, local presence, and close cooperation with customers, Cybercom strengthens its custom
ers' operations using endtoend solutions in which technology and real
ity meet.
Vision
Cybercom will successfully dominate its selected markets. Customers, employees, and owners will perceive Cybercom as holding a leading position.
Operation's objectives
Cybercom established these longterm objectives:
Become a wellknown brand among customers, employees, and in
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the labour market.
Strengthen the company’s presence on existing markets and continue
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to expand outside the Nordics.
Broaden the customer base; no individual customer will represent
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more than 15% of Group sales.
Offshore and nearshore services will represent a larger portion of
• sales.
Annual staff turnover will not exceed 10%.
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Values
Satisfied customers
We understand that satisfied customers guarantee success.
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Personal motivation Cybercom . . .
Values a healthy, unpretentious workplace, characterised by trust,
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respect, professional pride, openness, and honesty.
Stands for job satisfaction, laughter, fun activities, and positive energy.
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Appreciates the balance between family and leisure time, customer
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assignments and company activities – and the balance between hard work and good health.
Encourages initiative and expects employees to take responsibility.
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Believes in one company – one culture – one team.
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Profitability
Cybercom understands that only profitable companies:
Survive in the long term
• Grow
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Determine their own paths
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Financial objectives
Cybercom established these financial objectives:
13% longterm earnings before interest and taxes (EBIT).
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15% organic growth, average per year over a business cycle.
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Objectives fulfilled in 2007
During the year, Cybercom:
Achieved up to 12% organic growth.
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Reported an improved operating margin to 9.8%.
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Expanded into China, eastern Europe, and Finland.
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Widened its customer base and decreased dependence
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on individual customers.
In early 2008, no individual customer accounts for
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more than 15% of Group sales.
Reduced staff turnover.
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Increased the proportion of billable employees.
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Strengthened the company’s position on its markets.
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Strategies
Cybercom’s customers have stringent demands, and customer satisfac
tion is key on a highly competitive market. This satisfaction ensures future sales and is a requirement for good profitability. So close co- operation with customers is required to better understand their needs and to meet their expectations.
The quality of Cybercom’s proposition is closely tied to how customers are treated and services are delivered. While project quality is signifi
cant, Cybercom's employees and their knowledge, values, attitudes, and behaviours constitute its numberone success factor. Cybercom must always be able to offer its customers commercially sound solutions.
So Cybercom continually develops its organisation to improve customer
related services.
Cybercom will achieve its established objectives by following a strat
egy focused on profitability and growth and by building a strong brand.
These main strategies drive its operation:
Be fastpaced and focus on strong growth markets. The company
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must expand its operation to cover more market segments and geo
graphic markets via organic growth and strategic acquisitions.
Strong focus on profitability and growth – in that order.
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Focus on customers that have strategic operational needs for IT and
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expand in these areas:
– Portals and mobile solutions
– Ecommerce and business support systems (BSS) – Embedded systems
Reinforce our reputation and attraction among customers, employ
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ees, and the labour market – via brandboosting activities.
Form a decentralised Group organisation with short decision paths
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and global delivery capacity.
Recruit the best employees with the right attitudes.
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Focus on service through expertise, concepts, and methods, and
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create lasting value for customers via close, longterm partnerships.
Internally and externally act as one company – one culture – one
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team.
History
Cybercom was founded in March 1995; its basic concept was to create an expert consultancy with the best consultants in the industry. Since its start, Cybercom has focused on growth. This has occurred organically and through strategic acquisitions. Cybercom was listed on the O list of the Stockholm Stock Exchange (now the OMX Nordic Exchange) in 1999.
Important events
1995 Cybercom is founded.
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1996 The Stockholm office opens. Its first customers include Telia.
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1998 The company has more than 200 employees.
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1999 Cybercom works on mobile services. The company is quoted
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on the O list of the Stockholm Stock Exchange (now the OMX Nordic Exchange) in December 1999.
2000 Cybercom focuses on services aimed at the telecom and
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finance sectors.
2001 Cybercom establishes operations in Denmark concentrating
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on ebusiness solutions. The company has 300 employees.
2002 Cybercom establishes a presence in the UK by acquiring
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Stratum Project Management with operations in financial solutions and Reuters as its largest customer. Global application management responsibility for Sony Ericsson’s portal is granted.
