On Jan. 3, 2024, SoftwareOne announced its acquisition of Novis Euforia, a Spain-based SAP and cloud services boutique. This special report reflects TBR’s discussion with Pierre-Francis Grillet, SoftwareOne’s global lead for SAP Services, immediately following the announcement, as well as TBR’s ongoing analysis of SoftwareOne and the SAP landscape.

With New Talent and IP, SoftwareOne Extends Into SAP S/4HANA

According to Grillet, SoftwareOne intends to improve its position in the overall SAP ecosystem by moving beyond helping clients with cloud migrations into a more comprehensive SAP S/4HANA transformation role. To meet that aspiration, SoftwareOne’s acquisition of the Spain-based SAP boutique Novis Euforia adds experience and competencies around technically driven SAP S/4HANA migrations and positions SoftwareOne to better address growing client demand for modernization with minimal disruption and transformation through the journey to SAP S/4HANA.

 

While only a 35-person company, Novis Euforia marks about an 8% increase in SoftwareOne’s SAP practice, which Grillet said would be further bolstered by 15 senior functional data architects who are focused on finance and supply chain as well as ongoing growth in traditional SAP technical areas. Grillet believes the Novis Euforia acquisition and the new hires will significantly improve SoftwareOne’s SAP revenues, adding to his assessment that SAP has high growth potential for SoftwareOne.
 

 

Pragmatic Alternative to Complexity

Expanding on clients’ current concerns around SAP, Grillet noted that larger-scale competitors, such as the global systems integrators (GSIs), have increasingly embraced clean core as a means to rein in the rampant customizations often blamed for slowing migration to SAP S/4HANA and limiting innovation on SAP.

 

In SoftwareOne’s experience, according to Grillet, customizations fall into three categories: unused and therefore nonconsequential; used but no significant remediation required; and used with more complex remediation required. Notably, Grillet added, “a good part of remediations can be automated, further reducing the impact of customizations on the conversion to SAP S/4HANA effort.” A GSI’s greenfield engagement can be relatively expensive, in Grillet’s view, in contrast to SoftwareOne’s focus on preparation prior to a pragmatic and manageable approach to SAP modernization.

 

Further, Grillet said SoftwareOne has positioned itself well for negotiating a client’s best deal with SAP, given SoftwareOne’s vast experience around licensing and usage. Massive-scale enterprises undoubtedly need GSIs’ capabilities in complex SAP transformations, but many large and most small and midsize enterprises, in SoftwareOne’s view, can be better served through an incremental approach to transformation, framed by a deeper appreciation for customizations’ true hurdles.
 
Grillet also noted that, “Data, in particular, is relevant in the context of the Novis acquisition, as SNP automates the data transformation and conversion from ECC (ERP Central Component) to SAP S/4HANA, enabling, for example, company code and chart of account rationalization when moving to SAP S/4HANA.”

Gorging on a Massive Pie

The services opportunity around SAP S/4HANA transformations is immeasurable as credible estimates vary widely and, to some degree, do not matter. Services vendors with the available talent and credibility will not lack customers seeking help, especially as SAP’s self-imposed 2027 ECC deadline relentlessly approaches.

 

SoftwareOne’s latest acquisition helps the company address a larger range of client challenges and expands its footprint in Spain, with expectations of extending into Latin America and South America. While SoftwareOne’s SAP practice, at 500-plus SAP-trained professionals, lacks the scale of the largest GSIs, the vast majority of clients are not dismissing potential services providers because of scale — if you have the talent available now, you are hired. (OK, it is not that dramatic of a seller’s market now, but it will be before the end of 2027.)
 
Grillet also noted to TBR that one of the company’s “biggest assets is the fact that most of [SoftwareOne’s] professionals are dual-certified and also hold certifications for the three main hyperscalers: Microsoft, AWS and Google. They have a deep understanding not only of the SAP systems but also the platform they run on.”

 

In TBR’s view, SoftwareOne has consistently played to its own strengths, such as a deep inside view of midsize and large enterprise IT environments, to include spending and actual software usage. This recent acquisition continues that strategy, comes amid a slow-growing rush to add talent around SAP S/4HANA, and should allow SoftwareOne to extend its client base for SAP services over the next few years.

