AT&T ISTEL Ltd. History
AT&T ISTEL Ltd. is the British information technology subsidiary of American Telephone & Telegraph Company (AT&T), the world's largest telecommunications group. Originally established as a subsidiary computer services firm for the automaker British Leyland, ISTEL quickly went on to provide information technology to other companies in a variety of industries. After separating from British Leyland, the company operated independently for a few years before seeking an alliance with AT&T.
Originally called BL Systems, the company was created to provide British Leyland with reliable, state-of-the-art information technology services. The idea of a separate information technology company for this purpose was conceived in 1977 by John Leighfield, who later became the new company's chairman and chief executive. When the plan was approved in 1978, all British Leyland's mainframe computers were unified in one data center at Redditch, joined via a microwave communications network--the first such private network in Europe&mdashø the automotive manufacturing sites. The new center was finished in February 1979, and BL Systems came into official existence the following June.
BL Systems was intended to serve the full complement of systems, computing, and telecommunications needs of its parent company, and was not encouraged to actively seek commercial activities outside the firm. As early as March 1980, however, BL Systems took on its first outside client, developing the See Why package, a color graphics, interactive simulation system, for Alcan Aluminium.
Thereafter, BL Systems quickly established for itself a corporate identity separate from that of its parent company, with headquarters and staff consolidated at two locations, Grosvenor House and Coventry.
In November 1980 BL Systems inaugurated the first private videotex service--the Stocklocator system--for the BL dealer network. This system, later called Infotrac, was based on a leased-line data communications network. At the completion of its first full year of operation, BL Systems' revenues stood at a very respectable £25.7 million.
In February 1981 BL Systems served its first foreign customer, Heineken, which used the company's data center for remote testing while changing its own computer systems. BL Systems' See Why package won the British Computer Society's Software Innovation award in October. The following month the company celebrated the installation of its 100th disc drive. After the first stage of the U.K.'s deregulation of telecommunications, BL Systems was granted the first Value-Added Network Services license, which permitted the company to initiate Comet, Britain's first electronic mail service. The number of BL Systems employees had risen to 1,000, and by the end of the year revenues stood at £27.4 million, with £1.9 million of this attributable to outside customers. By the end of 1982, revenues reached £29.5 million, and the equipment in BL Systems' data center was valued at £20 million.
As BL Systems began to recognize the increasing importance of outside clients to its business, the company focused on attracting and retaining outside customers. To that end a 1983--87 five-year plan was established, with the goal of attaining 30 percent of the company's revenue from outside sources by the end of the decade.
In January 1983 BL Systems engaged in a joint venture with Atlantic Computers to found the Failsafe business unit, which provided contingency preparation and rescue services for computer failures. In April BL Systems launched a U.S. office in Boston called ISTEL Inc. to sell the popular See Why package. The year's other achievements included the foundation of BL Systems' Travel Service, its first facilities management project, for Homeview, and the assignment to manage an EEC-sponsored project to create the ground rules for computer-integrated manufacturing (CIM).
In 1984 BL Systems changed its name to ISTEL, making known its intentions to become a significant player in the fast-growing field of information technology, rather than simply a support function to the automotive industry as represented by BL. By mid-year--and several years earlier than originally targeted--the company surpassed its goal of achieving 30 percent of its revenue from outside clients.
ISTEL's first sale to a National Health Service (NHS) customer was made in 1984, when the company provided the Herefordshire District Health Authority with the Star tendering and review system. This marked the first step toward what would become a prominent role in the health sector. Later in the year the company made its first acquisition, Business Science Computing, which it purchased from British Steel.
In 1985 ISTEL defined its objectives, significantly altering its corporate structure to create specialized marketing divisions to court particular markets and sectors. That year the company also established ISTEL Automation to sell CIM systems to the manufacturing industry and launched InView, a highly successful data communications link between insurance companies and their retail markets. At the end of the year, ISTEL's revenues stood at £49.7 million, with £14.6 million of that attributable to non-BL customers.
Significant changes were heralded for ISTEL in 1986. The government announced plans to sell British Leyland (which had been renamed the Rover Group) to British Aerospace, and to spin off ISTEL as a separate company, preferably through a management-led employee buy-out. As preparations were made for the company's new status, ISTEL continued to grow, securing its first £1 million order (from Horizon Holidays), and providing its first sale to the Royal Air Force. The company's revenues jumped to £60.8 million by the end of the year.
In June 1987 a £1.8 million share offer was made to employees and proved very popular, being oversubscribed almost three times. Such confidence was clearly justified, as the company's revenues rose by nearly £10 million that year over the previous year. In 1988 the newly independent ISTEL developed separate operating divisions for its business: ISTEL Financial Services, ISTEL Commercial Services, and ISTEL Motor Industry Services. Other achievements for the year included the establishment of ISTEL Visual Interactive Systems; several acquisitions (of Viewtel, Abbey Business Consultants, Mycrom, and Deritend Computers); and the opening of an office in Edinburgh.
Believing that ISTEL would be better positioned for growth if it operated under the aegis of a larger, like-minded firm, ISTEL's board of directors searched for months for a suitable parent company. Finally, in October 1989, a deal was struck with AT&T, and the renamed AT&T ISTEL began a new era.
The alliance quickly proved advantageous to ISTEL, allowing it access to many new opportunities within AT&T's large, international client pool. Even as economic recession worsened, ISTEL continued to grow, opening two new business units in the United Kingdom: AT&T ISTEL Global Messaging Services Limited and AT&T ISTEL Computer Services Limited. By the end of 1990 revenues had reached £131 million.
The following year ISTEL made its first international acquisition, of the Dusseldorf-based Infoplan, giving the company an important foothold in continental Europe. Meanwhile, in its domestic market, the company stepped up its contracts with the NHS, largely in the field of facilities management, and acquired Belmin Systems, a provider of electronic purchasing systems for local and central government agencies.
As the 1990s progressed, ISTEL continued to expand and became increasingly associated with the health industry. In 1994 the company outmaneuvered intense competition to win contracts for management systems for two hospitals in Dublin. In 1995 important contracts were signed with West London's Hillingdon Hospital, the West Dorset General Hospital NHS Trust, the Norfolk and Norwich Health Care NHS Trust, and the Camden and Islington Community Health Services NHS Trust. The company had not severed ties with its former parent, Rover Group, which remained ISTEL's single biggest customer in the mid-1990s.
AT&T ISTEL thus retains ties with its original, loyal customers, has developed a specialty in the health care sector, and is continually on the lookout for new opportunities in the many industries that require information technology services. With its impressive record of steady growth backed by the strength of its new parent company, the world's largest telecommunications group, AT&T ISTEL appears well positioned to continue as a technological and financial success story.
Principal Subsidiaries:Al Deritend Ltd.; AT&T ISTEL GmbH (Germany); AT&T ISTEL Inc. (U.S.A.); Belmin Systems Ltd.; Facilities Management Services Ltd.; InView Ltd.; Viewtel Holdings Ltd.
Further Reading:
"AT&T ISTEL Wins Pounds 2m Hospital Pay Deal," Birmingham Post, February 24, 1995.
"Health Tonic for AT&T ISTEL," Birmingham Post, November 2, 1994.
History of AT&T ISTEL, 1979--91, Redditch: AT&T ISTEL, 1992, 7 p.
"RHA Sorts Out Deal to End Scandal of Computer Cash," Birmingham Post, November 18, 1994.
"Rover Old Boys Win Pounds 5m Project," Birmingham Post, March 31, 1995.
Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.
