Atos’s Journey: Can a Corporate Roll Up Maintain its Impressive Growth?

April 19, 2018

Atos’s Journey: Can a Corporate Roll Up Maintain its Impressive Growth?

Atos is a rapidly growing company that has inherited complexity and some great IP through its many acquisitions over the years. In fact, since 2002 the company has acquired 17 companies – many within the last four years. The company focuses on telecommunications, IT consulting services and solutions, data management, customer relationship management and service management. It is never easy to create a cohesive company out of some many different acquisitions. It is clear that the company is maniacally focused on creating one Atos from the variety of parts.

The company is in an enviable position in many ways. Atos has achieved revenue of $13 billion Euros while employing more than 100,000 worldwide in 72 countries. Atos seems to have made great strides over the last few years. In 2017, the company managed a growth rate and operating margin of 10%. Even more impressive, the company has no debt despite its focus on acquiring a variety of companies to fill out its platform.

While it is impossible in a blog to explain all the nuances of Atos’s approach to the market, I want to provide some of my observations about this intriguing company. Attending the company’s annual global industry analyst meeting gave me an opportunity to gain some perspective.

 

Focus on the enterprise. It is clear that the large enterprise is the target for Atos’s go to market. At a recent global industry analyst meeting, Atos shared its positioning strategy that it calls the Digital Transformation Factory. This strategy is intended to bring together all the elements of Atos’ expansive software and services offerings. The four pillars of the strategy include hybrid cloud and cloud workload orchestration, business accelerators for real time business requirements based on SAP Hana consulting services, data analytics and IoT, and the digital workplace. All of these elements are designed to sit on top of a layer of cybersecurity.

Reliance on partnerships. Partnerships are at the core of Atos’s business strategy. The company has strong partnerships with Dell, SAP, and Microsoft. One of Atos’s strongest partnerships is with Siemens, which is not surprising since Atos has acquired several of Siemens’ assets including, its IT solutions and services business in 2011, and Convergence Creators (cybersecurity and communications solutions) in 2017.

Role as an industry platform. Atos’s strategy is to present itself to the market as an ecosystem of platforms. The plan is to provide customers with a way of linking their various legacy and cloud platforms together through a combination of software and services offerings By integrating a variety of the infrastructure platforms of its customers Atos can offer a set of services to help customers deal with the variety of platforms for everything from IoT to multi-cloud.

Implementation and solutions for vertical markets. Through its acquisitions, Atos is buildings a large portfolio of solutions in its strongest verticals including manufacturing & retail (its strongest vertical), telecommunications, financial services, , and public sector & healthcare. The company is modernizing many of its offerings with cloud services and open APIs. It is clear that services and implementations are a primary strategy. It appears that Atos is avoiding low-end implementation services that has caused major problems for some of the outsourcing companies.

Analytics and Data will pervade the strategy. Atos is investing heavily in machine learning, artificial intelligence, and cognitive computing. This is not surprising given the growing requirements to provide automation based on data models to help customers manage complex hybrid computing environments.

Reliance on a private cloud consulting and implementation. Given Atos’s focus on enterprise services it is not surprising that the company would focus its strategy around a hybrid cloud strategy that incorporates public and private cloud services. On the public cloud side, the company has formed strong alliances with a variety of vendors including Amazon and Google. On the private cloud side Atos supports both its own Digital Private Cloud as well as Microsoft’s Azure Stack. This strategy includes consulting to assess the viability of existing applications, hosting existing legacy environments, and providing cloud orchestration services (based on ServiceNow). Equally important, Atos is offering services that help customers define how they should transform applications – either through modernization or through helping the to create cloud native applications. Therefore, Atos offers services to help its customers move to a multi-cloud strategy through its consulting services. As part of its cloud services offering the company will negotiate terms with public cloud service providers.

The Bottom Line

Atos is focused on maintaining significant revenue growth while absorbing a large number of significant acquisitions. Many acquisitive companies have trouble unifying their businesses and offerings. Clearly, Atos has a management team that is focused on building a strong platform for growth. It will not be an easy path. Atos has a large portfolio, which makes it difficult to present One Atos and still provide an understanding of the offerings and IP that supports the company’s value. It will be important to demonstrate to the markets its innovation in cloud services, data services, and multi-cloud management. In this rapidly changing market, it is not enough to be an implementation organization. Focusing on vertical markets combined with multi-cloud, advanced analytics, and manageability is a step in the right direction.

 

 

 

Judith Hurwitz
About Judith Hurwitz

Judith Hurwitz is an author, speaker and business technology consultant with decades of experience.