 

With six successful acquisitions in recent years, SoftwareOne has proven to be adept at integrating capabilities and leveraging IP. This seventh will continue SoftwareOne’s good fortune and make the vendor a must-watch competitor in the SAP space. Success will also depend on SoftwareOne’s ability to use the 15 senior functional data architects it is gaining as a bridge between existing cloud migration capabilities and SAP S/4HANA business transition opportunities, thus helping the company elevate the brand’s permission around SAP, a necessary step to avoid getting stuck in the increasingly commoditized migration services space.
 
Grillet summed up SoftwareOne’s position by noting that, “The ability to bridge between cloud migration to SAP S/4HANA conversion will depend on more than just these 15 new resources. It will be achieved through the extension of the services portfolio and its [the portfolio’s] underlying tools and IP — including adoption and embedding of the SNP tooling — successfully engaging in the early advisory and preparation engagements, and building an ecosystem of culturally aligned, functionally oriented partners in the various markets where SoftwareOne delivers its SAP services.”

On Jan. 9, 2024, HPE and Juniper announced they had entered a definitive agreement through which HPE intends to acquire Juniper Networks for approximately $14 billion in cash. The planned acquisition is expected to close in late 2024 or early 2025 should the agreement receive regulatory and Juniper shareholder approval. By acquiring Juniper, HPE’s networking capabilities, especially around AI-enabled networking, will be immediately bolstered. Naturally, the acquisition would also support HPE’s edge-to-cloud vision. Additionally, TBR predicts Juniper’s SaaS assets will be integrated into HPE’s GreenLake platform, which would strengthen GreenLake’s value proposition and expand the audience of enterprise customers.  

Acquiring Juniper Networks Will Bolster HPE’s Edge-to-cloud Networking Capabilities

Demand for networking solutions that securely connect, protect and analyze companies’ data will continue to rise as AI workloads proliferate across a variety of industries and organizations increasingly leverage hybrid cloud architecture. Recognizing these trends, Hewlett Packard Enterprise (HPE) has been increasing its focus on networking to meet the demands of existing infrastructure customers and further differentiate from its main infrastructure OEM competitors.  

 

Meanwhile, Juniper Networks also identified opportunities presented by trends in AI and hybrid cloud, understanding that customers were seeking simplified networking solutions with an emphasis on flexibility in consumption and deployment. As such, the company prioritized the expansion of capabilities associated with empowering cloud-managed, AI-enabled networking operations. 

HPE’s Road to Enterprise Networking Prominence Began with Aruba

With the development of mobile technologies enabling internet-based data transmission, enterprises began to realize the need for network modernization, supporting the ramping of cloud-driven digital transformation initiatives in the early 2010s. This gave rise to the wireless or mobile enterprise model, which is a near requirement in today’s business landscape.  

 

However, at this time, HPE’s networking expertise was somewhat limited to wired switching. The company knew it would have to expand its portfolio of wireless mobility solutions to remain competitive, and in March 2015, HPE announced plans to acquire Aruba Networks, a leading provider of network access solutions for the mobile enterprise.  

 

After closing the acquisition in May 2015, HPE immediately began to see a return on its investment, with the company’s networking segment revenue growing approximately 8% year-to-year in 2015, driven primarily by Aruba’s inorganic revenue contribution to the business, which centered on wireless local area network (WLAN) products.  

 

In addition to accreditive top-line impacts, the Aruba acquisition drove increasing gross profitability at the corporate level. Over the next few years, HPE leaned further into the WLAN space, leveraging its acquired Aruba assets. In 2018 HPE reorganized its reporting structure, forming its Intelligent Edge segment, which consists of two subsegments, HPE Aruba Products and HPE Aruba Services, and unified the company’s WLAN, campus and branch switching, and edge compute networking solutions. 

 

The formation of HPE’s Intelligent Edge segment promoted deeper portfolio synergies, supporting the development of new Aruba software and services offerings, including “as a Service” and consumption models for the Intelligent Edge portfolio of products, which benefited the company’s GreenLake “as a Service” business, boosting HPE’s annual recurring revenue (ARR) and the strength of the company’s Network as a Service (NaaS) capabilities. 

