Analysts: Kaz enhances Fujitsu's government footprint

Analysts say that Fujitsu's acquisition of Kaz enhances its government footprint

Analysts claim Fujitsu’s acquisition of Kaz will give the services integrator a stronger position in the government sector.

Fujitsu purchased Kaz from Telstra for $200 million last week. In a statement, the global outsourcer said the deal would expand its customer base, skills and national footprint and make it Australia’s third-largest IT services company by revenue.

Intermedium head of consulting, Kevin Noonan, said one Australian customer segment Fujitsu had struggled to gain traction was within the Federal Government market, a market Kaz was successful in.

“There are some good synergies there. Fujitsu picks up a chunk of market it has been missing out on, and Kaz has been languishing of late because really Telstra saw that infrastructure side of the business as non-strategic, whereas it’s quite strategic for Fujitsu,” he said.

Despite the slowdown in government spending over the last 12 months, Noonan claimed the services space in Canberra was the most profitable across the entire IT market.

“The challenge for Fujitsu is to see this as a strategic relationship that will pay off in the medium- to long-term,” he said. “It shouldn’t just focus on short-term gains.”

Noonan said the acquisition could potentially spark more competition and hinted there was room for further consolidation.

“Other players will find an attractive competitor in the market they now have to deal with,” he said. “I think the Kaz acquisition will be a success because there’s a good strategic fit between the two companies in their products and services. It’s a far better strategic fit then they would have had under Telstra.”

Gartner analyst, Rolf Jester, saw the acquisition as good for Kaz customers because it provided certainty in the company’s future.

“The reason it gives them certainty is that Fujitsu is in the business of IT services,” he said. “There’s a good fit with the Kaz operation and future – to an extent, that had been uncertain under the Telstra ownership for some time.

“What you’ve got is a fairly broad and capable IT services organisation that now has a solid home, an investor, strong management and a strategy that at the international level, has been emphasised as a focus on global IT services.”

Jester said the acquisition represented a healthy competitive environment.

“It’s the sort of competition that’s going to keep people on their toes as far as quality of service is concerned and fair pricing,” he said. “For the providers, system integrators and outsourcers, it just strengthens one of their competitors.”

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