AR IN SO in France

1. ARINSO in France Best in France Case Study September 2003 - May 2004 • Team MBA BSi: • Rachel ROSA • Martial FEVRIER • José R. VALENZUELA • Christophe VANIER

2. The Best in France case study aims at : Identifying what adaptations firms must make when opening business units in France, Assisting students, companies and government ministries by identifying and benchmarking managerial strategies that add value to the French economy and to firms operating in France, Creating a database of the detailed studies, available to the participating firms. Purpose Best in France Case Study

3. Success Story & Key numbers Arinso Business Model Company Products Operating Strategy Arinso Clients Why did Arinso come to France Arinso values in France Constraints in France Adaptation to France Key Costs of France Key Benefits of France Arinso’s Essential Advice Executive Overview Best in France Case Study

4. Arinso Success Story • 1994 : creation of ARgus INtegrated SOlutions in Belgium by Jos Sluys (former SAP executive) • Creation of international subsidiaries • 1996 : France, Nederland • 1997 : USA, Luxemburg • 1998 : UK, Canada and Spain • 1999 : Italy • 2000 : Germany, Portugal, Morocco, Argentina, Mexico, Brazil, Asia-Pacific (Singapore, Malaysia, Thailand) • Swiss, Sweden, Finland, Poland (October 2003 ) • Gone public in 2000 (Euronext Brussels: ARIN) Best in France Case Study

5. International Coverage 22 Countries on 5 Continents Best in France Case Study

6. Key Corporate Numbers • 10 years of existence • 22 countries of operation • 1300 Employees Worldwide (177 in France) • 121 M€ turnover * (France #1 with 25M€) • 11% EBIT * (to sales) * Annual Report 2002 Best in France Case Study

7. Arinso Business Model 4% 10% 10% • 22 countries, 1 business model, 3 key activities: • HR systems integration • HR Operations • HR Strategy • French affiliate: • Sales breakdown today • (total sales 25M€) • Target breakdown • Market share 89% 45% 15% 7% 45% 1% Best in France Case Study

8. Arinso Products/Services • HR IS Integration:Arinso is an established partner of the leading providers of HR management solutions • ERP: Establishing the foundations • Implementation • Integration • e-HR: Streamlining administrative processes • Enterprise Portals: Optimizing work environment Best in France Case Study

9. Arinso Products/Services HR Strategy:Transforming HRM to deliver Business Strategy • HR business analysis • HR process improvement • Transformation management Best in France Case Study

10. Arinso Products/Services HR Operations:Helping clients build more HR value • HR Shared Service Centers (HRSC) • HR Technical Business Process Outsourcing (TBPO) • HR Business Process Outsourcing (BPO) Best in France Case Study

11. Operating Strategy • Products: • Software tools (global offer) • Design in Belgium • Coding & maintenance in Malaysia(lower labor costs) • Bespoke developments (sold in France) • Local design • Coding in Morocco, India, Malaysia (lower labor costs) • Services sold in France: • HR Strategy consulting  Locally • HR Integration consulting  Locally • HR Operations • HR Shared Service Centers  Atlanta, Brussels • Business Process Outsourcing  US ( Atlanta ), CAN (Montréal ), SPAIN ( Barcelona Call center ) + Shared Service Centers • Technical Business Process Outsourcing  US ( Atlanta ), BEL ( Brussels ) Best in France Case Study

12. Clients • Who are they? • Big multinational groups • Local companies • What do they expect? • HR Transformation: • Systems • Organization • Processes • Better value at lower cost • How a presence on the French ground helps satisfying customers? • Requirement to know the French HR regulations • Minimize cultural gap (for sales & consulting) Best in France Case Study

13. Clients Arinso counts 90+ clients in Fortune Global 500 Best in France Case Study

14. Clients: Some Big Names Best in France Case Study

15. Why coming to France? • Demand from global clients for Arinso to roll-out projects for all of their affiliates  international expansion plan • Belgian market would have quickly become too small • French market was big & new (and need to be in France to deal with French customers) • Proximity • Geography • Language • Being in France seemed a must for a company with international ambitions Best in France Case Study

16. Company values • Core values: • Value creation • Harmony • Humility • Anticipated conflicts with France: Humility vs French culture • Verified good fit with France: Value creation (from the education system obviously ; French university) Best in France Case Study