 

The importance of HPE’s Intelligent Edge segment as it relates to the company’s corporate performance was further underscored in recent years as demand for traditional servers and storage stagnated and began to decline due largely to market cyclicality. In the trailing 12-month (TTM) period ending 3Q22, HPE’s compute and storage revenues fell 10.2% and 6.3% year-to-year, respectively, while Intelligent Edge segment revenue soared, growing 41.6% year-to-year.  

 

To further contextualize the segment’s growth, what started out as 9.9% of HPE’s total revenues in 2018 quickly grew to represent 13.3% of the company’s revenue in 2022, and in the nine months ended 3Q22, Intelligent Edge contributed over 19% of the company’s corporate top line. On top of this, since 2020 Intelligent Edge has contributed a disproportionately high amount to total segment operating income relative to the segment’s revenue contribution. In 2020, 2021 and 2022, Intelligent Edge accounted for 13.4%, 15.9% and 18.1% of HPE’s total segment operating income, respectively, highlighting the opportunity to provide high-value products and services to customers.  

Juniper’s Cloud-managed, AI-enabled Networking Solutions and Expertise Add Another Dimension to HPE’s Intelligent Edge Portfolio

As more and more organizations embarked on cloud-driven digital transformation journeys, it became clear that consumption and deployment flexibility were key priorities among most organizations. Recognizing this, Juniper acquired Mist Systems, a leader in AI-powered, cloud-managed wireless networks, in 2019. Mist’s AI-driven WLAN platform was a strong complement to Juniper’s wired LAN, SD-WAN and security solutions, laying the groundwork for Juniper’s Mist AI platform, which has been key to the company’s growth since the closing of the acquisition. 

 

In 2020 Juniper continued its acquisition spree with the purchase of 128 Technology, a networking company known for its session-smart networking technology that enables customers to create user-experience-centric fabric for WAN connectivity that is not only simplified and secured but also efficient and agile, basing networking decisions on real-time user sessions as opposed to static network policies. By incorporating 128 Technology’s session-smart technology into Juniper’s AI-driven enterprise network portfolio, Juniper sought to accelerate the adoption and development of modern AI-driven networks aimed at optimizing the user experience from edge to cloud. 

 

Through these acquisitions, Juniper became a leader in AI-driven enterprise networking, which supported the company’s expanding top line. In the TTM periods ending 3Q20, 3Q21 and 3Q22, Juniper’s AI-Driven Enterprise operating segment revenue, which includes Mist and Technology 128 offerings, has grown 20.4%, 22.7% and 45.9%, respectively, year-to-year. For context, Juniper’s corporate revenue expanded just 5.1%, 10.6% and 9.6%, respectively, year-to-year over the same TTM periods, highlighting Juniper’s focus on AI-Driven Enterprise as well as the market’s strong appetite for these offerings. 

HPE to Solidify Its Presence as an Industry Leader in the Networking Space by Integrating Juniper’s Mist AI Platform into its Existing Portfolio

Juniper’s portfolio of solutions somewhat overlaps that of HPE; however, much of this overlap is complementary. For example, both companies have competency in WLAN, SD-WAN, and enterprise and campus switching, but Juniper’s AI-native networking technology and expertise will bolster the capabilities of HPE’s existing offerings.  

 

Uniquely, Juniper’s Mist AI platform leverages AI, machine learning and other data science techniques to simplify operations across wireless access, wired access and SD-WAN domains in a way that optimizes the user experience from the edge to the cloud. Essentially, Mist AI brings greater insight and automation to network operators, which improves the end-user experience and is a compelling reason why HPE is moving to acquire the company. Additionally, Juniper’s portfolio lends HPE net-new competencies around WAN routing as well as network firewalls. 

 

HPE has been vocal in expressing its commitment to grow its highly profitable Intelligent Edge segment revenue stream as the company recognizes the massive opportunity presented by the onset of the generative AI (GenAI) revolution. Should the acquisition close, HPE is expecting to double its networking business, integrating Juniper’s solutions and expertise, especially as it relates to the Mist AI platform, with its own rapidly expanding Intelligent Edge segment.  