2003 Cybercom acquires Consafe Infotech and adopts a strong posi
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tion for telecom services in the Öresund region. In conjunction with the acquisition, the JCE Group and J. Christer Ericsson become major Cybercom shareholders.
2004 Cybercom reinforces its position in the telecom market and in
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selected technologies. Among other things, the company is chosen as a partner in SIMS, an EU research project, for development of mobile services and 3G applications.
2005 Cybercom acquires Netcom Consultants, which operates in
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telecom management. The acquisition gives Cybercom an office in Singapore – and Millicom and Tele2, major international customers.
2006 Cybercom starts a joint venture with Datamatics Ltd in Mumbai,
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India. Cybercom phases out its operation in Norway in December 2006.
2007 Cybercom acquires Varchar, a Swedish IT consultancy, in Janu
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ary, which brings key customers in new market segments to Cyber
com. Cybercom acquires auSystems’ operations in Denmark, Poland, and Sweden from Teleca in May. The auSystems acquisition more than doubles Cybercom’s sales and staff. See the "Acquisitions and disposals" section for more information on this deal. Patrik Boman takes over as CEO of the company in May. Cybercom signs an agree
ment to acquire Plenware, a Finnish IT consultancy with about 550 employees and operations in China, Estonia, Finland, and Romania – in December.
Cybercom’s strategic position
Profit
Specialist Sector leader
Market share
Resource consulting
The model shows that Cybercom can earn money by either dominating a sector, i.e., positions itself to the right of the curve – or by specialising in a limited niche – a position to the left of the curve.
The dangerous position, in which margins are often narrower, is when
the company is too big to be a niche player but is too small to be a sector
leader. Today, Cybercom's core areas position the company either as a
sector leader or as a strong niche player.
The board and CEO of Cybercom Group Europe AB (publ), cor- porate ID 556544-6522, hereby submit their annual report for the 1 January 2007 – 31 December 2007 period.
This financial presentation covers:
Director’s report
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Income statement, Group and parent company
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Changes in equity
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Balance sheet, Group and parent company
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Cash flow statement
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Notes to the statements
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All amounts are recognised in SEK thousands, unless otherwise specified.
Numbers enclosed in parentheses/brackets refer to the previous year.
2007 operations
Cybercom's proposition covers three main areas.
Portals and mobile solutions
Cybercom provides portal and mobile solutions that help customers create new digital services and propositions that are provided through the Internet or mobile devices. Cybercom runs and develops portals for several international enterprises. Modern web portals are becoming increasingly business critical for enabling companies to reach and com
municate with their customers worldwide – 24/7. Often, wellfunctioning portals are cost effective for companies because customer services are directly implemented or managed by portal visitors.
E-commerce and BSS
Cybercom offers a range of services that covers the entire ecommerce business process. Cybercom has an important partnership with IBM (among others) and has soughtafter competence in IBM’s ecommerce suite.
Cybercom has considerable experience in billing for BSS and often functions as a partner of product suppliers during a product's integration into a customer's system.
Embedded systems
Cybercom creates technical solutions and develops software for mobile devices. The company develops applications for customers inside and outside the telecom sector, including applications for transaction cards, electronic locks, and systems for emergency services and monitor
ing. The company has extensive experience working with customers throughout the value chain, from technology suppliers to OEMs.
Robust expansion
Strong growth and robust expansion characterised 2007. Cybercom completed three acquisitions that strengthened the company by broad
ening its customer base and increasing its geographical coverage.
Varchar acquisition
In January 2007, Cybercom acquired Varchar, the IT consultancy with operations in the Öresund region. The acquisition gives Cybercom access to valuable .Net expertise and new customer possibilities in the region.
auSystems acquisition in Denmark, Poland, and Sweden
Cybercom acquired auSystems' operations in Denmark, Poland, and Sweden in May 2007. The acquisition strengthened Cybercom’s position in Sweden and added a nearshore operation in Poland.
Plenware Oy acquisition
In December 2007, Cybercom signed an agreement to acquire Plenware, a Finnish IT consultancy with operations in China, Estonia, Finland, and Romania. The acquisition broadened Cybercom's customer base and included important capabilities with Mobile Linux, among others.
