December 11, 2013

Systems integrators and IT services firms are moving to adapt their customer offerings to a heterogeneous new environment wherein customers create hybrid (and fast-changing) network architectures from combinations and permutations of in-house assets, assets managed in colocation facilities, platforms provided and managed by IT service firms such as CGI, public cloud providers (i.e. Amazon) and private/hybrid cloud operators.

Cap Gemini S.A. (CAP – ENXTPA) provides an interesting and recent case study. This firm (which has a EUR 7.3 billion market capitalisation) has launched a stand-alone orchestration platform for cloud-based outsourcing (private, public and hybrid). Cap Gemini has placed Microsoft productivity applications at the core of this offering because they are still at the core of the workday of most of the employees of their client base.

The idea is to provide common business applications across a variety of infrastructures – across the heterogeneous network topology described above – and to integrate them with key managed services such as billing, automated provisioning and security. Royal Mail and Tata Steel (which moved legacy email to Office 365 with the aid of Cap Gemini) are apparently reference customers for this approach that ties everything from mainframes to the cloud together. Cap Gemini is supporting the marketing push by highlighting recent investments in key data centres in France, the UK and Holland. Locally-sited, European data centres are also being touted as a way to avoid the U.S. Patriot Act (and even U.S. spying).

The Microsoft productivity apps are being paired with EMC (Storage as a Service, Backup as a Service, Disaster Recovery as a Service), VMWare (IT Business Management suite as a service) and HP (service manager and testing as a service). Cap Gemini will wrap the Microsoft applications, the previously mentioned all this into customised environments across public, private and hybrid cloud environments (even including mainframes). Royal Mail in the UK is apparently a reference customer for this.

The IT service provider’s approach also highlights contrasting visions regarding control of data centres. Cap Gemini is arguing that data centre ownership is important. whereas rivals HCL, Infosys and CSC have elected to make substantial greater use of outsourced data centre ownership and management. In effect, many outsourcers are outsourcing…

This announcement is also interesting because it underscores a strong argument against those who claim that there is no future for systems integration in the cloud computing era: clients have layer upon layer of technology, and in fact do need customisation and integration because the systems archaeology of the past has to be combined with the construction of IT platforms for the future.

From an M&A and strategy perspective interesting opportunities therefore include cloud management and systems management platforms as well as partnerships between major IT services firms and leading, specialist managers of data centre assets.