BCE Emergis to retool health, finance operations

BCE Emergis Wednesday said it plans to concentrate next year on profitable lines of e-business, offer better products and add staff, but at the same time may sell some divisions.

E-business will be a key driver of growth in

IT business spending, and more than half of worldwide demand will radiate from North America, said Tony Gaffney, president and CEO of Montreal-based Emergis at a press conference.

“”We expect that growth to occur in a relatively few but very significant areas. And we see these as being primarily in finance-related services, and in particular in the areas of claims payments and loans processing.””

Emergis aims to respond to this expected appetite growth by concentrating on eHealth and eFinance operations, said Gaffney. For instance, Emergis will add electronic disbursement and dental adjudication to its eHealth service, as well as fine-tune its workers’ compensation platform to support the property and casualty insurance market and become more active in the government claims sector.

Plans for the company’s eHealth U.S. division, which contributes 75 per cent of revenue to Emergis’s eHealth operation and is worth 40 per cent of the entire company’s business, are more uncertain, though. “”We are in the process of considering alternatives with regard to that business, which include a potential diverstiture,”” said Gaffney.

This is because eHealth U.S., which is expected to garner experience modest growth next year, is different than Emergis’s core e-commerce business, he explained. In Canada, Emergis offers processing in electronic and paper forms in its health division, whereas a network of commercial agreements with service providers marks the nature of the corresponding U.S. unit.

Emergis had believed acquiring the U.S. business would bring its electronic health services to market. “”That synergy has not been realized, although we do consider it to be a very important asset.””

Emergis’s eFinance division, which includes loans and payments processing and related security solutions, will also see changes in 2004. Gaffney said its lending platform will launch commercially, beefing up its direct sales force and channel partners, and an automated mortgage service will be available in the U.S.

Despite the fact Emergis is ramping up products and services for the financial and health sectors, Gaffney acknowledged “”a good number of customers who are quite challenged in their adoption of e-services”” because they need to be integrated with existing systems.

So Emergis, which spoke of a new focus on customers instead of products, spent time talking to customers and realized they wanted “”more complete solutions.”” This may mean additional functionality or adding paper processing to an electronic service, said Gaffney.

Mark Quigley, research director of the Ottawa-based Yankee Group in Canada, attributed Emergis’s new focus on customers to a potential change in business philosophy that’s apparent throughout the technology world. If you try to entice customers with packaged solutions, in some respects, “”you end up playing a bit of a price game,”” he said. It’s better to spend more time in consultations, which helps “”tie that customer a little tighter to you.””

Next year’s revenues will range between $390 million to $430 million, but will be affected by lower returns from a distribution agreement with Bell Canada for legacy services, divested products and services and the impact of a stronger Canadian dollar on Emergis’s U.S.-sourced revenues, representing about half the company’s business, said CFO John Valentini.

“”Those three factors alone contribute $62 million of year-over-year decline in revenues.””

Emergis, which this week announced Christian Trudeau had stepped down as president and chief operating officer to pursue other interests, decided a year ago to build its business around finance and health.

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