The acquisitions are part of Cybercom’s growth strategy, and the in
creased delivery capacity of the new Group enables it to undertake larger customer projects. The deals bring in expertise, primarily in landline and mobile networks and embedded systems. Cybercom and the acquired operations form a leading Nordic consultancy in telecom, Internet, and media (TIM).
Frame agreements
Frame agreements with customers are business critical. This applies to the sector as a whole, because customers tend to procure increasingly
Cybercom's revenue by industry
Most of Cybercom’s revenue comes from telecom, although its customer base expands continuously to enable spin-off deals in its specialist expertise areas.
Telecom 56%
State & municipal 14%
Automotive 7%
Banking & finance 6%
Retail 5%
Industry 3%
Defence 1%
Other 8%
Telekom 58%
Offentlig sektor 11%
Fordon 7%
Bank & finans 4%
Handel 6%
Industri 4%
Försvar 3%
Övrigt 7%
large volumes from a smaller number of suppliers. Cybercom has frame agreements/master contracts with all major customers.
Cybercom’s major customers at Group level include:
AB Volvo
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Alma Media
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AMS, the Swedish National Labour Market Board
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ASSA ABLOy
• Ericsson
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John Deere
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• Kone Millicom
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Nokia Mobile Phones
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Nokia Siemens Networks
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Pentland Brands
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PFA Pension
• Reuters
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• Saab Sandvik
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Sony Ericsson
• Tele2
• Telenor
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TeliaSonera
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Broadening the customer base
Most of Cybercom’s revenue continues to come from telecom, and its customer base is continually expanding. Acquisition of Varchar, auSystems, and Plenware broadened Cybercom’s customer base, and no individual customer represents more than 15% of Group sales.
Other events in 2007
Sweden's Meteorological and Hydrological Institute named Cybercom
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as its future IT service supplier. The parties signed a frame agree
ment that runs until 30 June 2009.
In March, Cybercom presented its dynamic annual report (AR) for
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2006. The report is developed specifically for the web, with functional
ity adapted for this medium. The AR is no longer published in print.
Cybercom signed contracts (valid until 2010) with the Örebro and
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Kumla municipalities. The contracts cover integration of electronic document and case management for streamlining administration and increasing service in municipality portals for citizens and authori
ties. Örebro and Kumla are members of Sambruk an association that brings municipalities together over issues such as selection of eservices.
Cybercom signed a frame agreement as one of OMX's five preferred
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suppliers. The twoyear contract covers consulting services for project management, system development, and testing.
Cybercom signed a partnership agreement with UIQ Technology,
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which offers leading mobile platform products based on Symbian OS – one of Cybercom’s areas of expertise.
During the summer, Telenor launched the mobil.telenor.se portal that
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offers services for its customers and operators’ customers. The portal is the result of a successful partnership between Telenor and Cyber
com, which created the technical solution.
A world telecom leader showed its trust in Cybercom for mobile plat
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form testing. The assignment is an extension of an earlier contract and engages many consultants for about one year. New mobile plat
form technologies mean increased complexity, which requires top
quality test management.
Cybercom and Microsoft developed a secure login solution using
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eauthentication for Microsoftbased networks. Microsoft’s Internet Security and Acceleration (ISA) Server and Cybercom’s Trusted Security Server form the foundation for the solution, which is called Microsoft Authentication Broker.
Cybercom signed a new frame agreement with a leading global ve
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hicle manufacturer for hardware and software development, system development, simulation and testing, and project management. The threeyear contract has an extension option.
Using Bluetooth technology, Cybercom developed a wireless com
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munication module for Eltrac, an electronics excellence centre in the Iveco Group. The module enables wireless communication between vehicles and diagnostic computers used during workshop repair operations.
Cybercom decided to open an office in Dubai in early 2008. Cyber
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com is now working on several assignments in the region, so it is a natural next step to establish an office to provide the best possible service to customers and to recruit new employees.
One of Cybercom’s international customers placed an order worth
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about SEK 38 million. The contract is for one year with an option to extend.
Cybercom was commissioned to quality assure Bluetooth
•
®solutions
for Volvo Car’s model programme.
Cybercom received its single largest order in its history from a lead
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ing mobile device manufacturer. The order, worth SEK 80 million, is for mobile services development, a businesscritical part of the cus
tomer's operation; the order covers a 15month period with possible extension.
