What’s impacting Atos revenue growth?

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Elitsa Bakalova, senior analyst at TBR, says that Atos is on track for 2 percent organic growth in 2016 using digital solutions and cross-selling.

Atos grew quarterly revenue by providing business outcomes for clients and supporting their legacy infrastructure and new IT models.

Atos’ sales model transformation to expand its footprint with key accounts by selling services across its portfolio and development of next-generation digital solutions, such as around analytics, cyber security and cloud that drive business outcomes for clients are positively affecting growth. Atos reported its seventh consecutive quarter of organic growth, at 1.8 percent in Q2 2016, and the company increased its full-year 2016 organic growth guidance to 2 percent from the initial 0.4 percent target.

Atos is using its managed services strength to address clients’ needs around orchestration of hybrid IT environments that combine legacy infrastructure and new IT models. The company reported an increase in hybrid cloud infrastructure activities in its Managed Services line and 39 percent growth in cloud services revenue to €320 million in 1H16.

Using its manufacturing sector expertise and the Atos Codex analytics solution will allow Atos to attract clients with business outcomes value proposition in the Internet of Things, a segment that is relatively new and untested by the company. Atos’ progress in automation, especially around infrastructure services, automated cloud and orchestration and cognitive computing, enable the company to lower unit costs and ultimately reach its improved operating margin expectation of 9.2 percent to 9.5 percent for full-year 2016.

Atos mobilizes to support the Olympic Games and operates the Olympics at military-grade security and zero-incident level

TBR’s recent interactions with the team responsible for managing and executing IT services at a zero-incident level highlighted Atos is ready to meet the demands of the estimated 4 billion on-demand viewers. During the Olympics, Atos handles over 200 IT security events per second through real-time data analytics. TBR views security as one of the key components of Atos’ ability to maintain its relationship with the International Olympic Committee (IOC), especially as the growing scale of the Olympics, paired with increased use of mobile devices, adds another layer of complexity for security.

As Atos shifts to 100 percent cloud-based service delivery for the Olympics, testing applications in a cloud-based environment can increase the speed and agility of Atos’ testing capabilities, which the company could replicate with other clients. However, as many of Atos’ multinational corporation peers invest in automated applications services capabilities including testing, Atos could be challenged to differentiate, especially as the IOC demands more connected services at a fixed budget.

TBR sees an opportunity for Atos to use its Olympics-centric facilities in Madrid and Barcelona to demonstrate its innovation capabilities around digital transformation beyond the sports industry. Atos replicates its Olympics’ framework around security such as consulting, strategy and risk analysis with other clients, providing an entry point for broader discussions, especially as cybersecurity is a key pain point for clients switching to cloud services.

Atos is implementing automated models in IT services to improve its value proposition around speed, quality, cost and efficiency

In April Atos signed a three-year partnership with ClickFox to use automation and robotics to deliver managed services by collecting and analyzing data across Atos’ global operations and creating digital service journeys that allow the company to prescriptively re-engineer, streamline and automate procedures. In June Atos’ technology brand Bull launched alien4cloud, a software suite that automates the application life cycle, including development, deployment and production on premises and in cloud environments.

Atos also automates infrastructure services through ServiceNow solutions and leverages IPsoft’s cognitive agent Amelia in end-user services. While Atos hires people to accommodate for clients’ digital transformation needs, automation enables the company to mitigate the negative margin impact of skilled onshore hiring and reskilling. Automated infrastructure services will help Atos compensate for its less-developed low-cost resource base compared to its key competitors to cost-effectively deliver its solutions to clients.