More privatisation

[Keaney Michael <michael.keaney@xxxxxx>]

Indra maps out a high-tech route to poll position:
The Spanish IT group has spotted an opportunity from last year's electoral
chaos in Florida, writes Leslie
Crawford:

Financial Times, Feb 20, 2001

By LESLIE CRAWFORD

Last year's presidential election confusion in the US was good news for
Indra, a Spanish information technology group.

The muddle over the counting of votes in Florida has given rise to hopes for
a company whose expertise ranges from designing ballot forms to tallying
national results.

"The aftermath of the US presidential vote convinced us there is a real
business opportunity there," says Juan Navarro, Indra's director of
electoral processes.

"It has accelerated our plans to establish a beachhead in North America. We
intend to be fully operational in the US - alone or with partners - by
2002."

Indra, which began life in the state-controlled defence sector, has been
organising elections for more than 22 years - from Spain's first general
elections in 1978, following dictator Francisco Franco's death in 1975, to
primaries, national polls and referenda in Argentina, Nicaragua, Colombia
and Venezuela.

In 1996, Indra was the first IT company to post the results of the Spanish
national elections on the internet in real time - as fast as its computers
counted the votes. The margin of error, Mr Navarro says proudly, was less
than 0.02 per cent.

In Venezuela, where four elections have been held in the past two years,
Indra was able to deliver the results 45 minutes after polling stations had
closed.

The optical scanners used in the Venezuelan polls were light years ahead of
the cranky old punching machines that were responsible for so much of the
controversy in Florida.

"We have developed a good methodology at Indra to guarantee the accuracy of
voting results. But this must be backed up by good technology. In Florida,
Indra would have been able to detect problems earlier, but it still would
have been stymied by those mechanical voting machines. The technology and
the methodology must go hand in hand."

The business of organising elections is a lucrative one. In Venezuela, which
has a population of 24m, Indra charged the government Dollars 25m for
tallying the 1999 presidential vote.

It is more difficult, however, to predict accurately the cashflow of
counting votes. At present, Indra earns about 12 per cent of its revenues
from organising elections.

Mr Navarro would like to expand this line of business, but he knows this
opportunity is limited by the fact that there are only a finite number of
elections around the world every year. That is why the US market is so
important.

Mr Navarro sees plenty of opportunities in the consultancy field, given that
the 3,000 counties in the US are responsible for organising all the
elections within their constituencies.

This, according to Mr Navarro, means dealing with a patchwork of
technologies and methodologies when it comes to tallying the final count at
the national level.

"It represents a huge challenge for all the IT companies that get involved,"
he explains.

When elections are won by large margins, no one questions the accuracy of
results. But when the outcome is as tight as it was in Florida, then the
legitimacy of the entire democratic process hinges on the accuracy of the
technology employed.

"The social stability of a country depends on it," Mr Navarro says.

Meanwhile, other IT teams at Indra are employed in integrating the air
traffic control systems for a unified European air space.

Indra's software already runs the air traffic control systems of Hong Kong,
Frankfurt, Moscow, Oslo and Madrid. A big push into China netted Euros 120m
(Dollars 110m) in contracts between 1999 and 2000, including the operating
systems for the Shanghai metro and the electronic toll gates for the
Shanghai-Nanjing highway.

Indra, which posted revenues of about Pta110bn (Euros 662m, Dollars 608m)
last year, up 13 per cent from 1999, also developed the software that runs
the banking settlement systems in Spain, Argentina and Peru. On top of this,
the company has supplied the software that processes passport applications
for Portuguese consulates around the world.

Such a varied pipeline of projects has allowed Indra, which listed on the
Madrid stock exchange in March 1999, to weather the storm in European
technology stocks. Indra's shares remained steady at about Euros 11, giving
it a market capitalisation of Euros 1.6bn.

The company says it is in acquisition mode, and is out to buy technology
companies that have been less fortunate than itself during the IT crunch.

Full story at:
http://globalarchive.ft.com/globalarchive/articles.html?print=true&id=010220
001186

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx