Called upon to testify about the origins of Engineering as an “informed witness” and, therefore, about to write a brief memorial on the company’s birthday, I cannot help wondering who I would like its recipient to be.
This reminds me of the ancient belief that the history of Engineering, a unique and extraordinary one in many ways, is little known not only to those who, in general and for professional reasons, are interested in the production of knowledge regarding the country’s productive economic reality, but also to a large extent to the middle managers and executives who work in Engineering, forming, so to speak, its organizational structure, its functional and productive framework.
1980 – 1985
Engineering – Ingegneria Informatica S.p.A. was founded in Padua in 1980 and soon became one of the institutions which would contribute, over the following decades, to transforming the entire country’s production system of goods and services.
Engineering was the result of the meeting of two people with ambition and visionary skills: Mario Volpato, full professor of mathematics at the University of Padua and President of the local Chamber of Commerce, interested in creating databases serving the entrepreneurial fabric of lower Veneto, and Michele Cinaglia, at the time sales executive of Univac, an American multinational manufacturer of large computers and a main competitor of IBM both in Italy and in the rest of the world.
This meeting, this intertwinement, enrichment and exchange of these two people’s visions led to the foundation of CERVED, the joint-stock company with entirely public capital which then initiated the automation of all the Chambers of Commerce and the creation of the National Register of Companies.
Once he had left Univac to manage the newly formed joint-stock company, Michele Cinaglia chose as his assistant Arrigo Abati, who had been a fellow student at the University of Pisa where they both graduated in electrical engineering. Abati holds the position of technical director responsible for all technological and production aspects.
Within a few years, between 1977 and the end of 1979, a large part of the project began with the computerization of the Padua Chamber of Commerce, i.e. a system of computerized and interconnected Chambers of Commerce network for all of Italy, could be considered accomplished. Cinaglia and Abati were in a position to be able to lay claim to an honorable arrangement for themselves within the public system, becoming part of that class of public managers who, at that time, enjoyed great prestige and excellent wages in companies belonging to the so-called state-owned (both regional and local) system.
Their choice was different. Whilst creating CERVED, from a certain moment onwards they began to believe that the skills which they had acquired, and those they could additionally acquire whilst implementing the project, were too precious and original to not be of interest for the private sector too.
Strengthened by this awareness, Cinaglia and Abati suggested to their chamber of commerce representatives, the Presidents of the Chambers of Commerce, that they should give the go-ahead for the establishment of CERVED Engineering S.p.A., a public-private company, with predominantly public capital (60%), which, however, would operate mainly in the private industry, starting with the banking sector.
The purpose of the new company was to ferry the innovations developed to tackle the needs of the Public Administration towards the private business market. And vice versa: to make innovations developed at the request of the private sector, in particular the financial services one, accessible to Public Administrations.
At the basis of this request there was not only the claim that the Chamber of Commerce should acknowledge them an equally dignified professional status as to those who, by virtue of their institutional roles, the Presidencies of the Chambers of Commerce, ascribed to themselves the merit of having innovated the Chamber of Commerce network. There was also the desire to affirm the full sustainability of forms of public-private partnerships for implementing reform projects (which at the time essentially meant computerization) within the Public Administration.
Engineering was created, therefore, as CERVED Engineering (the company acquired its current name in 1985), but the public system soon proved to be neither interested nor ready for innovations that it not only considered audacious, but beyond any chance of control. The latent conflicts between the shareholders of the newly registered company and those expressed by the CERVED management became evident with the first signs of CERVED Engineering’s market success.
Cinaglia was convinced that a major effort to keep the two systems together should be pursued. In particular, he viewed the strategic management of technological systems and the development of public databases in a unified way. Among the reasons that steered him towards this choice, there was also the desire to prevent the IT management of the public sector from being colonized by IT companies from across the Alps and from overseas.
1985 – 1988
The conflict ended with the clear separation of CERVED Engineering from CERVED. Cinaglia, Abati and other CERVED executives interested in migrating to the new company, and who already owned 40% of it, took over the remaining 60% of the Engineering shares held by the Chamber of Commerce network.
Faced with Engineering’s loss of the objectively rewarding partnership with CERVED, Michele Cinaglia concentrated his efforts towards identifying other potential strategic partners who, based on the market experience already gained by Engineering, could provide accreditation purposes for the company on the market. This type of partnership was identified in a limited number of banks which, over the years, proved to be strategically important for the fate of the company. The fact, however, of playing it by ear led the Engineering founders to dramatizing their various points of view regarding the future of the company.
Rosario Amodeo comes into play. A long-time friend and colleague of Michele with whom there had also been a reciprocal employment relationship over time. Amodeo had been hired by Michele himself in CERVED as deputy general manager. After Michele’s departure, he was appointed by the Chamber of Commerce as General Manager of CERVED. From here, three years later, he moved to Engineering after buying an equal number of shares as Cinaglia and Abati held.