 

By integrating Juniper’s Mist AI platform with its existing technologies and offerings, HPE will further differentiate from its infrastructure OEM peers as an AI-driven networking provider, building a networking portfolio rivaling that of Cisco (Nasdaq: CSCO). However, HPE’s acquisition of Juniper would arguably propel HPE’s portfolio past that of Cisco and other major networking players in terms of technological advancement specifically through an AI-driven networking lens. Juniper’s deep relationships with telcos and service providers and the company’s large router install base will also expand HPE’s addressable market.  

 

Similar to how HPE integrated Aruba’s management platform into GreenLake, should the Juniper acquisition close, TBR expects HPE will fold Juniper software and services into GreenLake, bolstering HPE’s GreenLake for Networking solution, formerly GreenLake for Aruba. This anticipated move would enhance HPE’s GreenLake value proposition compared to Dell APEX and Lenovo TruScale while fueling continued GreenLake ARR growth, supporting the company’s edge-to-cloud strategy and improving its profitability.  

 

Additionally, TBR believes that if the acquisition closes, HPE will integrate Juniper’s product offerings into HPE’s “as a Service” portfolio, further augmenting the company’s NaaS offerings. 

In late November 2023, TBR and PwC Transformation Consulting Solutions Leader Tom Puthiyamadam continued a decadelong discussion about the consulting business model, reflecting on changes wrought by the pandemic, technology ecosystem partnerships and generative AI (GenAI).  According to PwC’s assessment, technology investments have not delivered the business value or transformative effects enterprises have expected over the last decade. Implementing the latest ERP does not, in itself, deliver growth, and moving workloads to the cloud does not, unrelentingly, reduce costs. Just as commuters have not taken off in the flying cars that “The Jetsons” promised, business leaders have not seen technology provide transformational results.

Technology Is Easier to Use but Harder to Make Useful — and Still No Flying Cars

For PwC, a new year and a hot new technology, GenAI, provide an opportunity to reassess how consultancies and IT services vendors bring value to their clients, first by defining credible, meaningful business outcomes and then creating a value chain back into the technology, process and operations stacks. What does that actually mean? According to Puthiyamadam and other PwC leaders involved in the discussions with TBR, the starting point is defining business value transformation — a desired end state — and then delivering on trust, transparency and speed.

 

Taking the 10,000-foot view, PwC leaders noted that technology as a whole has been getting easier, perhaps even more so now in the GenAI age. No-code and low-code platforms, visualizations, and GenAI-enabled programs like Microsoft’s Copilot all support a trend toward making technology easier to understand and deploy.

 

Notably, in Puthiyamadam’s words, “The old hard part is still the hard part. Can you stitch it all together? Can you get people to work differently? Can you drive behavioral changes in an enterprise?” And most critically, can a consultancy “deliver on CFO-level outcomes in 12 weeks, not 12 months?”

 

Repeatedly, PwC Consulting leaders came back to a fundamental point around how clients view consultancies: How fast can they deliver measurable, meaningful outcomes? Experience, expertise, technology skills and even scale are table stakes. Speed, combined with quality and at a fair price, matters most.
 

  

NASCAR and the Factory Approach: What PwC Can Do Differently

Embracing what PwC leaders have called a “factory approach” to technology-infused professional services engagements allows PwC to reassure clients that the firm is purpose-built when it comes to people, scale, expertise and price.

 

Critically, PwC reassures clients’ IT professionals that the firm provides advisory and support services, availability, and integrated technologies but does not wholly replace those IT professionals’ roles within their organization.

 

In TBR’s view, PwC’s recognition that a standardized, scaled business model — the factory approach — combined with high-touch consulting could actually assuage fears around job disruption may prove critical in coming years as GenAI permeates IT services, generating more uncertainty and fear. Paired with the focus on measurable business outcomes, PwC’s factory approach could help separate the firm from peers.

