Siemens said it had agreed a cooperation agreement with i2 Technologies Inc to use the U.S. software company's e-business solutions as its technical platform
Siemens to spend 1 billion Euros on Internet
By Reuters staff
10 October 2000
German electronics giant Siemens AG said on Tuesday it would spend one billion euros ($869.6 million) over 18 months to put its global operations on a single electronic network which would cut costs and lift efficiency.
"All processes will run electronically - from procurement to marketing, from development to controlling," Chief Executive Heinrich von Pierer said, promising Intranet access to all 440,000 employees as part of a rapid corporate revolution.
Pierer said the "fast and furious" change would yield cost savings of at least one billion euros in the initial investment phase. The savings could rise to between three and five percent of turnover - seen by analysts at 75 billion euros in the year to September 30, 2000 - in the medium term.
"As an Internet company, Siemens will be faster, closer to its customers and more efficient," said Pierer.
Siemens' chief said the transformation of the group into an e-business company would lead to a considerable improvement in productivity and higher growth and should be reflected in the group's market value, which has suffered from recent weakness in the technology sector.
"Shareholders will see that e-commerce is a unique opportunity for Siemens," he said.
The announcement met with a positive reaction from investors. Siemens was the second biggest gainer on Frankfurt's blue-chip DAX30 index, gaining 2.20 percent to 144.60 euros.
"It's basically a good thing. I don't think it's a great, huge piece of news, but it's certainly positive from the overall trend point of view," Theo Kitz, technology analyst at Munich private bank Merck Finck said.
As part of the planned investment programme, Siemens said it had agreed a cooperation agreement with i2 Technologies Inc to use the U.S. software company's e-business solutions as its technical platform.
IBM would also be part of the project to integrate the 70 percent of Siemens' activities which are already networked.
Siemens said its main priority was to expand e-procurement to account for over 50 percent of its 35 billion euros procurement volume in the next two to three years from 10 percent at present. |