Cybercom signed a new frame agreement with the Stockholm County
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Council. The contract covers consulting services in IT control, opera
tions development, informatics, system development and administra
tion, infrastructure and operation plus information security. The 2year contract has an option for extension.
The Swedish National Defence College signed a contract with Cyber
•
com for integration of an electronic document and case management
system.
Sales and profit
Sales for 2007 totalled SEK 1,165.0 million (535.8), a 117% rise in revenue compared to 2006. Newly acquired companies accounted for 105%, and Cybercom reported 12% organic growth. The revenue rise is due to the higher number of employees. The percentage of subcontractors continued to be high during the period, because recruitment could not keep up with demand.
Operating profit rose 123% compared to the same period in 2006 and reached SEK 113.7 million (50.9). This corresponds to a 9.8% operating margin improvement (9.5%).
In the preliminary analysis of the auSystems acquisition, the entire sur- plus value was allocated to goodwill. Per IFRS, a final acquisition analy- sis was drawn up, in which SEK 56.1 million was reallocated to amortis- able customer relationships. So EBIT comprises amortisation totalling SEK 3.7 million (0.4) of acquired intangible assets (customer relation- ships), of which SEK 0.9 million and SEK 1.4 million have a retroactive impact on Q2 and Q3, respectively, and SEK 1.4 million on Q4.
Net financial items stood at a negative SEK 21.6 million (-0.8); this figure includes SEK 20.4 million in interest expenses for the loan used for the auSystems acquisition. Profit after net financial items was SEK 92.1 mil- lion (50.1), yielding a 7.9% profit margin (9.4%).
Investments
Net investments in property, plant, and equipment during 2007 reached SEK 8.2 million (4.4). Net investments in intangible non-current assets totalled SEK 0.9 million (1.5).
Liquidity and cash flow
On 31 December 2007, the Group’s cash and cash equivalents stood at SEK 82.0 million, compared to SEK 88.9 million on 31 December 2006. During the period, cash flow before changes in working capital amounted to SEK 105.7 million. Working capital fell by SEK 41.2 million during the period, so cash flow from operating activities totalled SEK 64.5 million (34.4).
Financial position
Equity on 31 December 2007 was SEK 708.4 million (272.4), yielding a 51.0% equity/assets ratio (66.3%). Equity per share amounted to SEK 31.65 (22.11).
A new share issue with rights for the company’s shareholders was com- pleted during the autumn. The issue injected about SEK 368 million into the company before issue expenses. The issue was oversubscribed.
Due to the new share issue, the number of shares in Cybercom rose by 9,948,605. The company’s share capital totalled SEK 22,384,362, dis- tributed over 22,384,362 shares after implementation of the share issue.
Events after year-end
On 4 January 2008, Cybercom announced that Per Norén is resigning of his own volition from the board due to an assignment and move to the US.
On 23 January, Cybercom held an extraordinary general meeting, which approved the Plenware Oy acquisition.
On 29 January, the company announced that it had signed a new frame agreement with a leading telecom company as a global supplier for IT consulting services in 2008 and 2009. The agreement meets the cus- tomer’s needs for development and management of applications and IT solutions.
0 50 100 150 200 250 300 350 400 MSEK
Q1 2004 2005
2006 2007
Q2 Q3 Q4 0
10 20 30 40 50 MSEK
Q1 2004 2005
2006 2007
Q2 Q3 Q4
Sales per quarter EBIT per quarter Profit/loss per quarter
SEK million SEK million SEK million
0 5 10 15 20 25 30 35 MSEK
Q1 2004 2005
2006 2007
Q2 Q3 Q4
According to the European Information Technology Observa- tory (EITO 2007), the ICT market in Europe amounted to EUR 680 billion in 2006. The market is broken down into vari- ous products and services as shown in the next diagram.
The IT services market looks like this:
Professional services – consulting services and services within imple
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mentation and application management.
Support services – maintenance and service for hardware, software,
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and network products.
Cybercom operates within the IT services market and predominantly provides professional services.
European IT services market
EITO 2007 estimates the size of the European IT services market at EUR 140 billion for 2006. Between 2006 and 2008, EITO 2007 expects 5.4% annual real growth, and the size of the market is expected to reach EUR 156 billion in 2008.
