The Atos Origin and Siemens Partnership: Will the Sum of the Parts be Greater Than the Whole?
Lee Ayling, Managing Director, Information Technology Advisory, UK
Nico Boot, Executive Director, Information Technology Advisory, Europe & Asia Pacific
Stan Lepeak, Managing Director, Global Research
On December 14th Atos Origin and Siemens announced their intention to form a global strategic partnership. According to the release, “Siemens will contribute its Siemens IT Solutions and Services for a total sum of €850 million to Atos Origin in order to create a European IT champion. Siemens will become for a period of at least five years a sustainable shareholder of Atos Origin with a 15% stake.”
Siemens Information Systems has been for sale for a while, so finally closing a deal addresses uncertainty over Siemens Information Systems’ long-term direction. For Atos, this is a positive move to expand scope and capabilities and cement it as a top tier European player in the IT services market, enabling it to compete better against global providers such as HP and IBM. The deal is financed in a way that Atos can undertake more acquisitions to spur its growth. The new company split its services into managed services (over 52%), service integration and consultancy (33%) and transaction and other business services (15%). This acquisition reinforces Atos’ image as a managed service provider in addition to its IT consulting and systems integration capabilities.
This marks yet another step in service provider consolidation and history shows doing the deal is easier than making the merger work, especially in the short run. Integrating large services firms is challenging (think HP and EDS), especially when they’re from different countries (i.e. France and Germany!). Consider the challenges Cap Gemini faced in integrating E&Y consulting. While the long-term prospects are good, the interim integration period could be a bit rocky. Neither of these firms has ranked as a top performer in EquaTerra’s Service Provider Performance and Satisfaction (SPPS) studies (though Siemens did do well in the recently released UK ITO SPPS).
Will the new combination improve buyer satisfaction? Will the two be strong enough to build on their European delivery capabilities to become a true global player? As a combination of mid-performing players – the jury is out as to if the sum of the parts is greater than the whole.
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