Atos and the digital transformation factory

 

With 100k employees and revenues of €12b Atos is a serious IT services supplier. Overall it had just over a 2% share of the IT services market in EMEA last year, where its strongest business was outsourcing (see the Figure above).
I spoke recently with Bruno Pinna (Global Head of Marketing, Business and Platform Solutions Division), giving me a chance to catch up on its customers, activities, partnerships and strategies. You’ll want to learn more about how Atos has modernised its business to take advantage of the shifts in customer purchasing.

Atos’ vision – digital disruption

At its investor day in November 2016 CEO Thierry Breton described the company’s vision, which predicts a future of digital disruption affecting its (mainly large) organisational customers. In particular:

  • Business models – driven by data and connectivity, these will change dramatically through news sources of business value and types of partnership.
  • Ways of working – changes in business process and the nature of work itself.
  • Disruptive technologies – creating revolutionary, rather than evolutionary, changes expanding the ‘art of the possible’.
  • Evolving challenges – existing business challenges will be addressed in new ways due to the emergence of new influences created through these big shifts in technology, processes and working practices.

If correct, this should be a wake-up call for those of us who see the use of technology in business as a steadier evolution. Of course Atos’ vision is designed to encourage its existing customers and partners to engage with it more deeply.

Atos divisions, acquisitions and offerings

Atos started its own transformation at the beginning of 2014 with the creation and integration of a new structure and restructured its salesforce at the end of the year before launching phase one of its new business model at the end of 2015. Its current four business divisions are:

  • Big Data and Cybersecurity – covering HPC and Exascale computing (using x86 and IBM Power-based servers), Big Data storage, ‘military grade’ security, ID and access management and Cybersecurity; all of which are based on its Bull acquisition in 2014. It has also recently launched a quantum computing research initiative.
  • Worldline – a specialist in contactless and epayments and transaction services; modernising payment processes gives Atos a deep interest in developing Blockchain  applications.
  • Infrastructure and Data Management – including managed services such as cloud orchestration (based on Canopy, which it acquired in 2012), automatics and cognitive computing as well as OH Assist (previously Atos HealthCare, which has had a troubled history in the UK for its contract with the Department of Works and Pensions for Work Capability Assessments (WCA) and Personal Independence Payment (PIP) assessments.
  • Business and Platform Solutions – which includes its Consulting and Systems Integration group services (smart computing, IoT, data analytics, ‘as a Service’ applications and management and agile application development) and Unify – its brand for unified communications solutions.

Bull in which it acquired a controlling interest for in August 2014 for €620m brought with it 9.5k employees. It remains a significant player in the European server and storage market as a result, although about a third of its business (mostly IT services minus hardware maintenance) was moved into other Atos divisions. Bull’s customers (including the a number of government accounts and the French nuclear industry) were both complimentary and additive to Atos’. Bull also has some significant experience in the needs of enterprise customers for cloud computing of course.
Xerox ITO business was acquired at the end of 2014 for $1b and gives the company a major foothold in the USA (in fact North America was Atos’ strongest region, accounting for 18% of its 2016 revenues). It brought with it 9.7k employees.
Overall Atos currently has 5k active patents, filing around 150 new ones each year, spends c. €300m a year on research and development and has 15 research and development centres in 9 different countries.

Atos’ most important partnerships

It announced a partnership with EMC in 2012, which has continued since Dell bought EMC. It s relationships also includes work with associate companies VMware, RSA, Pivotal and VCE. The partnership now involves a level of ‘co-opertition’ with Dell EMC subsidiary Virtustream, especially in the area of SAP HANA. The partnership is obviously important to Dell EMC as it awarded Atos its Partner of the Year award today.
Following its acquisition of Siemens’ IT Solutions business in 2011 for €820m the 2 companies subsequently signed a global alliance, which includes a joint investment programme of €230m into innovation. They are developing a pre-configured analytics platform to help their 130 major customers in manufacturing, transportation, energy and utilities and infrastructure industry sectors with digital transformation, especially in the use of ‘smart data’. Siemens’ (and before that Siemens Nixdorf and Fujitsu Siemens) close relationship with SAP will help Atos to build business in this area. This alliance is important for its experience in (and aspirations to grow) SAP HANA activities.

The need for European IT services suppliers

Atos is the fourth largest IT services supplier in EMEA, behind IBM, Accenture and Microsoft and the largest European supplier (see Figure). European national and regional supplier fortunes have declined steadily over the years, as our industry has become increasingly consolidated: IT services are an exception, partially because government purchasers often prefer them. I believe the current social and political shifts towards new nationalism will affect the company’s fortunes in various ways; Brexit in the UK and Donald Trump’s presidency in the USA may make business more difficult especially in government contracts (28% of its revenues in 2016), while being seen as a national and European supplier in Germany, France and may other EU countries will have a more positive effect on its performance…
… but these shifts will be irrelevant if Atos succeeds in intersecting the new demands for services outlined in its vision of the revolutionary changes upon us. Its new directions and digital transformation factory concepts will be hard for many of its existing customers to understand easily now, but will become increasingly relevant over the next few years. Its own transformation is refreshing and new strategy fascinating and different. I’ll be watching its success closely over the coming years.

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