Swedish IT services market
EITO 2007 estimates the size of the Swedish IT services market at EUR 5.2 billion for 2006. Between 2006 and 2008, EITO 2007 expects 5.1% annual real growth, and the size of the market is expected to reach EUR 5.8 billion in 2008. The Swedish market for professional services amounted to EUR 3.8 billion in 2006 and is expected to have 5.5% real growth annually through 2008 to a value of EUR 4.2 billion.
Trends – historic development
The end of the 1940s brought the first generation of computers, devel
oped in university laboratories around the world. Another leap forward was taken at the end of the 1950s with the advent of integrated circuits.
As the computer became more common with companies and govern
ment agencies, demand for skilled computer programmers increased and soon a new type of company emerged – the IT consultancy.
Current trends
The market situation for consulting companies in the IT and telecom sectors has been favourable in recent years. The market has been very active and characterised by robust growth that generates strong demand for Cybercom’s services. Cybercom’s growth has been strong
est in the expanding Öresund region, where the company has offices in Copenhagen, Lund, and Malmö. Cybercom also held its own in Stock
holm in 2007, despite tough competition.
Following is a description of some trends that Cybercom management believes will affect the IT services market going forward.
Large investments in telecom
Telecom industry players continue to invest, aiming to expand and take market shares. This leads to favourable market conditions for telecom and IT consulting companies. International telecom operators invest in network expansion and development of services, along with expansion in new geographic markets. In the Nordics, telecom operators are more focused on optimising existing systems than on new construction.
A few large companies that have frame agreements with several select
ed consultancies dominate the telecom market. Size, niche propositions, and an international presence are increasingly key factors for consulting companies.
Telecom, Internet and media converge
The market for telecom, Internet, and media is changing. Reduced call
ing rates have forced operators to find alternative revenue streams.
Together with more sophisticated technology, the result is the conver
gence of telephony, broadband, and TV with new types of content and
Teletjänster 44%
IT-tjänster 21%
Datorhårdvara 12%
Mjukvara 11%
Datakommunikations- och nätverkshårdvara 6%
Kommunikations- utrustning för slutanvändare 4%
Kontorsutrustning 1%
Cybercom
Mobile phone users System suppliers
Content providers Service providers
Network owners
− Mobile network
− Landline network
Users:
− Companies
− Individuals
− Organisations
− Virtual operations
Telecom services 44%
IT services 21%
Hardware 12%
Software 11%
Data communications &
network hardware 6%
Communications equipment for end users 4%
Office equipment 1%
Market ICT European market 2006
services. For example, recently the market for music in mobile phones has expanded quickly. TV through mobile telephones is also advancing, assisted by development of the DVBH technology that adapts digital TV for mobile phones.
Development of content and technology parallels an increase in the number of market players. Today the combination of telephony, broad
band, and TV are delivered by traditional telecom operators, by content
producing media companies such as Alma Media, MTG, and Schibsted, and by network owners like Com Hem, Teracom, and Vattenfall.
Customers demand nearshore and offshore capacity
Today’s customers require suppliers with global capacity and 24/7 avail
ability. Customers want better service and efficiency, but, above all, competitive prices. The trend shows that companies primarily choose outsourcing for mature, standardised development and administration processes. This changes the role of Swedish and western European consultancies. They find it difficult to offer standard services at competi
tive prices. Instead, they focus on profitable specialist assignments and turnkey projects.
Available capabilities on the labour market
The IT and telecom labour market is highly mobile and highly competi
tive. It is widely believed that there is now a shortage of qualified labour on the Swedish market. Some companies are finding it difficult to recruit and retain qualified employees.
Cybercom’s competitors
Cybercom has various competitors in various fields and geographic mar
kets. The company’s primary competitors are:
Accenture – a global giant with 175,000 employees. Listed on the
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New york Stock Exchange.
Capgemini – A leading consultancy in Europe with 83,000 employees.
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Listed on Euronext.
HiQ – a local Scandinavian company with 1,000 employees. Listed on
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OMX Nordic Exchange.
InCode – An American consultancy focused on telecom. Owned by
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the publicly traded VeriSign.
Logica CMG – British consultancy that purchased WMdata. Has
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40,000 employees, including 9,000 in Scandinavia. Listed on the Lon
don Stock Exchange.
Sigma – a Scandinavian player with 1,400 employees. Listed on OMX
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Nordic Exchange.
