Capgemini betting on business outcomes to drive growth

Capgemini provides transformational services that drive business outcomes

In an early session at the Global Analyst and Advisor Summit, Capgemini CEO Aiman Ezzat declared Capgemini had become a business and technology partner to clients, helping them with their digital transformation and delivering business outcomes.

 

To make clear the change from years past, Ezzat said unequivocally that Capgemini is “not an IT services company,” a sentiment echoed throughout the day’s sessions and in many of TBR’s side discussions with Capgemini leaders and professionals.

 

In TBR’s view, Capgemini must shift more than just its approach toward clients if the company wants to bring a truly robust breadth of offerings, from strategy to core IT services to cocreation of shared IP. Capgemini must shift its culture, an effort TBR believes is well underway. Across a number of competencies, strategies and go-to-market motions, TBR saw examples of Capgemini bringing a new focus on value, such as the comment by Capgemini’s Group Chief Strategy and Development Officer Fernando Alvarez that Capgemini would be selling “value and delivering business outcomes,” not just basic IT services.

 

Given the global economic uncertainties, newly developing competitive pressures and accelerating commoditization of IT services, cultural and business model shifts might challenge Capgemini’s performance as businesses might cut back on discretionary spending on transformational projects; however, TBR expects the company to leverage Capgemini Engineering as the bridge between transformation and a new wave of outsourcing opportunities.

 

 

Positioning as a strategic partner for clients enables value creation

Capgemini places value creation at the center of its strategy and creates value utilizing its technology background and software engineering skills. The company is looking for ways to help run clients’ businesses more efficiently and also establish new business models, such as by utilizing its development skills to build software architectures for e-vehicles. Pushing client centricity and selecting 10 focus industries to drive specialization improves Capgemini’s ability to create value and increase client reach.

 

While in the past Capgemini was not as vocal on being proactive on the topic of innovation, its leadership team is placing innovation at the core of its strategy. The company is running an initiative to increase perception with clients around innovation and is involving two-thirds of its strategic accounts in coinnovation activities in the Applied Innovation Exchange (AIE) network and labs to address areas of transformation such as around quantum computing, metaverse-related solutions and sustainability.

Capgemini attracts clients and talent by leading with value

Capgemini is positioning as a strategic partner for its clients to address their needs. Alvarez stated during his presentation that listening to clients is the rule for Capgemini and the company must communicate in a focused way by industry to better serve its clients. Delivering value to clients is driven by measurable business outcomes, industry expertise and data-driven industry solutions.
 
Creating new business models, harnessing the value of partners and data ecosystems, and supporting talent that has a passion for innovation are also value creation factors. According to Alvarez, Capgemini does not just address clients’ needs around cloud; it covers what runs on top of cloud. For example, data is a critical asset for clients, and Capgemini pushes to drive excellence around implementing data solutions and focusing on insights and business outcomes, and the data capability is coupled with cloud for scalability. Capgemini’s ability to build ecosystems to create value with partners by industry verticals and bring subject-matter expertise in engagements drives value creation and improves the company’s ability to price differently and position as a talent magnet.
 
Capgemini’s management team is no longer seeing the company as an IT services provider with outsourcing heritage sitting in Europe, but as a global digital and technology transformation provider that focuses on value creation, a strategic direction that will enable the company to continue to drive profitable revenue growth in the coming years.

Capgemini is shifting from selling capabilities to selling transformation

Establishing a proactive offerings development strategy and packaging offerings with clear value proposition and business outcomes improve Capgemini’s ability to expand wallet share with existing clients and approach new clients before they reach out with a request for proposal.

 

Capgemini’s corporate strategic framework, which has two pillars (data/AI and cloud) and three playing fields (customer first, intelligent industry and enterprise management), allows the company to support clients’ technology-based transformations. Investing in developing industry and domain expertise enables Capgemini to become a transformation partner for clients and drive revenue growth of over 20% year-to-year at constant currency in its three playing fields and 25% year-to-year in its two pillars.

 

According to Franck Greverie, head of Portfolio and Global Business Lines at Capgemini, connecting the dots by delivering end-to-end transformation that starts at the customer-first playing field and moves through intelligent industry and enterprise management is a key emphasis for Capgemini. Clients expect activities across the value chain, and engagements typically start with strategy services and work with clients on use cases and on transformation tasks to reach the endpoint. The strategy piece is key, so Capgemini is not only selling solutions but also providing transformation components and is partnering with clients to help them reinvent themselves. According to Greverie, two-thirds of Capgemini’s offerings were related to technology-enabled transformation four years ago while two-thirds are related to business-led transformation today, a shift that also contributes to Capgemini’s value creation.

Applying innovation at scale supports value creation

According to Pascal Brier, chief innovation officer, innovation enables clients to drive change, grasp opportunities, build value and separate from competitors. Placing innovation at the center of its strategy enables Capgemini to help clients change their status quo. Capgemini has a three-step approach to innovation that helps create value and deliver innovation at scale.

