The electrical engineering group Siemens is exploring opportunities for basing further software investment and e-commerce activities in the Republic, according to its president and chief executive, Dr Heinrich von Pierer.
On a visit to Dublin to celebrate Siemens' 75th anniversary here, Dr von Pierer said the company would not consider the Republic for factory-style investments, but it was considering how the State could play a role in Siemens' new e-business strategy.
Last week Siemens announced a major e-business initiative that will bring all its 440,000 employees online and shift procurement onto the Web. The plan will cost €1 billion over 18 months.
"For staff it means in factories we will have Internet information centres and all our office employees will have direct PC connection on their desks," says Mr von Pierer.
It is also likely to bring considerable cost savings, he says.
"Siemens procures components worth €35 billion per year and out of this only 10 per cent are bought online. Our target is to transact 50 per cent online within two to three years and achieve cost reductions of €1 billion."
The Internet data centres and servers required to facilitate Siemens e-business strategy will be based in Munich, but the location will be constantly under review.
"We are aware of the Irish Government's strategy in this area," says Mr von Pierer.
However, Irish technical expertise is already at the forefront of the new strategy. Siemens announced in March it would locate a global centre of competence for secure e-commerce in Dublin. This centre currently employs 100 people and is set for rapid expansion in the next few years.
The group's international call centre based in Cork is also adapting to the e-business environment. It has developed an e-commerce application that enables the electronic procurement of mobile phone accessories and is consistently moving up the value-added chain.
Siemens e-business strategy is likely to have a profound effect on the culture of the group, which until recently has been viewed by analysts as conservative, and too focused on its distinct German heritage.
The 150-year-old company, which spans sectors as diverse as energy, healthcare, communications and transportation, has wrestled with restructuring issues since Mr von Pierer was appointed chief executive in 1992.
Frustrated at the slow pace of this transition, investors had called for Mr von Pierer to resign as recently as last year. But this year sentiment towards Siemens is more positive and investors have bought into its transition from industrial "smoke stack" to new-economy player.
"When I became chief executive in 1992 I understood the company had to change in terms of globalisation, privatisation and the fact we would face tough price pressure and competition," said Mr von Pierer.
"I remember someone told me it would take 10 years to change the culture and I think now he was wiser than me because it has taken much longer than I had originally thought."
Our aim has been to boost productivity, innovation, growth, culture change and to expand Siemens abroad, he says.
"And this calendar year we have reached an important milestone, with the US becoming the most important market for Siemens for the first time."
Aside from its e-business strategy, Mr von Pierer highlights several areas where Siemens has undergone a change in culture.
"We think we are the most transparent of all our big competitors and whereas a few years ago we would have limited meetings to our customers now we hold regular investor meetings with analysts and brokers," he says.
Siemens is on track to report results according to US accounting standards by December 2000.
But as well as meeting the requirements of the capital markets it also means each division knows how it is doing against another, according to Mr von Pierer. "This has created a competitive culture among divisional heads, who have to travel to head office every quarter to present their numbers to management and all the assembled divisions," he says.
"The division with the worst numbers goes first. So naturally all the bosses want to be last to give their numbers," explains Mr von Pierer.
Siemens has introduced an incentive system where top management receive a basic 40 per cent salary, which is then supplemented by bonuses, which makeup the remaining 60 per cent.
The company is also issuing stock options for its top staff despite difficulties with the domestic law in Germany.
The company has also focused on making its core divisions world leaders in their field. After some years of difficulty its semiconductor unit, Infineon, was floated on the Nasdaq in April and raised $5.4 billion. It is now recognised as a global leader, with strong profit growth.
Likewise the buoyant mobile phone sector has driven annual sales at Siemens to more than £47 billion. Demand is currently outstripping supply in the handset market and the Siemens models have been particularly successful, claiming some 25 per cent of the Irish market.
But despite a research and development budget of £3.2 billion, Siemens, along with other mobile handset providers, is struggling to implement rapid technological developments such as GPRS and UMTS technology.
"There are some concerns that the handsets are not ready because we have to make two-mode handsets," says Mr Pierer.
"Because the UMTS network will not be complete coverage, people will have to roam on GSM networks in some areas. This is not an easy thing to develop but I think we can guarantee we will have it ready on time."
Staying on top in the fast moving high technology market will prove a difficult challenge. The proposed flotation of SSE, the specialised software development subsidiary of Siemens, was postponed last year after running into difficulties, and more flexible start-ups could pose a threat going forward.
However, Mr Pierer is upbeat about Siemens future prospects.
"Look at the situation with the stock market and what is happening to so-called technology shares," he says. "We are the new economy of substance, not only with dreams, expectations, business plans and hopes. Siemens has substance."
