Are software developers inferior to the consultants

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After a period of weakness at the beginning of last year, CW: sd & m has a very good order backlog again. What is your recipe for the ongoing industry crisis? KÜPPER: Our recipe is quality and concentration on individual development in the project business. For our customers, for example Deutsche Telekom, BMW or Daimler-Chrysler, we implement business-critical applications that give them a competitive edge. Our highly qualified team is the basis for this strategy. If possible, we do not take lateral entrants, mainly university graduates with very good exams or doctorates. We develop our staff and our managers in our own company.

CW: Does that mean you are not experiencing the price pressures that all other companies are facing? KÜPPER: Yes, we too are under this pressure. Many underutilized competitors are currently pushing their way into the markets based on price, and of course that affects us too. But we have enough leeway to remain flexible in terms of prices.

CW: Do you expect the market situation to improve soon? KÜPPER: Not this year. The shakeout is not over yet. I expect that up to 50 percent of the workforce in our industry will be laid off.

CW: So many? KÜPPER: Yes. The consolidation is creeping in, the downsizing has been going on for over a year, but initially it was ignored in the media.

CW: You too had to cut jobs at the end of 2001. KÜPPER: At that time, our IT specialists or software engineers had a low utilization rate of less than 80 percent for our standards. As a result, we expected 2002 to be more difficult than it ultimately was. That is why we had to lay off a total of 50 employees at the end of 2001. We went through 2002 with this slightly reduced capacity. That is also the reason why sales and earnings in 2002 remained slightly below the previous year's level.

CW: With Ernst & Young, Cap Gemini has also acquired the majority in sd & m. The French are currently in the headlines mainly because of their economic difficulties. Are you affected by it? KÜPPER: No. There is an agreement according to which we can appear and act independently in the market. We have two sales channels: our own via sd & m and the joint via the account management of Cap Gemini Ernst & Young. Since we are a successful business unit, we are allowed to operate independently.

CW: You develop custom software - don't you have to be on your guard against standard software manufacturers who are increasingly offering industry-specific solutions? KÜPPER: This trend is putting pressure on our market position, but it also offers us additional opportunities. Software companies such as SAP, Oracle and others have had to modularize their monolithic software systems as a prerequisite for a stronger industry orientation. The components that are available in this way give software houses such as sd & m the opportunity to create individual solutions within the framework of software integration projects without having to develop everything from scratch. In order to be able to advance such projects quickly and safely, we use our own application architecture, which supports component-based software development in particular.

CW: If you work on the basis of prefabricated modules and products, you are no longer far removed from the product business. Are you planning to get started? KÜPPER: Definitely no. We use our application architecture as a productivity and quality increasing tool. We subject the concepts of this architecture to all major development and integration projects without charging any costs.