TietoEnator – largest in Scandinavia. A SwedishFinnish consultancy
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with 16,000 employees. Listed on OMX Nordic Exchange.
Competitors also include many specialised consulting companies that operate on the international telecom market.
2008 and beyond
Technical paradigm shifts have driven changes in the IT sector in recent decades. The sector is now expected to enter a mature phase, and the service sector is expected to become more affected by economydriven fluctuations.
Mobile communication represents the most growth in the industry and is expected to rise by more than 10% per year through yearend 2010.
Growth will primarily come through large investments in the mobile net
works of Asia, the Middle East, Africa, and Russia. The 3G network in Europe will also continue to expand gradually.
Operators’ revenues will gradually move from voice traffic and SMS to other sources. This is due to several factors:
Quickly reduced calling costs, causing operators to expand their
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offerings.
More complex mobile phones with space for more services.
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Content providers, such as the music industry and news agencies,
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gain influence over operator’s service offerings.
The ongoing merger of telephony, broadband, and TV, called triple play, will include mobile telephony. The combined proposition of communica
tion, entertainment, and services will become wireless – i.e., quadplay or quadruple play. New media is creating a new market.
Demand for IT services is increasing in all parts of society and the posi
tive market outlook, based on a good economic climate, is expected to continue during 2008.
With the auSystems and Plenware acquisitions, Cybercom forms a new leading consultancy within the telecom, Internet, and media (TIM) sec
tor. The new company gains a stronger brand and delivery capacity that is attractive in large projects for local and global players.
Cybercom is making no forecasts.
Cybercom develops services, applications, systems, products, and software on behalf of its customers worldwide. The com- pany runs turnkey projects, manages applications, and offers services such as consulting, testing, and development using leading technologies.
Cybercom can deliver services globally – onshore, nearshore, or off
shore. Operations are divided into these areas: portals and mobile solu
tions, ecommerce and BSS, and embedded systems.
Portals and mobile solutions
Cybercom provides portal and mobile solutions that help customers create new digital services and propositions that are provided through the Internet or mobile devices. Several new players are interested in delivering content services to mobile phones, and a new market is be
ing created. This trend benefits Cybercom, which has solid experience and extensive expertise in the area. Cybercom also runs and develops portals for several international enterprises. These portals are becoming increasingly important for companies to reach and communicate with customers, round the clock, worldwide. Customers include Sony Erics
son, AMS (the Swedish National Labour Market Board), ASSA ABLOy, and Reuters.
In portals, Cybercom received its first offshore project in 2006 when it signed a multiyear agreement with Sony Ericsson for application responsibility, development, and testing of Sony Ericsson’s external web sites and related functions. Cybercom’s commitment includes daily management and participation in important development and testing projects. In 2007, the company had many offshore assignments, for example, from Nordnet and Pentland Brands.
E-commerce and BSS
Cybercom offers a range of services that covers the entire ecommerce business process. This market displays robust growth in all segments.
New or improved ecommerce solutions are in demand as Cybercom’s customers focus on gaining market share. Cybercom has an important partnership with IBM and has soughtafter competence in IBM’s ecom
merce suite. This cooperative venture has led to new, interesting cus
tomers, primarily in the UK. The assignments are mainly with customers in industry, telecom, and retailing.
The BSS area is becoming more standardised and modulebased, al
though customer adaptations are always made. Cybercom often acts as
a product supplier partner when integrating the product with customers' systems. Cybercom has extensive experience in billing for BSS. Telia
Sonera and Tele2 are key customers. Cybercom aims to broaden its BSS and billing customer base beyond telecom, the dominant sector.
Embedded systems
Cybercom creates technical solutions and develops software for mobile phones. This area of operation is typified by intensive competition and requirements for rapid product development. Cybercom conducts these businesscritical assignments mainly for Ericsson, Nokia, and Sony Ericsson.
Cybercom helps various terminal manufacturers worldwide develop innovative solutions that contain mobile and wireless technologies of the future. Cybercom combines terminal design with expertise in wireless technology and multimedia, such as Bluetooth
®, UMTS, HSDPA, WiFi, UWB, DVBH, and ZigBee™. The company develops applications for customers inside and outside the telecom sector, including applications for transaction cards, electronic locks, and systems for emergency ser
vices and monitoring. AB Volvo, ASSA ABLOy, and Saab are Cybercom’s primary customers in this area.
