Reflections on Atos Global Analyst Conference 2018: Let’s Get Real about Digital | Sherpas in Blue Shirts

Posted On April 9, 2018

Several of us from Everest Group attended Atos’ Global Analyst Conference in Boston last week (April 5-6, 2018). That this is the third consecutive year the €12.7 billion IT services company has held this event in the U.S., even though it’s headquartered in France, makes it abundantly clear how important the North American market is to its growth strategy.

The conference featured an interesting line up of North America leaders, global practice heads, customers, and partners. Here are some of the highlights.

It’s Making Significant Progress Toward its 2019 Ambition

2017 was a year of sizable growth for Atos. It clocked revenue of €12.7 billion, growing at 10.1 percent (at constant FX), with organic growth at 2.3 percent. Its operating margin stood at 10 percent, and its book to bill was at 110 percent. While organic growth is within its guidance, the company plans to leverage its debt-free portfolio to continue its M&A posture.

Partnerships are its Key to Unlocking Value in the Digital Ecosystem

Since 2011, the partnership between Atos and Siemens has resulted in €2.5 billion in combined order intake. In the week leading up to the conference, the companies announced continued investment in their strategic alliance, with another €100 million of investment across AI, data, and cybersecurity. Atos’ ecosystem positioning was also evident as its partnership with Dell Technologies continues to play out in strategic areas including cybersecurity, hybrid cloud, and analytics and big data. It’s clear Atos is looking to tap the potential of the digital market by striking strategic partnerships to accelerate time-to-value.

IoT is Breaking Away as a Mature Digital Market

Within the broad spectrum of technologies that encompass “digital,” IoT is starting to gain significant traction in the modern enterprise. Service providers are moving beyond free pilots as the conversation has turned from experimentation to business value. Atos laid out encouraging progress with actual client successes and measurable outcomes across a range of industries such as CPG, chemical, oil and gas, telecom, etc.

Cybersecurity is Becoming the Foundation of Digital Transformation

In the last couple of years, cybersecurity has become a CXO imperative due to high-profile data breaches and attacks. In the week prior to the conference, Boeing, Lord & Taylor, Saks Fifth Avenue, and Under Armour joined the burgeoning list of recent victims. Atos underscored the importance of security as a bedrock of its digital factory framework, as well as partnerships with Siemens and Dell Technologies.

Digital Trust is Finally a Part of the Conversation

Coming on the heels of the Facebook-Cambridge Analytica scandal, the conversation around data ownership, access, and consent is finally gaining traction. A number of use cases showcased how Atos is establishing digital trust by laying down guardrails on who owns and can access data as their clients embark on digital transformation.

Looking Beyond the Blockchain Hype

Atos fellow Nicolas Kozakiewicz led an interesting discussion about how Atos (specifically Worldline) and Bureau Veritas have partnered on a real-world blockchain engagement named “Origin” to improve traceability of food products. This is one example of the fact that enterprises and service providers are starting to look beyond the initial hype to understand specific problems that lend themselves to a blockchain-based solution. Of course, questions around curation, trust, and scalability remain. And we’ll say it loud and clear here: despite what the market may have you believe, blockchain is not the holy grail solution for every business problem.

Atos’ Vertical Strategy Gets more Definition

In the last few years, Atos has acquired companies in the security, cloud, and data functional areas, in the North American region, and in the healthcare vertical. Healthcare and life sciences is now a €1 billion+ business for the firm, building on its acquisitions of Xerox’s NA ITO portfolio, Anthelio, Conduent’s provider businesses, and Pursuit Healthcare Advisors. It is now tying these investments into a coherent and differentiated value proposition for the segment.

Digital is not Just Front Office – Time to Drink Your Own Kool-Aid

The market is realizing that while digital technologies and operating models impact clients, they can also be used to unlock internal service provider value. In a panel with customer Johnson & Johnson focused on the Future of Work, Atos highlighted how it is using digital internally to improve the employee experience through an interesting chat bot / agent to map and serve personalized employee journeys, dubbed Chief Happiness Officer or CHO.

The Road Ahead

Atos is at an interesting junction as it builds on its core technology strengths around high-performance computing, data analytics, cybersecurity, and IoT, as well its investments to become more meaningful in North America. We’re seeing two distinct “markets” within Atos’ digital services world – IT modernization and business transformation. Conflating the two is suboptimal, as they are driven by different stakeholders with different imperatives, buying behaviors, and needs. While Atos is building on its technology-led story, it will be interesting to see how it builds out its business transformation narrative.

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