May 02, 2005
Intergraph Corporation CEO and President SpeaksIntergraph Organizational Structure Realignment Announced
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Susan Smith - Managing Editor

by Susan Smith - Managing Editor
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A weekly news magazine featuring important industry news profiles, a summary of recently published AEC product and company news, customer wins, and coming events. Brought to you by AECCafe.

Welcome to AECWeekly! A keynote delivered by Halsey Wise, President and CEO of Intergraph Corporation in San Francisco, California offered a valuable overview of the company's vision and direction that encompassed all four divisions of that company: Power, Process and Marine, Mapping and Geospatial, Solutions, and Public Safety. Interestingly, a day later, Intergraph announced a complete organizational structure realignment and the streamlining of its global operations from four divisions to two. Read about it in this week's Industry News.

AECWeekly examines select top news each week, picks out worthwhile reading from around the web, and special interest items you might not find elsewhere. This issue will feature Industry News, Acquisitions/Alliances/Agreements, Announcements, Awards, Appointments, Around the Web, and Upcoming Events.

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Best wishes,

Susan Smith, Managing Editor

Industry News

Intergraph Corporation CEO and President Speaks

by Susan Smith

Halsey Wise, President and CEO of Intergraph Corporation, spoke at this year's Intergraph Geospatial World 2005 held in San Francisco, Calif. April 24-28. Although this was a geospatial conference, I'm including coverage of Wise's keynote for AECWeekly because it focuses on all Intergraph's divisions, not just the geospatial division. Those divisions include: Intergraph Mapping and Geospatial, Power, Process and Marine, Intergraph Solutions and Intergraph Public Safety.

Wise stated frankly in his keynote that he felt that Intergraph hadn't always done an optimal job of sharing with users what the full capabilities of the company are. In the past we didn't perform well in speaking with our customers, said Wise. However, he said today "Intergraph has the highest customer service relationship ratings in the industry."

The company's
financials were going to be announced on Thursday so Wise couldn't talk about them yet. He quoted Mark Twain, saying, "You can't rely on your eyes if your imagination is out of focus." Adding: "Some of the things that we imagined will soon be part of Intergraph's future."

Wise is fond of the phrase "Now - next - after next" which was first spoken by the National Geospatial-Intelligence Agency's (NGA) General Clapper to outline Intergraph's movement into the future. Wise sees these three phases describing the way Intergraph will be transformed for the future.

In recounting 2004's progress, Wise said that Intergraph is in 60 companies. Approximately 55 percent of their profits come from outside the U.S. "One of the key messages is that we're truly a global company."

Operating results for the year ending December 31, showed that Intergraph is on the best financial footing in its history, and is at a 12 year record high.

In 2004 Intergraph had a gross profit of $275,764, gross margin 50.0%, and operating income of $34,094. The company also:
  • Increased revenue by 5%
  • Increased gross margins to 50%
  • Increased operating income by over 150%
  • Commitment to research and development is at an "all time high," according to Wise. Intergraph settled all pending patent litigation and continues to have a strong balance sheet to invest in growth opportunities. Their share price continues to outperform the NASDAQ composite and their peer group.

    Intergraph has almost $300 million in revenue with no debt. "We can afford to take risks that smaller competitors can't," said Wise.

    He named off the four divisions of the company, listing what each was worth in annual revenue:

    Intergraph Mapping & Geospatial Solutions - $205 million annual revenue

    Process, Power and Marine - $145M annual revenue

    Public safety - $70 M annual revenue

    Solutions - $135 M annual revenue

    According to Wise, some facts about Intergraph include:
  • World's #1 provider of 3D software for Power, Process, and Marine.
  • In Public Safety the company has the world's largest #1 market share of incidence command, dispatch for all federal, CIA, Washington, DC capitol police, Paris police, Dutch and German border guard. Intergraph has a high security clearance from many governments to deliver public safety.
  • 39 of the 50 Departments of Transportation in the U.S. use Intergraph
  • In the "Now" phase, Intergraph was in a period of significant change and searching to find out what the company was good at and not good at. Last summer the company finished its first strategic plan which is a blueprint for their future. They focused on performance orientation, and rewarding their best people.

    In the "Next" phase Intergraph focused on improvements. The company capitalized on the revenue and cost synergy opportunities among the four divisions.

    These improvements took place in each division:

    Intergraph Mapping & Geospatial Solutions: shift towards vertical SIM applications

    Power, Process and Marine: growth into full lifecycle solutions

    Intergraph Solutions Group: focus on projects in core markets

    Intergraph Public Safety: Build complete public safety solution

    Goals for this phase include:
  • Return to revenue growth
  • Cost structure reductions
  • Benchmark performance
  • Performance based culture
  • Alignment with strategic plan
  • In the "After next" phase are the following strategic initiatives for the company:
  • Potential change in industry landscape
  • Company or market expansion
  • Transformation opportunities
  • Goals for this phase include:
  • Above industry performance
  • Turnaround complete
  • Sustained growth stage
  • What was determined by Intergraph's 2004 strategic plan were primary strategic opportunities characterized by:
  • heightened security concerns and ever present terrorist threats
  • high oil prices and tightening inventory
  • increased development has created a demand for critical infrastructure
  • "The markets we're in are large and growing, targeted software markets represent more than $2.5 billion in annual customer spending," said Wise. The markets have an average blended annual growth rate in the 5-10% range.

    Key corporate strategies:
  • Focus assets and management on software led growth and development to meet the demand of our customers and industries we serve.
  • Consolidate operations to realize revenue synergies between business units and provide the greatest value for our customers.
  • Invest in ways that add value to our customers, internally and through acquisition where market size and opportunity are significant, returns are appropriate and growth and demand are apparent.
  • Note: One day after this keynote address on Wednesday, (from the press release) Intergraph Corporation announced that, consistent with its Strategic Plan, the Company
    is realigning its organizational structure and streamlining its global operations from four to two divisions - Process, Power & Marine (PP&M) and the newly formed Security, Government & Infrastructure (SG&I). Intergraph's SG&I division will consist of core operations that previously existed in Intergraph Mapping and Geospatial Solutions, Intergraph Solutions Group and Intergraph Public Safety. The organizational realignment is intended to: (1) improve the customer focus and responsiveness of the Company; (2) facilitate revenue growth by better leveraging the Company's full
    range of technology and services; (3) enhance the Company's development capabilities and ability to deliver innovative solutions to its target markets; and (4) reduce the overall cost structure of the Company. The Company expects the organizational realignment process to be completed by the end of the second quarter of 2006.


    FIATECH and the Lean Construction Institute (LCI) have formed an alliance to unite advanced production management with advanced enabling technology. The formation of an alliance between FIATECH and LCI creates an unprecedented cooperative and mutually rewarding relationship enabling both organizations, and their members, greater achievement in their objectives. The Alliance will develop solutions that create and validate best practices and continually set new standards for the industry.


    Bentley Systems, Incorporated announced a survey and information program to help users of Intergraph's Plant Design System (PDS) decide whether to take a revolutionary or evolutionary path to a digitally integrated plant environment. The survey's initial results show that 87 percent of the respondents said the transition from PDS is important to them; yet only 28 percent said they had enough information to make decisions about this strategic transition.

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    -- Susan Smith, Managing Editor.


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