 

During the discussions with TBR, PwC leaders acknowledged that many enterprise clients struggle with technical debt but challenged the idea that this debt constitutes the biggest obstacle to realizing digital transformation value. Instead, PwC suggested process debt — the ingrained operational tasks, flows and interdependencies — has also accumulated at enterprises, slowing efforts to gain value from the technology (digital) or the business (transformation) investments in digital transformation.

 

PwC leaders further suggested process debt at many enterprises had reached levels that demand attention, even at the cost of additional technical debt. Here, according to PwC, the firm helps clients gain maximum use from current technology investments, finding additional value while accelerating transformation to new (and better) processes with, as needed, new technologies.

 

In TBR’s view, a NASCAR pit crew analogy Puthiyamadam invoked multiple times seemed most appropriate in discussing how PwC could help clients with both their processes and technology. Changing tires fast requires not just better tools but also practice, teamwork and performing under pressure. In an increasingly competitive and budget-constrained IT services and consulting market, bringing NASCAR-like precision and speed to digital transformations will be expected of leading vendors.

Business Value Realization and the Art of Keeping Everyone Honest

Speeding and crashing provides no value on the track or to a business, bringing into play the other two elements PwC sees as critical to a new way of framing consulting: trust and transparency. PwC leaders told TBR that the firm has increasingly been bringing a private equity mindset to its clients’ value realization.

 

Rather than taking three years to fully understand the value of a technology-enabled change, PwC and its clients have been constantly examining ongoing work, determining on a monthly basis whether the expected value continues to be reflected in current progress. The transparency around business value realization — critically here actual measurable business value, not just technology milestones — builds trust and enables speed. PwC has had to reorient its ways of working, reinvigorate its technology training, and build the business model agility to take on financial risks as a way of “keeping everyone honest,” in Puthiyamadam’s assessment.

 

As he pointed out, PwC can help with “modernizing the core while improving the business, realizing value from existing technology. … The client can hit ‘pause’ if they’re not believing [PwC is] going to hit value.”

 

Further on PwC itself, PwC leaders reiterated to TBR that the firm has been training strategists on emerging technologies, an effort that began globally years ago with the Digital Fitness app and has continued to be a learning and development priority. Assessing management consulting overall, Puthiyamadam stated that consultants who are not “trilingual will be irrelevant really soon, if not already. Design, business value, and technology. Must speak all three.”

 

Critically, PwC leaders in the discussion added that the firm’s consultants focused on working within the existing technology stack at their clients, accepting the technology environment that they are in and recognizing that perfect is the enemy of progress. Combining what PwC does for itself and what it brings clients, PwC leaders further elaborated that as clients bring new technologies into their IT stack those clients need the full suite of change management, learning and professional development, and product management critical to successful technology deployments.

 

In TBR’s view, the near-term disruptions in the management consulting and IT services space will require many traditional services — ones that PwC has experience with and credibility around, in part by applying those services directly to the firm.

Does PwC Have the New Consulting Business Model? If So, TBR Is Here for It

TBR might not be quite as gloomy as some of PwC’s consulting leaders on the failures of technology to date — we may yet see flying taxis in Paris next summer — but we agree fully that most enterprise information technology has been oversold and has under-delivered in terms of overall business value. PwC’s focus on getting the most from technology that clients have already acquired and addressing process debt, those sticky business problems that prevent the full value of technology or digital transformation from taking hold, all while delivering value quickly and transparently strikes TBR as a smart strategy to address an ecosystemwide problem.

 

There is an old saying, “You can have it fast or good or cheap, but not all three.” PwC is challenging that formulation by saying you can have fast and good, and you will always know what you are paying for and what you are getting, even in a previously nebulously defined area like management consulting. And to back it up, PwC will put its own fees at risk, knowing that value will be evaluated every three months, at least, if not more frequently.

 

To TBR, this approach echoes the recent attention around financial operations, in which enterprise IT buyers ask how much value they are getting from software, platforms and cloud. At frequent intervals, PwC assesses the value it is bringing to clients with no further steps and no further action until the expected value is understood and credibly on track. Is PwC disrupting the consulting business model? In TBR’s view, there is no better time for it.