The end of the partnership between Engineering and Abati took place shortly after the arrival of Rosario Amodeo. The latter had worked hard to mediate the conflict between Cinaglia and Abati which, at the end of 1988, in the opinion of all those involved, stopped making sense.
Abati resold his shares to the other two partners and started his own independent business.
1989 – 2000
A period of seven years followed during which the governance of the company was ensured by a “perfect consulate”, with Cinaglia and Amodeo as the two “consuls” from 1989 to 1996.
These were years of growth, fruitful alliance policies and commercial success. But there were also critical issues and problems related to growth which involved the entire national sector of the IT industry and Engineering itself.
The changes that occurred in the information technology market and the evolution of the demand for services opened up new opportunities for the company, but also highlighted the need for an innovative approach towards the market as well as for preparing solutions which were more responsive to the requirements of the demand. In particular, a certain inadequacy surfaced for the governance of the projects required by the market, which were more numerous, with a growing financial profile and increasingly complex.
In Cinaglia and Amodeo’s opinion, the belief grew that the time had come to entrust the management of the operational and commercial activities and of the management of the implementation phases of the projects to a single manager with the rank and powers of a Director-General.
In 1996 Paolo Pandozy, an Engineering manager since 1983, who had proved himself very capable in managing particularly demanding projects, was appointed Director General. At the top of the company, above him and still strongly involved in the strategic governance of the company, there are Michele Cinaglia with the role of Executive Vice President, and Rosario Amodeo, with the role of CEO.
With Paolo Pandozy a new course in the management of the company began, at first cautiously, then more decisively, which allowed Engineering to go public on the stock exchange in December 2000.
2000 – 2013
Initially, the stock exchange listing was a success. There followed a period of generalized crisis which made some believe that the listing had been too hasty.
But the acquisitions of companies and the growth, made possible following the entry on the stock exchange, demonstrated that the choice of the listing had been the right one: from 2001 to 2007, the amount of the company’s equity investments multiplied its value by over six. The turnover of the Engineering group went from 182.2 million in 2000 (with a EBITDA of 22.6 million) to 457.1 in 2007 (with a EBITDA of 70,5). In 2007, the number of employees was close to four thousand.
The acquisitions made in those years concerned sectors by and large familiar to Engineering: among these, Healthcare, through the acquisition of what remained of Olivetti Sanità, a Joint Venture with GFI Informatique, a French company, up to 100% ownership of the company and its renaming as Engisanità; local public services, with Neta spa, a company operating in the utility and municipalized sector; Management Consulting, with BIP Business Integration Partners, a strategic consultancy firm; the Banks-Finance Sector, with the acquisition of Caridata, taken over from Banca Intesa.
The highlight of the whole decade was the acquisition of Atos Origin which led Engineering to grow in size by more than 50% in one year.
Here ends Engineering’s story (1) and gives way to recent news.
These are the key events which have occasionally been covered in the financial news pages of national newspapers:
- After a collaboration lasting decades, Amodeo and Cinaglia discover that they have different views regarding the company’s future governance.
- The irreconcilable conflict of interest results in Amodeo selling almost all his shares to a fund (OEP) managed by JP Morgan. The price was € 32 per share.
- Engineering’s new shareholder hopes to be able to also take over all Cinaglia’s shares quickly and easily in order to freely decide on the fate of the company.
- But it didn’t reckon on Cinaglia who was still the company’s main shareholder and who successfully resists and rebuts OEP’s claims. He does not sell his shares and imposes on the new shareholder a modus operandi inspired by a full and loyal collaboration in favor of the industrial development of the company.
- Cinaglia and Pandozy are confirmed at the top of the company with full powers and the cooperation with the new financial partner for the entire three-year period 2013-2015 leads to generous results.
- At the end of the three-year period, the shareholder OEP, now a grateful ally of the company, and Cinaglia decide to sell their respective shares to new investment funds (APAX e NB Renaissance).
- The price per share agreed with the new purchasing funds is € 66.
- Michele Cinaglia decides to reinvest part of his proceeds in Engineering alongside the new partners.
- The new shareholding structure of Engineering (Cinaglia + APAX and NB Renaissance Funds) makes the decision, which became executive on 8th July 2016, to exit the stock exchange.
Over the following years, the company has grown considerably from an economic and financial point of view, further expanding its activities worldwide, achieving 12,000 employees and a turnover of 1.25 billion euro.
(1) Anyone wishing to retrace the noteworthy episodes and stories of the protagonists need only consult the volumes:
- I segreti di un’impresa italiana di successo – a cura di M. Bolognani, S. De Vio, N. Melideo, G. Scifo – Ed. Il Sole 24 Ore, 2000
- 25 Anni di informatica italiana – La storia di Engineering, Ingegneria Informatica – a cura di M. Bolognani, S. De Vio, N. Melideo, G. Scifo, M. Vitale – Ed. Il Sole 24 Ore, 2005
- Engineering 30 anni – Da impresa italiana a multinazionale dell’IT – A cura di S. De Vio, Guerini & Associati editori – 2010.