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Atos Separation –

Last week, Atos announced a plan divided into two companies. He also announced that CEO Rodolphe Belmer is leaving after a nine-month stint at the company. The Deputy CEOs will be taken over by Nourdine Bihmane and Philippe Oliva.

Atos plans to weave its stunning, cybersecurity and analytics service lines into a new publicly traded company called Evidian. The remainder will keep the Atos brand and the ITO and BPO parts of the business with a primary focus on infrastructure – primarily data center and workplace services (see Surveillance Data).

The Market evolved faster than Atos
We have talked a lot over the last few years about the exponential growth of the cloud. And this growth has come at the expense of many traditional IT services like data center sourcing. It is here – in the data center – that Atos has been successful for many years.

But the demand for data center sourcing has dropped dramatically. In 2021, the data center’s annual contract value was down 11% from the previous year. Projected revenue growth for Legacy Atos is following the same pattern – estimated to be down 12% Y / Y.

To his credit, Atos recognized the huge change in the market. It has invested heavily in its OneCloud platform and made a significant acquisition in the multi-cloud company CloudReach. But both happened well after the transition to cloud actually started to pick up in the second half of 2016.

Clients are Raising Concerns
In the face of the turmoil over the past two years, with the change of CEO and the close amalgamation of DXC, the quality of Atos delivery has declined in some cases. And our latest customer experience (CX) measurements show that the overall CX Atos score is below the market average. This raises concerns about how the split could exacerbate current delivery challenges.

By implementing a potential subcontractor-type relationship between Atos and Evidian (where much of the digital talent will go), we expect clients to become more concerned about access to demanding talent such as stunning engineering and cybersecurity.

With the continued possibility of acquiring Atos’ legacy business sometime between now and 2026 (when Atos says the business will return to growth) potential new clients will be taken into account when considering the many options available in the bargain.

Great Opportunity for Evidian
However, the capabilities that move with Evidian are in high demand. Atos’s cyber security capabilities are strong, and it’s steady ranked as leader across several categories in our Supplier Lens research. The nearly $ 4 billion ACV with cybersecurity scope to be renewed over the next two years is a good thing for Evidian.

Cloud and apps are moving with Evidian too. We have long discussed the strong relationship between cloud growth and ADM; ADM increased by 40% in 2021. Much of the application growth is due to the growth of cloud services. And Evidian is likely to retain the high-performance computing solutions, which are central to its delivery execution.

In light of all this potential, Evidian is projecting around 5% growth in organic revenue, which is in line with the 5.1% growth we are projecting for the IT services sector in 2022.

Kyndryl sets precedent
While it is surprising to announce the result, and customer perceptions are generally negative at the moment, there may be more positive news on the ground. The Kyndryl precedent illustrates how such a result can work for clients and employees who remain with the “legacy” part of the company separated.

Like Atos clients, IBM clients were very anxious when they first learned of the separation, but Kyndryl’s result is mostly working. Six months after the announcement, the layers within the company have shrunk, decisions are being made faster, and overall, clients tell us that the company is more transparent and easier to work with than ever before.

Clients Should Get Involved Quickly
Existing Atos clients and prospective prospects should contact executive contacts. This may sound like mommy & apple pie advice, but overconfidence is crucial in these situations. Atos will expect many questions but not all.

And clients should also weigh the risk of switching suppliers. While this may seem like the best course in the short term after a big announcement, waiting for a supplier going through a major transformation may work as Kyndryl’s example showed. Most importantly, the executive leadership promises to work for both sides.

An post Separation Atos first seen on Need to See IT News Desk.

Atos Separation –

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