Services
Introduction
From the old times of Hermann Hollerith and from the
beginning of Bull, the data processing business was quite different from the traditional
electrical manufacturing business. The "manufacturer" designed, manufactured,
installed and leased the equipments. All those functions were bundled in IBM as in Bull inside
a single company entity.
The fact that the end user rented the equipments made the "manufacturer"
responsible of putting the application system in operation by "programming" the
interconnection panels or the program memory to fit the application.
The services industry included soon financial entities that offloaded the financial constraints of the manufacturers. But, those entities were only known to the customers when they appeared on the clauses of the contract. The "manufacturer", and Bull even more than IBM because it was often the challenger, remained the total supplier of the EDP solution.
Progressively, the notion of "facility management", if not the term, appeared. A punched card equipments center represented, for medium and small users, strong constraints by needing to establish specially equipped room, to hire operators staff... In the 1950s, Compagnie des machines Bull, often on a local or regional initiative, established or helped to establish centers to service that class of users.
It was only in the scientific applications that users start to take the responsibility of programming, usually in high level language such as FORTRAN, and in military, aerospace or industrial automation, where third parties contracted the system integration. Those areas were not aggressively pursued by Compagnie des Machines Bull. Scientific computer centers allowing batch machine time were set up by IBM and Bull. Initially, those centers were used by the manufacturers as public relations centers than source of profit. However, in the early 1960s, a French company, SEMA, started to compete with them by selecting a Control Data 3600.
It was in the late 1950s, with the advent of computers with stored programs, that the responsibility of applications programming started to be separated from that of "system programming", the former implying usually user's involvement and exonerating partially the manufacturer liability. By using the word "partially", we mean that the contracts still committed the manufacturer to provide a suitable configuration to do the job.
The services industry was born in United States from as an offspring of the large aerospace contracts by companies such as CSC, Mitre, SRI ... In Europe, systems of this type were limited to France and United Kingdom that did the work inside the State laboratories until the mid 1960s. When the manufacturers started to free themselves from the burden of hiring people knowledgeable in customer specific business and from the maintenance of the applications, a specific services market started to emerge. One of the most successful company was created by a Grenoble Bull local responsible Serge Kampff, the created of Sogeti, later Cap-Sogeti. Other companies follow suit during the 1970s created by people from the manufacturers or from EDP public labs.
A company like Bull, and later Bull-General Electric fond necessary to federate a certain number of embryonic service companies that, founded by Bull employees or by Bull customers employees, specialized themselves in the non-IBM programming business.
The big change in the services industry happened when IBM under the pressure of law suits decided to unbundle its hardware, its software and its services. IBM opened the door to external companies as the same time that it could make money from its non faithful customers that have bought peripherals or central systems from its competitors.
Bull financial Subsidiaries
At the times of card punch equipment, till the late
1950s, the obsolescence of the electrical-mechanical hardware was relatively low (up to a
dozen years), while the cost was offset by a about one year of leases. maintenance costs
were high but reconstruction of returned equipments allowed the recycling for new periods
of leases. Bull and IBM show high financial profitability and those margins allowed to
finance new equipments and growth.
That financial scheme was wrecked by the technological progress due to electronic
computers that required heavy R&D resources and were obsolete in just a few years. As
the business was still made of leases, a strong need of financing the growth appeared. For
a few years, Bull financial balance looked good because return equipments were still
refurbishing and were kept in the books at their new catalog price. But the inventory grew
and write-offs became necessary.
The strategy had to be to raise financing through an external company, controlled by
banks. So, Locabull became in France the owner of a large part of the Bull park.
When CII entered the business computer market with the Iris computers in the second part of the 1960s, it was confronted to the same problem, because even the government controlled agencies rented their computer, hoping that inflation would decrease their rental payments. The problem was aggravated by the early announcement of series X that was obsoleting Iris park faster than IBM S/360. So, banks, through CILOMI, took control of CII business. Conflicts occurred about the price of returned equipments.
Locabull
Locabull was created around 1960 to unload the financial burden of leasing the
machines to customers.
CILOMI
The Compagnie Internationale pour la Location de Matériel Informatique
(CILOMI) was founded in 1971 by CII (50%) and banks to finance the leasing of CII
hardware to French users.
With the integration of Bull within American companies, the financing problem subsisted, while it was easier to borrow moneys from banks when you belong to prestigious international companies. Advantages of the leasing structure were shown, when a down-turn of the economy in the early 1970s was almost non-significant for computer companies, and when delays in NPL in 1974 did not have a catastrophic impact on Honeywell-Bull
1979 started a big change in the industry: IBM accepted to sell its computers and unbundled the software and services. Software was still on the base of rental and was assuring IBM of recurrent revenues. The rapid shifting from rents to sales caused in 1980 a surge in the profitability of IBM and contributed to mask the financial problems of CII-HB. In fact, many customers went directly to third party companies to finance their computer equipment. Those financial companies were able to get discounts that were added to the price decrease of the manufacturer. If Bull's marginal costs got on par with IBM's ones, the fixed expenses had to be amortized on a number of machines an order of magnitude lower. True, R&D was still partially subsidized by taxpayers, but the continuously decrease of prices fueled by the competition of "open system" took inexorably their toll.
The unbundling per se did not change much for Bull: its catalog was matching the IBM's one line by line and prices were almost identical. Bull had not significantly to deal with clones manufacturers in the 1980s. Bull could have attempted to get higher prices from their proprietary product lines, but influent customers press for an alignment. Bull could have lowered the price to increase its market share, when it introduced CMOS systems in the late 1980s, but the low margins on peripheral subsystems and open systems required that its GCOS systems compensate that impact.