Cybercom offers design services based on expertise in hardware and soft ware design, from concept to production launch. The company has partnerships with several manufacturers and can manage the entire design process, from requirement specifications to production. Cyber
com's expertise mainly comprises software design and some hardware design. The company carries out certification and qualification processes per most industry standards.
Cybercom plays a coordinating role in standardisation for the Open Mo
bile Services Interface Forum, within device management. The purpose of this effort is to create a common standard for all mobile telephone manufacturers when updating mobile telephone software.
The automotive industry is another prioritised market for Cybercom. The company has extensive experience working with customers throughout the value chain, from technology suppliers to OEMs, and has developed genuine industry expertise. Because Cybercom focuses on telecom, various types of communication solutions for the automotive industry are one of its core capabilities. For example, it developed Bluetooth
®based applications for more than 20 national and international automotive
industry customers. Cybercom participates actively in the Bluetooth
®SIG, in which it works to standardise new profiles and protocols for other application areas.
Application management (AM), project and consulting services
Developing and managing IT projects takes a lot of time and money.
To stay within budget, it is important to maintain cost control. Cybercom offers application management (AM), a service that guarantees high quality and service levels at a fixed price.
Sales per assignment
Turnkey projects & AM, 42%
Consulting services, 58%
Helhetsåtaganden projekt och AM 42%
Konsulttjänster 58%
With AM, Cybercom takes on maintenance and development of already operational IT systems. This can include customised and thirdparty applications. The concept clarifies responsibilities, activities, and costs related to support, development, and operation of a system or an ap
plication.
Cybercom’s AM concept focuses on key business processes required for maximum use of an application – from business development and management to technical support. The method is structured and en
ables contracted service levels and accurate cost forecasting.
One or more servicelevel agreements drive AM services. Cybercom’s management team, together with customer and supplier representa
tives, regularly follow up on AM services.
Cybercom runs large AM projects for its major international customers.
Bestshore
Cybercom established a joint venture with Datamatics Ltd in India. This enables Cybercom to offer competitive offshore services.
The IT market is progressively becoming more global, and multina
tional companies hunt for partners that support their organisations with outsourcing and global sourcing. Major projects inevitably raise the question if they should stay local or move to less expensive countries nearshore or offshore.
Primary key factors that weigh into the choice of partner include price, efficiency, and technical expertise. During a 10-year period, Cybercom carefully evaluated its outsourcing experiences and created an offering that meets outsourcing needs. Cybercom has several outsourcing as
signments that involve businesscritical applications for major customers.
Cybercom offers bestshoring – a method for optimising outsourcing and for selecting the best onshore, nearshore, or offshore option. In best
shoring, Cybercom’s project management works locally, close to cus
tomers, and creates and manages teams that carry out development, implementation, testing, and administration at customers' preferred locations. For projects that demand daily flexibility, it is natural and most often cost efficient to be geographically close to customers. For projects that have reached maturity and perhaps apply standardised processes, geographic presence is not as important, and implementation can be moved to another country if advantages outweigh disadvantages.
Depending on customers’ needs, Cybercom takes on various best
shoring roles. Central aspects of bestshoring include 24/7 availability, increased productivity, high quality, and cost savings, with focus on core operations and business development.
Mature, standardised processes for the entire chain – from development and testing to administration and support.
Besides India, Cybercom offers management for these types of projects in China, Estonia, Poland, and Romania.
Selected technologies
Access to the latest technologies enables Cybercom to help customers benefit from new business opportunities. Thanks to extensive techno
logical expertise, Cybercom specialises in serving leading enterprises that are on the cutting edge of technology.
The ability to balance technology’s cutting edge and commercial fea
sibility requires a combination of technical knowhow and thorough understanding of customers’ business operations. Expertise in support
ing technologies forms the foundation for selecting, implementing, and developing the best solutions. We specialise in solutions based on these technologies: Java, .Net, WebSphere, Oracle, J2EE, and Akamai.
Consultants also need to understand customers’ operations so that they can contribute their expertise and function as discussion partners. We understand the entire process – from A to Z. And we’re experts in tech
nology.