 

First, the company highlights what comes next and puts technologies to the test. Second, the company develops a tailored approach for each client, and third, it deploys innovation at scale. In the first step, the company conducts self-funded internal research and utilizes partnerships with academia to look at emerging trends and prepare capabilities. For example, Capgemini works with MIT around defining a framework for trust in AI and autonomous systems. The partnership with the MIT Initiative on the Digital Economy and joint research on B2B platforms was highlighted at the event.
 
Capgemini also participates in industry consortiums with government subsidies and conveys joint research with clients. Capgemini also cited the EcoSat R&D program, an initiative led by Capgemini Engineering to develop a solar balloon to conduct observations of the Earth and expand 5G capabilities. Capgemini’s labs, such as around quantum, 5G and edge, the metaverse and Web3, and autonomous systems, support the company’s research programs and thought leadership, improve its internal readiness and enable early business engagement.

 

In the second step, Capgemini’s global network of 22 AIEs across the globe enables tailored coinnovation with clients that is catered to specific industries and applies technologies to use cases. The key for innovation is that it is deployed at scale, and this is the way value is generated. Capgemini’s frog studios, ecosystem of technology partners and startups, Centers of Excellence and established network of global delivery centers enable scaling of innovation.

 

Capgemini Invent, the digital innovation, design and transformation business of Capgemini, highlighted two brands that drive technology-based innovation — Cambridge Consultants and Synapse.
 
Cambridge Consultants, which Capgemini acquired as part of Altran in 2020, is a specialist in identifying and developing breakthrough products and services that drive differentiation to clients. Headquartered in Cambridge, U.K., it has generated over 5,000 patents for its clients and comprises over 800 engineers, scientists, designers and consultants across offices and over 140 labs in the U.K., U.S., Japan and Singapore. Synapse, which is based in the U.S. and was a Cambridge Consultants company, is a product engineering company whose mission is to positively impact people and the planet through sustainable product development and improved user experience. Such expertise strengthens Capgemini’s transformation and innovation capabilities, enabling it to attract clients by reinventing their business models and generating business outcomes.

Industry expertise augments business outcomes delivery

Integrating the industry angle into its strategy and offerings, applying industry expertise with global accounts, and touting industry specialization through marketing messaging and branding supports Capgemini’s industry mission. Capgemini has selected 10 priority industries in which the company is building depth and investing in talent with the goal of helping clients offset pressures from external factors that negatively affect their business performance.

 

Capgemini shared six factors for disruption across industries, including geopolitical conflicts, energy crises, supply chain disruptions, economic factors, labor constraints and planet boundaries. For example, Capgemini stated that the consumer products and retail industry is challenged by labor crises and increasing labor costs, which are negatively affecting distribution centers that move daily household essentials. There is also approximately 35% employee attrition, on average, in stores and approximately 30% in manufacturing. To capture opportunities in consumer products and retail and help clients drive revenue growth, manage costs and operate sustainably, Capgemini is showcasing its capabilities around omnichannel commerce, advanced user experience, and solutions that combine physical and digital shopping.

 

Capgemini’s emphasis is to drive innovation in the sector and enable clients to improve customer experience and take costs out through a transformational effort, not a transactional effort, such as around changing store designs, addressing specific store employee needs and balancing activities with clients’ brand purpose. Consumer products and retail accounted for 13% of total revenue in 3Q22 and grew 14.5% year-to-year in constant currency in 3Q22 and grew 20.4% year-to-year in constant currency for the first nine months of 2022.

Capgemini creates new business models in the automotive industry

During the event, Capgemini augmented the sessions with multiple client representatives discussing their work with Capgemini on stage or connecting live through a virtual communication platform to show Capgemini in action and provide insight on successes and challenges during engagements. For example, Capgemini invited its client Lynk & Co, a global mobility company and part of Geely Auto Group, to talk about the journey around implementing an innovative and sustainable car-sharing service in Europe.

 

According to the presentation, cars stand still during their lifetime approximately 96% of the time, on average, while just 4% is spent on the road, or 6 hours and 43 minutes in a week and 14.6 days in total for the year. Lynk & Co is improving car usage by launching a car-sharing model in Europe, in which a person’s Lynk & Co car can be rented out while it is not used by its owner.

 

The Lynk & Co mobile app enables car owners to make their cars available to the community, including establishing rental pricing and requirements about parking the car when the rental time is over. The cars are built to be shared, with advanced telematics and connectivity to make the rental process secure. Community members receive star ratings from car owners based on their behavior to avoid vehicle misuse, while car renters get rated for the condition of the vehicle they own. The customer journey for purchasing a Lynk & Co vehicle is fully digital, with an online sales channel and no dealer involvement.

 

Capgemini was instrumental in the initial development of the business model and launch of the solutions and digital platform program with Lynk & Co in Europe. Capgemini was involved in the development and implementation of a custom-built platform, CRM solutions and mobile apps, and implementation of financial management software from SAP. The Lynk & Co client case highlights Capgemini’s capabilities around business and digital design consulting, along with its technology and systems integration expertise, which drives superior customer experience and new business models.