SyntBots allow Atos to differentiate at points of disruption as the company gradually expands revenue share from digital services
A year ago, Atos aimed for Digital Transformation Factory (DTF) revenues to contribute 30% of the company’s total sales in 2018 and 40% in 2019. Atos hit that goal in 2018, and TBR expects Atos will reach its target for 2019 as well. TBR believes the transparency and visibility around Atos’ DTF portfolio make it a more believable use case compared to the offerings of industry peers, many of which fold digital services under a rather broad umbrella that encompasses legacy capabilities. Atos’ realistic outlook around DTF enables the company to provide guidance for digital services to grow at a CAGR of 2% to 3% through 2021, a goal that TBR believes the company will hit, especially as the recently acquired assets from Syntel, such as SyntBots, enhance Atos Codex (one of DTF’s four pillars) capabilities around AI and automation.
With SyntBots in place, Atos has certainly broadened its addressable market to better compete for digital services at scale across both IT and OT. Integrating traditional tools along with AI and machine learning, SyntBots allow Atos to reduce the complexity of clients’ IT architectures, providing the typical benefits of automation including cost reduction. TBR believes the true benefit, however, will stem from Atos’ ability to convince clients to reinvest cost savings in other areas, with Atos remaining the prime IT services vendor. According to TBR’s 4Q18 Digital Transformation Customer Research, extension remains the most natural jumping-off point to DT initiatives, as enterprises can experiment with disruptive technologies within familiar business operations, see their value in generating new business insights, and then use those insights to reimagine processes.
SyntBots’ Automated Operations and Product Engineering capabilities create additional entry points, which are needed to take advantage of with the “extension” phase of DT. Atos can engage with multiple CxOs at a single client to become aware of DT initiatives happening outside the CxOs’ current engagements and to stay top of mind when those initiatives move to the front burner — if not as the primary provider due to lack of a certain specialized capability, then as the conduit to a partner that can address the next initiative. While points of arrival to new technologies, such as AI and cloud, are rather common, we believe points of departure and points of disruption are areas where Atos has an opportunity to differentiate. Using legacy systems to build a repository of knowledge, rather than to just manage clients’ technical debt with the assistance of AI, is one way for Atos to compete at speed for DT-related opportunities.
While rivals such as Accenture (NYSE: ACN) maintain similar platforms, such as myWizard, Atos’ position as a “silent assassin within the North America market,” as Atos North America CEO Simon Walsh termed it, could certainly catch rivals by surprise and enable Atos to overdeliver in its digital services performance.
For the fourth consecutive year, Atos held its annual Global Analyst Conference in Boston, where the company continued to emphasize expansion in North America and the diversification of its global revenue base, as well as its desire to be closer to the U.S.-based IT industry analyst community. The company covered core areas of its three-year plan — codenamed ADVANCE 2021, which stands for “Atos Digital Value Advancing Customer Excellence” — and underscored its strategy to enable customers’ digital businesses by providing secure, data-driven ecosystems of multiple infrastructures, industry-specific services and technologies, and smart data platforms and services.