Atos and Siemens have extended one of the most successful relationships in the recent history of the European outsourcing market.
The essentials of the deal are that this will be a third iteration of a relationship first announced in 2011 when Atos acquired the Siemens IT Solutions and Services division, and the former was awarded a seven-year, €5.5bn deal with the parent Siemens group to provide managed services and systems integration.
Following an initial extension in 2018, this new agreement has a value of €3bn and will see Atos support Siemens AG, Siemens Energy AG and Siemens Healthineers over the next five years. Focus areas will include services modernization and digitalization, data driven digital, cloud transformation and cybersecurity.
There’s a few interesting takeaways from this latest announcement. In many regards it is very deal typical for its time, with a growing number of customers choosing to renew or enter into long-term outsourcing deals with a single supplier to drive a more transformational approach at speed.
Rather than engaging with a cluster of suppliers on focused projects in areas such as cloud migration or customer/employee experience enhancement, a growing number of large accounts see greater value and pace of transformation in entrusting a more end-to-end approach to a single partner. The relationship is kept fresh over time with board-level engagement between the two sides to ensure that the relationship is adapting to support the client’s changing business needs.
We see a lot of outsourcing deals where the two sides talk about exploring collaborative opportunities beyond the boundaries of the core contract. The truth is that we struggle to think of many examples where this has developed into anything meaningful. What sounded like a good idea at the time quickly becomes forgotten as other commercial partnerships are prioritised, the right stakeholders fail to engage and nothing concrete is developed in terms of a formal, measurable plan of action.
That is not a criticism that can be levelled at Atos and Siemens. There have been additional asset swaps between the two sides (Unify, Convergence Creators) which have helped to cement the relationship, but there has been real commitment on both sides to make things happen. A joint €330m investment fund supports investment in propositions across 15 clearly-defined areas and Atos is participating in Siemens One, the Siemens go-to-market framework for targeting large accounts. Importantly, the two sides work at a country level to ensure that their joint solutions are relevant in the local market.
One of the most recent initiatives was the announcement of a digital twin solution 2020 to support the production and release of pharmaceutical products. This underlines one of the big success factors behind the alliance is that they are well-positioned to attack the increasing overlap be-tween IT/OT. The OT world is changing at speed due to increased connectivity and a lot of the concepts and technologies from the IT world (cloud, analytics) are now being harnessed. Capgemini acquired Altran to target this opportunity, and if Atos and Siemens can keep the momentum of their relationship going, they can also be among the leading contenders.