Growth areas such as cloud, big data, security and IT consolidation will help Atos ramp up revenue through 2016
Author: Elitsa Bakalova, Professional Services Practice Analyst
JUL 28, 2014 01:14 AM
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TBR Perspective

Atos' 2016 Ambition plan sets a clear strategy for the firm's growth: Leverage strengths in managed services (MS) and consulting & systems integration (C&SI), commit to disruptive and innovative offerings (with cloud computing as a key growth area), expand reach in North America and emerging geographies, and enhance its position in the payment market through Worldline. With its strategy in place, the firm is in execution mode to overcome its growth challenges, as 2013 revenue declined 0.9% year-to-year at constant scope and exchange rates. Atos is positioning as an end-to-end consult-design-build-run service provider, consolidating its previously separate consulting and technology services with its SI service line and tightening the relationship with the MS service line. Atos' strategy to align its C&SI business by its four core vertical markets and begin to develop industry-specialized MS offerings will help the firm increase the value and attractiveness of its portfolio. The firm's investments to augment its traditional portfolio with offerings around technology trends such as cloud, big data and analytics, mobility, smart utilities, and digital security will help support long-term revenue growth and accelerate global expansion. While 2014 will be a year of recovery for the firm, with a difficult 1H14 but anticipated growth improvement in 2H14, the 2016 Ambition plan will enable the firm to reach its three-year target to increase organic revenue by 2% to 3% CAGR from 2014 to 2016.

Event Overview

TBR attended Atos' Industry Analyst Days "Ambition 2016," held at Atos' headquarters in Bezons, France, near Paris, on April 1 and 2, 2014. The purpose of this event was for Atos to provide a strategic and financial overview of Atos IT Services, which accounted for 80% of Atos' 2013 revenue and includes two service lines, C&SI and MS. BPO, which is reported as part of managed services, and the Worldline businesses were not covered at the event. The emphasis of the event was to provide an overview of the key strategies and achievements during 2013 for the two service lines, insights into the 2016 Ambition plan, and key levers helping Atos reach its goals. Atos conveyed the information through a series of presentations on C&SI and MS, including strategic overview sessions, portfolio innovation, industry segment deep dives in C&SI, and details on cloud computing and Canopy. Several of Atos' clients spoke of how Atos IT Services' C&SI and MS offerings are transforming their businesses, which provided a complete view of Atos in action.

Impact and Opportunities

The conference succinctly highlighted the following key pillars of Atos IT Services' strategy:

Atos is enhancing value for its clients and wants to be their partner of choice across the IT services value chain

Atos is consolidating its previously separate consulting and technology services line (7.1% of 2013 revenue) and SI service line (26.4% of 2013 revenue) into the C&SI service line and improving the bond of the MS line (46.6% of 2013 revenue) with C&SI. Atos' integrated C&SI offerings span the following segments (or global business units): business and IT consulting, SI projects (custom and ISV-based excluding SAP), SAP projects, and application management. Increased collaboration with MS will enable the firm to offer service continuity and attract clients with an end-to-end consult-design-build-run value proposition. While Atos is moving toward a better-aligned business model, the firm's consult-design-build-run value proposition matches that of many IT services competitors. Atos has well developed SI, MS and industry-specialized capabilities that the firm can leverage to differentiate and attract clients, but TBR expects the firm will invest in developing its business and IT consulting expertise to build a credible position in the consulting arena and attract clients at the beginning of their transformations. Atos will also have to work around the complexity of merging consulting and SI into one organization, as the two service lines differ in business models, incentives and nature of work with clients. Atos is making sure all consulting business is used for external revenue generation and is not used for internal projects, enabling the business to effectively achieve its revenue goals, drive customer satisfaction and deepen relationships.

Atos is increasing its customer focus and account management in C&SI, which will help improve customer relationships and satisfaction, drive account expansion and bring more business in the service line. The firm has introduced more than 50 account partners in C&SI and more than 300 C&SI account managers to support the intensified customer focus. The account partners provide one entry point and one face to clients, interact with the CxO level and focus on becoming the clients' strategic business and technology partner. Account partners offer all C&SI solutions to clients and make sure the right collaboration between the segments is in place to support the interest of the clients.

Atos is increasing the value and attractiveness of its portfolio by aligning C&SI by its four core vertical markets and starting to develop industry-specialized MS offerings

Atos' C&SI strategy is to have a value-driven portfolio focused on verticalization and offerings reuse as well as cloud computing through Canopy. Atos' C&SI offerings are globally aligned by four core industries that the firm considers its C&SI markets across geographies and global business units: manufacturing, retail and transportation; telco, media and utilities; public sector and health; and financial services. Atos' four C&SI industry markets are closely aligned with its corporate vertical markets, enabling the firm to focus on the four industry verticals. The offerings are not just a cross-industry commodity, but also are adapted to each industry to provide value to the clients. Manufacturing is one example of the industry-specific breadth of C&SI offerings that differentiates Atos from its competitors and positions the firm to effectively compete in the segment. Atos' integrated manufacturing C&SI portfolio covers the consult-design-build-run life cycle and offers manufacturing industry consulting services such as process and solution harmonization for manufacturing IT and industry-specific reference process houses and solution maps. In the design-build phase Atos offers product life cycle management (PLM) and global agile manufacturing, such as manufacturing execution systems (MES), manufacturing intelligence and plant maintenance. The services life cycle ends with application management offerings such as MES, PLM, ERP, engineering applications and operations management.