17. Company values • Values instilled in France the same way as anywhere else: • Through the personality of the charismatic founder & CEO • Customer-oriented, efficient, hardworking, … • Academy-type management, clear communication, … • Close to the base, always flying in economy class, … • Through the structure of the organization • Flat, reactive, identifying & rewarding potentials, dropping dead weights, … • Homogeneity in organizational structure, business model and bonus plan structure across countries, … Jos Sluys Best in France Case Study

18. Constraints in France • Expected constraints: Costs • Structure • Labor • Some more discovered after settlement • Rigidity of labor regulations (increased even more since 1996) • Employer-Employee relation not easy to manage • Poor language skills of French professionals (even young grads) • More requirements from young graduates: • compensation & benefits (1999-2001) • little flexibility (still true) • Backing of the value “labor” in the French society • Worst constraints • Labor costs (35hrs/week) • Lack of of flexibility and decrease of professional commitment • Operations management made more complex from 35 hrs/week Best in France Case Study

19. Constraints in France • Difference with other locations • Labor costs: Profit margin • France/Luxemburg = 1/5 • France/Belgium = 1/4 • France/Holland = 1/4 215 workdays/yr in France vs 240 in the majority of the rest of Europe • Far better flexibility in the UK, Holland, Belgium… • Labor regulations and social environment better than France anywhere else apart from Italy and Germany • Lost opportunities outside France? Why? • Not competitive on labor costs • Poor language skills • Low flexibility of employees and need more coaching abroad Best in France Case Study

20. Adaptation to France • Recruitment/Selection Errors cost much  recruitment process kept internal • Compensation • Implementation of attractive packages (company car, stock-options, profit-sharing) • Increase of the variable part of remuneration for some positions • Management Development • Setup of a middle management • Good technical culture need to be more Project cultured (most projects are fixed-price nowadays)  Training on Project Management • Workforce Planning • Recruitment: Quarterly plan • Management succession: No planning • Delocalization of low-margin activities abroad (near-shore / off-shore) Best in France Case Study

21. Adaptation to France • Motivation • Initiation of a career plan process • Communication policies • External: PR agency • Internal • Formal “Company” or “Business Unit” meetings • Informal get-together evenings (restaurant, bar, cultural event, …) • International transfers, use of expatriates • 20 French employees abroad / 180 • Lots of impatriates (international projects on the French ground) • Training of Moroccan technical engineers in France • Training Quite substantial training budget (Structural & cultural expectation for training and career development in France) Best in France Case Study

22. Key Costs of France • HR type costs • Hiring • Paying • Training • Dismissing • Structural Costs • Offices • Taxes • Communication constraints • Poor foreign language skills Best in France Case Study

23. Key Benefits of France • Product/Service quality • Very high productivity (education, mindset, behavior) • “Must” country for customer image • Revenue/profit • Revenue increase • Profit decrease  Re-positioning on high value-added activities  Watch out for structure costs • Location benefits • quality of life (impatriates do not wish to leave France) • Market Potential • customer demands for cultural adaptation of product(s) Best in France Case Study

24. France vs Corporate Figures of 2002 Best in France Case Study

25. Essential Advice • Before coming to France • Project & analyze profit margin (operating costs : costs of sales + other expenses ) • “Paris vs. rest-of-France ?” • Adaptation while in France • Capacity to adapt to regulatory constraints • Prudence and anticipation (small errors can have greater consequences than in any other country) Best in France Case Study

26. We Thank • Denis TOURNESAC, Managing Director Arinso France, denis.tournesac@arinso.com • Catherine AIELLO, Finance & HR Director France, catherine.aiello.verniere@arinso.com • Olivier CARPENTIER, Operations Director France, olivier.carpentier@arinso.com ARINSO France Espace 21 31, Place Ronde F-92986 Paris La Défense 7 Tel: +33 (0)1 49 00 31 31 http://www.arinso.com Best in France Case Study

27. Bibliography • References: • Arinso website http://www.arinso.com • Arinso Annual report 2002 http://www.arinso.com/Downloads/annual_report_2002_eng.pdf • Appendix • Questionnaire Best in France Case Study

28. Our Team • Rachel ROSA, rachel.rosa@mailhec.net • Martial FEVRIER, martial.fevrier@mailhec.net • José Ramon VALENZUELA, ramon.Valenzuela@mailhec.net • Christophe VANIER, christophe.vanier@mailhec.net HEC School of Management 1, Rue de la Libération 78351 - Jouy en Josas Cedex Tel: +33 (0)1 39 67 70 00 http://www.mba.hec.fr http://www.hec.fr Best in France Case Study