Data processing
Coranord
Compagnie Régionale d'Applications Mécanographiques du Nord was a subsidiary founded at Lille by Machines Bull on February, 25 1952. It merged into IMSAC in 1971.
Cetam
Centre d'Etudes et d'Applications Mécanographiques was acquired by Machine Bull in 1952. It merged into IMSAC in 1971.
CAM
Compagnie Amiénoise de Mécanographie was founded in Amiens (North of France) in February 1957. It was consolidated into Coranord in April 1962.
IMSAC
Institut Mécanographique, de Statistiques et d'Applications Comptables was founded in Paris in March 1950. The French regional service subsidiaries of Compagnie Honeywell-Bull, still alive in 1971 were consolidated into IMSAC in October 1971.
General Electric Information Services division
GEISD originates in 1956, when Herb Grosch came in Phoenix with an IBM 704 with the intent of creating a common computing center for the GE divisions. But this first attempt was not successful and Herb Grosch leaved in 1958, freeing GE from an IBM bias. In the early 1960s, after the Dartmouth College developed its famous Time-Sharing System on GE-265, GE decided that that system could be offered to business users and started to open several TS computing centers accessible by remote Teletype 33. In 1965, several such centers opened in Europe (initially, London, Amsterdam and Paris). The port of Dartmouth TSS on the GE-635 allowed to consolidate those centers and to interconnect users through email. Due to communication cost structure, the initial Mark-III world-wide center was located in Cleveland OH.
At the time of GE disinvestments in computing, in 1970, it kept within GE this worldwide service business, keeping Honeywell as its supplier and giving to Honeywell-Bull distribution rights for some time. GEISD was, at that time, located in Bethesda MD and is still headquartered in Maryland.
GEISD installed new central computers from Honeywell (some under Mark-III special time sharing operating system, a few under GCOS-III) and from IBM (used in remote batch through GE). GE developed multi-access connections to disc files (IBM brand) and software extensions to Mark-III. In practice, the strength of GEISD (and the fact that until 1975 GE remained a key shareholder of Honeywell), inhibits any diversification of Honeywell and Honeywell-Bull in the Facilities Management business.
By preferring in 1982 the NEC ACOS1000 system to Honeywell DPS-88, GEISD triggered the acquisition of NEC mainframes by Honeywell that announced the ACOS-1000 as DPS-90 in 1984, and sold eventually DPS-90 to GEISD at Cleveland and Amsterdam.
In the 1980s, GE attempted to establish GENIE (General Electric Network for Information Exchange) an end-user proprietary network to compete with Compuserve and Prodigy, using its professional infrastructure and computers. GENIE did not achieve its goals and gave way to Internet in the 1990s;
HBS Honeywell-Bull Services
Natel Nationale de Traitements Informatiques
That company was founded in 1973 by BNP Banque Nationale de Paris in absorbing IMSAC and Honeywell-Bull services.
Natel eventually merged into GSI.
Méthodes Informatiques
This SSII specialized in Bull designed systems was absorbed by Groupe Bull in 1986.
Athesa
There was an attempt in 1974 to consolidate the Bull facility management activities and the CISI software subsidary of the French Atomic Energy Committee. The entity Athesa headed temporarily by Jacques Tordjmann, ex-EDS France manager went quickly apart and Bull consolidate its own forces into Integris.CISI was later acquired by Compagnie des Signaux group.
Intégris
founded in 1992 in Billeria as Integris Data Services. The role of that subsidiary was focused on Systems Integration that encompass Honeywell-Bull servers (Pyramid agreement in July 1992).
A company of the same name was founded in 1995 in
Saint-Ouen and its main activity was to take over European Groupe Bull data services (internal EDP -"informatique interne", telecommunications).
In 2001 Bull was in the process to divest the international assets of Integris to STERIA and to spin-off the French assets.
Distribution entities
The distribution business started in Bull, with the creation of a Cards and Papers division in the 1930s.
Bull Express
Bull Express was a French subsidiary of Bull S.A. created in the mid-1980s to handle office supplies for the microcomputer market. It was extended to provide cables, add-ons and peripherals.
Maintenance entities
The maintenance of EDP machines was one of the most important job in Bull. Card equipments systems and early computers required the presence of maintenance people on the site, sometimes on a 24h/24h basis. The cost was bundled in the rental contract and the Field Service engineers were excellent agents for the Sales Networks, being intermediaries between the customer's EDP responsible and the manufacturer's site, advising the former and informing the latter.
Serrib
SERRIB is a company created in December 1991 by spinning-off the repair workshop of the Belfort plant. Its main activity was impact printer repairing and recycling. It also extended to other Belfort originated peripheral products.
Conclusion
Bull strategists, and their consultants, say, since the beginning of the 1980s, that the future of computing is no more in manufacturing "computing boxes" but in services. Such a strategy has been attempted but was until now unsuccessful. The reasons might be that Bull had kept the same customer interface that was established at punched cards equipment time and that it failed to base a new business on new ideas. The service business was always entered as a "me too" , waiting that others, with similar weight constraints, such IBM, show the way to go. With the shift to open systems in the late 1990s, Bull attempted to convert itself to the service business bidding for large users contracts. At the end of 2000, Bull decided to group all those services activities in a separate entity, widely independent from its "infrastructure" traditional business. With the cession of Integris, Bull reincorporated its still profitable maintenance activities with the Servers business.
Revision : 29 juin 2001.