2005 Financial Report - Capgemini

32 ANNUAL
THE GROUP
Capgemini
as the “Deliver” methodology. Project managers are given specific
training to develop their skills and acquire the appropriate
level of certification for the complexity of projects under their
charge. The Group also has a pro-active policy of seeking
external certification (CCM, ISO, etc.) for its production sites.
Contract execution is monitored using established procedures
throughout the life of the project, with a dedicated
structure for monitoring complex projects. Expert teams
track these complex projects, and may also intervene – at
the request of the Group’s Production and Quality department
– on projects that are experiencing difficulties. Each
project is subject to monthly financial controls, and the Internal
Audit function checks that project management and
control procedures are being properly applied.
Capgemini uses its own proprietary client relationship management
process known as OTACE (On Time And Above
Client Expectations). The partnership approach to client
relations encouraged by the Collaborative Business Experience
concept helps to resolve problems upfront.
These procedures and systems play an important part in
identifying risks at the earliest possible stage, allowing preventive
measures to be taken that will limit the impact
both for clients and for Capgemini itself.
Employees
Capgemini’s people are its main productive resource, and
the Group attaches great importance to developing and maintaining
its human capital. The Group’s human resources
functions operate performance assessment and staff retention
programs.
Information system
Capgemini’s operations have little dependency on its own
information systems, which are managed via a predominantly
decentralized structure. The Group is sensitized to
the security of internal communication networks, and protects
them via security rules and the use of firewalls; it also
has an IT security policy. For some projects or clients, enhanced
systems and network protection is provided on a contractually-agreed
basis.
Clients
Capgemini serves a large client base, in a wide variety of
sectors and countries. The Group’s biggest clients are multinationals
and public bodies. The largest client accounts for
just under 12% of Group revenues, and is in the public
sector, while the second-largest client accounts for just 3%.
The top 10 clients collectively account for a little under 28%
of revenues, and the top 30 for approximately 40%. The
Group pays close attention to the billing and payment terms
of each contract, with the Finance Department closely monitoring
compliance with these terms.
Suppliers
Capgemini is dependent upon certain suppliers, especially
REPORT 2005 Capgemini
in its systems integration business. Although alternative solutions
are available for most software, the Group has forged
alliances with a limited number of strategic suppliers. Agreements
that provide for commissions or rebates are subject
to strict rules, and clients are usually informed of their
existence. Group-level agreements are subject to approval
by the Major Commitments Committee.
Countries
Capgemini has permanent operations in approximately 30
countries. The bulk of its revenues are generated in Europe
and North America, which are economically and politically
stable. Strict approval criteria must be met before employees
are sent to work in countries where there are no existing
Group operations, and even stricter criteria must be met
before the Group establishes operations in a new country.
7.3 Insurance
The Group Insurance Manager, who reports to the Chief
Financial Officer, is responsible for all non-life insurance
issues. Life insurance issues, which are closely related to
employee compensation packages, are managed by the human
resources function in each country.
Group policy is to adjust insurance coverage to the replacement
value of insured assets, or in the case of liability insurance
to an estimate of specific, reasonably foreseeable
risks in the sector in which it operates. Excess levels are set
so as to encourage operational unit managers to commit to
risk prevention and out-of-court settlement of claims, without
exposing the Group as a whole to significant financial risk.
General civil and professional liability
This type of coverage, which is very important to clients, is
contracted and managed centrally at Group level. Cap Gemini
S.A. and all subsidiaries over which it exercises direct or
indirect control of more than 50% are insured against the
financial consequences of general civil or professional liability
arising from their activities, under an integrated global
program involving a range of lines contracted with a
number of highly reputable, solvent insurers. The terms of
this program, including cover limits, are periodically reviewed
and adjusted to reflect trends in revenues and changes
in the Group’s activities and risk exposures.
The first line of this program, totaling €30M, is reinsured
through a consolidated captive reinsurance company that
has been in operation for several years.
Direct damage and business interruption
Capgemini operates from premises located in many countries
and, within most of these countries, operates at a number
of sites. In all, the Group has just under 400 sites, with
an average area of around 2,000 m 2 . Some of the Group’s
consultants work on client premises. This geographical
dispersion limits risk, in particular the risk of loss due to