Fujitsu America CEO makes mid-market enterprise bet

Fujitsu America will kick off April 1 as an integrated IT systems player with a game plan to target mid-market enterprise customers and large corporations in industries such as retail, financial services, government, manufacturing and health care.Last September, Fujitsu announced plans that it would create Fujitsu North America  Holdings to aggregate its consulting, systems and transactions units together into an IT services, software and hardware company.

Fujitsu America will kick off April 1 as an integrated IT systems player with a game plan to target mid-market enterprise customers and large corporations in industries such as retail, financial services, government, manufacturing and health care.

Last September, Fujitsu announced plans that it would create Fujitsu North America  Holdings to aggregate its consulting, systems and transactions units together into an IT services, software and hardware company.

The combination makes Fujitsu America more an IT services player in the U.S.,  Canada and Latin America. Parent company Fujitsu, based in Japan, is one of the  top four IT services companies in the U.S. and roughly on par with Accenture in terms of revenue.

We caught up with Fujitsu America CEO Farhat Ali (right) ahead of the move. Here are some snippets of our conversation:

First off, Ali wasn't able to discuss the Sun-IBM merger chatter. If you recall,  Fujitsu has been rumored to be the most likely buyer of Sun's server business.  After all, Fujitsu manufactures Sun's servers, sells systems that run on Sun's  Sparc chip and may be an ideal buyer should IBM want to unload a commodity hardware business.

With that tidbit off the table, here's a look at Fujitsu America's game plan.

Ali outlined a mid-market enterprise strategy that made a lot of sense because it fills a need in the market place without getting trampled by IBM and HP, two IT service giants. Ali said:

"We're targeting  enterprises with $1 billion to $5 billion in revenue. There's  greater opportunity in the mid enterprises. It's a sweet spot where we can combine the intimacy of being local with the expertise and resources of a large IT leader (parent Fujitsu). This slice is not well served."

I was inclined to agree with that take. Mid-tier enterprise CIOs historically are skeptical of large IT services companies because they fear they won't get the attention they deserve. "The issue for a big company is how do you serve that group. Sales costs very high and the broadbrush approach it doesn't work,"  explained Ali. "It's difficult for large companies to get in there and give the attention. I'll take a CEO call any day or night. I'm the same size and have the same empathy."

As for the larger enterprise accounts, Ali said Fujitsu America is going after  customers of its parent company that want to standardize platforms. For instance,  large Fujitsu customers such as Canon, Ricoh and Toyota in Japan have sizeable U.S. operations that may use other IT services companies. By streamlining, Fujitsu America can go after those accounts.

"Japanese clients are very interested in global partners that can deliver  everywhere their operations are. If Fujitsu is going to do application development in Japan, it can work similarly here. We already understand that company and its industry," said Ali, who noted that Fujitsu America will soon announce a $100 million deal with a large manufacturing client.

The other approach for Fujitsu America is to take clients where the parent already has relationships and deals and add on more services. "We have good relationships with a selected number of large enterprises because we provide servers, PCs and application development," said Ali. "We're now trying to take a total value proposition to them."

But there are challenges. For starters, Fujitsu America is targeting six key  verticals---retail, healthcare, public sector, manufacturing, telecom and  financial services. Ali talked about integrated sales teams and new management,  but the economy has wreaked havoc on some of those industries such as retail, financial services and manufacturing. Then again, there is a boom market in  government and health care.

We also talked about Fujitsu America's offshore strategy and here the company made an interesting move. Ali is responsible for the U.S., Central America and Canada, but also has the Philippines and India units reporting to him. The gist: Combine offshore, nearshore and on-premise teams. In India, Ali said, Fujitsu has 2,000 workers and just opened a new $10 million facility. Overall, Fujitsu America has about 10,000 employees.

The big question is whether Fujitsu America can go toe-to-toe with IBM, HP and  Accenture in U.S. accounts. Those three deploy armies of consultants. Meanwhile,  Fujitsu America is also running into accounts that are seeing a lot of pressure to cut costs. Ali verified the problems that Accenture has reported with its customers. And it's going to take some time to penetrate large accounts.

However, Fujitsu America's mid-market strategy is sound and when you consider that mid-sized enterprises are also focusing on more outsourcing to cut costs, the underdog may just have a shot in the Americas.

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