Our capabilities include:
Development languages – Java, C++, C, J2EE, EJB, PL/SQL,
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MS.NET, and CORBA
Databases – Oracle, SQL Server, Sybase, and Informix
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Object databases – Versant
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Web design – HTML, various HTML tools
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Data formats – XML
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Transaction processing systems – BEA WLE and Tuxedo
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Application servers – WebLogic and WebSphere
• Akamai
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Bluetooth
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®Strategy and advisory services
Cybercom provides expertise, advice, and services for telecom manage
ment and networks.
Our consultants and worldclass telecom services enable international customers to develop their businesses using the latest technologies.
Our consultants have customers worldwide – we work with telecoms, service providers, and content providers to develop their businesses by taking advantage of new technologies.
We maintain strong customer relationships by delivering the highest quality consulting services, expertise on various telecom technologies, and indepth knowledge of current and future trends.
Cybercom's strategy and advisory services are divided into these areas of expertise:
Business applications
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Network solutions
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Technology and innovation
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Telecom management
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Cybercom's organisation in 2007
Cybercom’s operation is geographically divided into nine units plus the Group head office in Stockholm. The operative organisation and distribution of employees are as follows:
Cybercom Sweden
Cybercom Sweden mainly provides services to the telecom and au
tomotive industries, plus the public sector with services in embedded systems, Bluetooth
®, and wireless terminals. Cybercom provides com
munication solutions for customers throughout the value chain, from technology suppliers to OEMs. Major customers include AB Volvo, ASSA ABLOy, BAE Systems, Ericsson, the National Tax Board of Swe
den, OMX Group, Saab, SEB, Sony Ericsson, Stockholm Transport, the Swedish National Labour Market Board, Tele2, Telenor, TeliaSonera, and Volvo Cars. The company has 1,051 employees.
Cybercom Poland
Cybercom Poland works with selected technologies. Operations focus on local assignments in Poland and customer deliveries for sister com
panies in the Group. Major customers include Ericsson, Nokia Siemens, and Telenor. The company has 91 employees.
Cybercom Denmark
Cybercom’s Danish operation is primarily focused on technologies and a large proportion of its customers are in banking, telecom, and the public sector. Some of its major customers include BEC, Nordea, PFA Pension, the Swedish National Labour Market Board, and TeliaSonera. The com
pany has 45 employees.
Cybercom India
Cybercom India primarily operates in the telecom and finance sectors.
The unit is a joint venture with Datamatics Ltd. Cybercom owns 50%.
Cybercom India works on assignment from other units within the Cyber
com Group. Its end customers include Nordnet, Pentland Brands, and Sony Ericsson. The company had 86 employees at the period's end. Of these, half are included in Cybercom's employee count – 43 persons.
Cybercom UK
The UK operation concentrates on e-commerce solutions and financial information services primarily for Reuters. The unit also offers advice on IT design and infrastructure. In the past year, the company has attracted several new retailsector customers, such as John Lewis, Pentland Brands, and Tomy. The company has 28 employees.
Cybercom Singapore
Cybercom Singapore mainly works in telecom, and Millicom is its most important customer. In 2007, Cybercom decided to open an office in Dubai in early 2008. Cybercom is now working on several assignments in the region, so it is a natural next step to establish an office to provide the best possible service to customers and recruit new employees. The company has 19 employees.
Partnerships
Cybercom's assignments are technologyintensive. The company main
tains close partnerships with leading software suppliers and actively works with implementation of their products. Cybercom often partici
pates in development of new solutions. The company's major partner
ships include Akamai, BEA, IBM, Microsoft, Oracle, and Quest.
Cybercom Group Europe HQ
President and CEO: Patrik Boman Vice president: Peter Keller-Andreasen
CFO: Per Jonsson
Acting Communications manager: Patrik Anshelm 13 employees
Cybercom Sweden East
Stockholm MD: Anders Franzén
Cybercom Sweden South
Malmö, Karlskrona, Lund MD: Thomas Barge
Cybercom Sweden West
Göteborg, Huskvarna, Linköping MD: Magnus Andersson
Cybercom Sweden North
Östersund, Sundsvall, Örnsköldsvik MD: Joakim Ek
Cybercom Poland
Warzawa, Lodz MD: Mats Petersen
Cybercom Denmark
Köpenhamn MD: Karsten Adelmark
Cybercom India
Mumbai MD: Per Pedersen
Cybercom UK
London MD: Terry Hunter
Cybercom Singapore
Singapore MD: Conny Karlsson
