Finland's Tieto buys Norwegian enterprise software company

Finnish IT services company Tieto is strengthening its business in Norway through the acquisition of Software Innovation for NOK 610m (£50m).

Norway’s Software Innovation specialise in enterprise content management software and consultancy, such as the ProArc document management system used by engineering and construction clients throughout the Nordic region. ProArc boasts more than 100,000 global users and is the software of choice in the Norwegian engineering, oil and gas industries.

Around 75% of Software Innovation sales come from Norway while Tieto’s clients are more concentrated in Sweden and Finland. They share a focus on public sector projects, according to Tieto executive vice-president of public, healthcare and welfare Håkan Dahlström.

"Software Innovation has a handful of proven products in the market. We have co-operated with them in many projects before and resold some of its products, and are happy with what we have seen. This gives us good growth opportunity in Sweden and Finland, but also a way into its existing customer base in Norway,” he said.

The acquisition is of strategic importance for Tieto in its battle against Indian outsourcing competition that is piling into the Nordics and can offer equivalent services at a lower cost. As a result of the acquisition, Tieto expects its market share in the Nordic enterprise content management business to increase almost three-fold to 20%.

"Our technology, the industry and the customer bases are complementary and we will have a great opportunity to cross-sell, so this is a pure growth agenda for us,” said Dahlström.

Many Norwegian hospitals already run Software Innovation’s Public 360° case and archive system, while Tieto is heavily invested in healthcare with major projects for the city of Stockholm.

Dahlström sees a strong trend towards digitalisation of public services in the Nordics. "When it comes to society, the trend we see in the market is about increasing the service level towards citizens. We have talked about the concept of 24/7 authorities for some time, but now it’s finally real," he said.

"On the infrastructure side there’s a big cost awareness as customers seek to make infrastructure more efficient while digitalising the way they work. This makes cloud become interesting for many, but it’s also about streamlining business processes around the infrastructure. The Finnish market, especially the public sector, is ahead when it comes to outsourcing IT infrastructure, but the entire Nordic region is moving in the same direction," added Dahlström.

"Some of our customers want to proactively open up all the data they have instead of being reactive. To achieve this, we must get away from yesterday's way of working with a paper-oriented process that bounced back and forth between paper and digital."

The deal is subject to approval from the Norwegian competition authority and is expected to close in August 2015.

"I am convinced we will create added value for our joint customers and accelerate digitalisation in a broader market. There will be good opportunities for our existing and new customers to utilise Tieto’s global delivery and the full scale of competencies in the Nordic countries,” said Software Innovation CEO Torstein Harildstad, who will remain in a leadership role.