Digital and cloud see Capgemini's revenues rise

Analysts outline how Capgemini’s adoption of digital and cloud has resulted in newfound growth for the company.

By Hafizah Osman Jul 10th 2017

Capgemini’s evolution and adoption of digital and cloud has resulted in growth for the consultancy company, according to industry analyst firm, Technology Business Research (TBR).

According to TBR senior analyst, Elitsa Bakalova, Capgemini’s strategic shift towards new technology such as the cloud and digital - dubbed "the new" - has resulted in the company hoisting up its year-on-year revenue. 

Specifically, these technologies collectively accounted for 30 per cent of the global IT consulting company's revenue in 2016, up from 22 per cent the year before.

According to TBR, its strategic technology partners and emerging partner ecosystem, is and will be a driving force for the company’s shift to “the new.”

“The company positions [itself] as a digital transformation partner for large enterprises in select sectors, such as consumer products and retail, automotive and financial services, and applies its management consulting and technology capabilities to connect digital and legacy IT for clients,” Bakalova and fellow TBA professional services senior analysts, Sebastian Lagana, wrote in a report.

With Capgemini formalising a global network of Applied Innovation Exchanges (AIEs) in early 2016 to act as a platform for clients’ cloud adoption and digital transformation and initiatives, Capgemini and its ecosystem network have identified new opportunities and generated solutions that address clients’ specific business challenges as they move to digital using frameworks, tools and insights, the analysts suggested.

“There are multiple benefits for Capgemini from having such a network. Capgemini expands its share of wallet with clients, adding opportunities around new areas such as digital and cloud,” the authors mentioned.

“The company builds relationships with clients and with its partner ecosystem, and develops its pipeline of deals, driving growth opportunities. The facilities enable Capgemini to showcase its value, increase visibility of its capabilities, and potentially attract talent from its ties with the ecosystem,” the report stated.

According to the TBR analysts, Capgemini has also been working closely with technology players to enhance its portfolio and accelerate its expansion in “the new".

Its partnership with IBM in Cognitive Internet of Things (IoT), with Pega in Smart Processes Driven Digital Enterprise, with Amazon Web Services (AWS) and VMware in hybrid cloud, and with Pivotal and Microsoft Azure in cloud-native apps were highlighted as examples.

Locally, the company recently hired Olaf Pietschner as its new A/NZ COO, to build on its "intelligent technology" drive.

It has also embarked on digital transformation deals with the likes of Members Equity, which resulted in the company winning the 2017 Asia-Pacific New Partner of the Year gong from MuleSoft and Cloud Partner of the Year award at the 2016 InformaticaWorld conference.

Notably, Capgemini was also one of just four large integrators to make their way onto the Australian Government's panel of service providers to pitch in on the landmark Welfare Payment Infrastructure Transformation (WPIT) program, which has been slated to cost in excess of $1 billion.

“Truly transformative digital engagements often begin with a consultative element, with Capgemini and peers seeking to define what is possible for clients that may have a high-level understanding about how digital can help evolve business models or functions, yet require a partner to help define specifically what types of technologies can generate “quick wins” in support of an iterative transformation approach,” the authors said.

Meanwhile, Capgemini’s aggressive perusal of the user experience (UX) and customer experience (CX) space has also underpinned its digital growth objectives. Its focus on security was recommended by TBR, with the authors stating that these security conversations have increasingly become “table stakes” as clients transition to cloud-based IT environments.

“For Capgemini, the theory of Security as Code, utilising the building blocks provided by the aforementioned infrastructure providers, is an area the company views as a significant opportunity, as few clients retain the in-house resources capable of shifting their cyber posture from tying together a suite of on premises products to developing a virtualised connection using underlying code within the public cloud environment,” they added.

The analysts also mentioned that the company’s knowledge of public cloud environments, and how to use the underlying code to better secure the asset, positions it well to expand wallet share on cloud engagements via inclusion of embedded security services.

According to the TBR analysts, moving forward, automation represents an “excellent fit” for Capgemini as the applications-focused nature of automation aligns with Capgemini’s core business and is an easily defensible, smaller-scale investment that can generate quick wins for those adopting the solutions, whetting clients’ appetite for broader, more transformational engagements.

“Capgemini’s ability to road map these feature for prospective clients, particularly in target verticals such as manufacturing, automotive or life sciences, represents a significant growth opportunity for the foreseeable future,” the report stated.

However, Capgemini, just like other tech companies, will face two challenges in seeking talent to fill roles within these new tech areas: finding and attracting digitally skilled professionals, and providing a workplace for a new generation of people with new expectations.

“As Capgemini competes for talent with its IT services peers, especially around high-demand digital skills, its diversity and inclusion agenda to support gender, ethnic and cultural diversity and to provide opportunities for people with disabilities enhances its brand as an employer and enables the company to access and attract the talent it needs.

“Additionally, promoting and supporting the well-being of its employees by making sure its facilities and business practices empower excellence further enhance Capgemini’s ability to attract people,” the authors added.