Large IT Services Choose Distribution And Energy As Their New Growth Power

Jul 03, 2015

Large IT service companies chose new growth power to break into stagnant market and are out to preoccupy markets. Distribution and energy businesses are major new growth powers that large IT service companies chose.

According to the industry, SK C&C chose distribution business following Samsung SDS as its new growth power. LG CNS, Lotte Data Communication Company, and Hanwha S&C chose energy business as their new growth power, and Posco ICT is pushing for Smart Factory business.

SK C&C, which is merging with SK Corporation, is putting out 4PL business to front in August. It is going to utilize analysis of IoT and Big Data and establish Smart Distribution platfore that implements volume prediction and minimization of transport. It is planning to provide distribution service targeting SK Group’s affiliates such as SK Hynix.

This process is similar to distribution service that Samsung SDS provides to Samsung Group’s affiliates based on distribution platform called ‘Cello’. But thinking that group’s affiliates’ size of quantity of goods that get transported is not big enough, it is operating foreign business side by side. Director Cho Young Ho of SK C&C’s IT Service Business Department said at ICT Partner Day that it is planning to enter distribution market on its own, where destruction of business field is occurring, as a business man.

Samsung SDS made 2.13 billion dollars (2.4 trillion KRW) last year just in Distribution Business Processing Outsourcing (BPO) business field and it is predicted that it will make 2.93 billion dollars (3.3 trillion KRW) this year, which is 42% increase compared to last year. This business is closing in on 40% of all sales and it will firmly establish itself as a new growth power.

LG CNS executed reorganization of the group on the 1st and established the group that pushes for new energy business, which indicates that it will strengthen energy business as its new growth power. Group that pushes for new business that is led by Director Ha Tae Seok is comprised of Jeju Eco Platform Business, Marketing Team, Business Strategy Team, and Energy Self-Sufficient Business Team.

“We’ve established a group that pushes for energy business to concentrate on capability of energy business within our group. We are planning to build new energy business in Korea as well as in foreign countries by establishing environment-friendly energy self-sufficient business and a group that is solely responsible for Jeju Eco Platform business.” Director Kim Sang Dong of LG CNS said about why it is pushing for energy business.

Lotte Data Communication Company and Hanwha S&C also made side dots on energy business, and energy diagnosis consulting and new renewable energy system are the most significant ones. It established information technology research center in early this year, which is an organization that is solely responsible for finding new businesses, and recruited specialists from foreign countries.

Hanwha S&C is performing related business by cooperating with Group’s affiliated energy companies such as Hanwha Chemical. Although energy business only occupies 10% of all sales, its plan is to promote it as its main business hereafter. Posco ICT focused on Smart Factory business by utilizing analysis of IoT and Big Data.

The reason why IT service companies are looking for new businesses and putting them out is to overcome limitation of previous market. Due to reinforcement of regulations such as stagnant information-oriented market and software business promotion law, conventional system integration and IT outsourcing markets greatly decreased. Profitability also became worse due to reduction of business budget.

This is how IT service companies such as Samsung SDS, SK C&C, and Hanwha S&C emerged as groups’ main affiliates. To improve company’s value and stocks, they are promoting company’s capabilities at groups’ levels.

Staff Reporter Shin, Hyekwon | hkshin@etnews.com

■ [Table] Current situation of selected new growth power of major large IT service companies
▲Samsung SDS is pushing for distribution BPO business targeting group’s affiliates based on distribution platform called ‘Cello’
▲LG CNS is pushing for new energy business such as Jeju Eco Platform business
▲SK C&C is pushing for domestic and foreign distribution service using development of Smart Distribution Platform
▲Posco ICT is pushing for Smart Factory business using analysis of IoT and Big Data
▲Lotte Data Communication Company is pushing for energy businesses such as energy diagnosis consulting and new renewable energy system
▲Hanwha S&C is pushing for energy business by working together with group’s affiliated energy companies.(Reference=each company)
<■ [Table] Current situation of selected new growth power of major large IT service companies ▲Samsung SDS is pushing for distribution BPO business targeting group’s affiliates based on distribution platform called ‘Cello’ ▲LG CNS is pushing for new energy business such as Jeju Eco Platform business ▲SK C&C is pushing for domestic and foreign distribution service using development of Smart Distribution Platform ▲Posco ICT is pushing for Smart Factory business using analysis of IoT and Big Data ▲Lotte Data Communication Company is pushing for energy businesses such as energy diagnosis consulting and new renewable energy system ▲Hanwha S&C is pushing for energy business by working together with group’s affiliated energy companies.(Reference=each company) >

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