While C&SI overall is a key area of industry alignment for Atos, the firm is starting to apply its vertical expertise and add industry specialization to some of its MS offerings, which lag behind in industry specialization compared to C&SI. For example, the firm is planning to launch in 2014 vertical MS offerings such as broadcast operation outsourcing and manufacturing outsourcing. Industry specialization in MS will increase Atos' ability to address client-specific needs and provide additional value, increasing client engagement and revenue opportunities for the firm in the service line.

Atos IT Services is converting into a global organization for the majority of its business

With the exception of Atos' local BPO business in the U.K., Atos IT Services is turning into a global organization, a transition that started in the beginning of 2014. SI is a global structure, but consulting is transforming from several local organizations in countries such as France, the U.K. and Germany to a global organization aligned with the SI business in resources, offerings, industries and delivery. Atos will be able to optimize processes, improve operations, quality and risk management, and increase customer satisfaction through global C&SI and MS offerings; global deal solutioning; global training; aligning KPIs globally; global delivery capabilities enriched with local reach, especially in Europe; and an improved client experience.

Disruptive and innovative offerings such as cloud, mobility, big data and analytics, and security, including managed security and cybersecurity, will contribute to the firm's growth momentum through 2016

Atos' emphasis on technology, innovation and the transition of its large clients to cloud through the company's "cloud unless" policy in C&SI and MS, which adds cloud to traditional deals, will enable the firm to add value and grow its cloud-related revenues. Atos leverages Canopy as the brand for its cloud activities and as a go-to-market lever, with hybrid cloud a core focus for the firm. Working with partners such as EMC, VMware and VCE, Atos enables cloud solutions for clients. Atos invests in vertical-specific solutions and leverages its partners to develop and differentiate its Cloud and Enterprise Software business, accessing $3.5 billion in annual R&D through its partners VMware and EMC. Partners help Atos gain access to customers and sales channels, which will enable the firm to grow cloud revenue from €280 million in 2013 to a corporate estimate of €700 million, or approximately 10% of the firm's revenue, in 2016.

Atos works with its strategic partners to enable co-innovation and expand its market reach, such as in big data and analytics. Atos has a joint investment of €100 million with Siemens to develop offerings for different industries. Data Analytics as a Service (DAaaS) is an Atos-Siemens offering that combines Atos' Canopy cloud infrastructure and analytics platform specialists with expertise in advanced analytics technologies from Siemens Corporate Technologies and capabilities in operations intelligence in the oil, gas and chemical industries from Siemens XHQ. With this solution Atos combines cloud and big data and analytics capabilities, and helps clients extract insights from data and gain competitive advantage. Atos is planning to expand its big data and analytics capabilities in managed services through investments such as enhancing and developing big data infrastructure platforms through 2016. While Atos is advancing in big data and analytics, the firm is less recognized in the segment and will face tough competition from other IT services providers. For example, IBM and Accenture expanded their big data and analytics capabilities over the past several years, but Atos has a smaller set and less depth of offerings in the segment compared to both firms.

Security services, part of MS, are Atos' best-kept secret with capabilities embedded into larger IT services contracts. The Olympic Games are one example of the firm's security activity. The firm collected 322 million IT security alerts during the 2014 Olympic Winter Games in Sochi, Russia, and resolved 182 real issues, or 10 per day, with zero impact experienced. Atos is planning to make its managed security and cybersecurity services more visible to the market in 2014. To position as the leading managed security services provider in Europe, the firm launched a Security Service Delivery unit at the end of 2013 with a global reach and 24/7 availability. The firm is also enhancing its cybersecurity offerings and planning to launch in 2014 services such as Next Generation Endpoint Protection, Cyber Threat Management Dashboard, Cloud Data Loss Prevention and Identity & Access Management as a Service.


Atos' industry emphasis in C&SI will help the firm ramp up revenue growth through 2016. Key industries showcase Atos' industry capabilities and success. In manufacturing and telco, media and utilities, Atos has strength through the acquisition of Siemens IT Solutions and Services, its partnership with Siemens, and clients such as Nokia Solutions Networks and Siemens AG. In energy and utilities, the firm leverages Atos Worldgrid to support industry transformation. The listed key industries collectively accounted for 54% of Atos' 2013 revenue, and TBR expects the firm will transfer its know-how and success to other C&SI verticals the firm is targeting. TBR sees security as an immediate area where the firm will gain customers, revenue and profit due to its capabilities and investments to make the offerings more visible to clients.

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