Atos SE FAQ: 1. Which Assets is Atos selling?

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As a regular analyst and commentator on Atos SE strategy, and the IT Services industry in general, I speak with 3rd party advisors, investment firms and other interested parties. These conversations address a wide spectrum of topics, ranging from financials, competitors and unique selling points, all the way to how to build the right sales or delivery teams.

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There are however some questions that frequently pop-up in these conversations. So i thought I might spend some time answering them in a new series of blog posts.

Today we will address the topic of Atos selling assets.

On June 14, 2022 Atos organised a Capital Markets Day and presented a storyline about their strategy for the future of the company. In that presentation the company announced their plans to split the company in 2 parts. This is obviously a very ambitious plan, which is I believe a result of a thorough market review and taking conclusions from serious market situation consequences for companies like Atos.

The presentation shown at that event, shows on slide 22 that Atos will sell 700 million euro of Non-Core Assets by 2023. The recurring question in my conversations with clients and interested parties since then has been; what are the None-Core Assets that Atos is planning to sell?

It is my understanding that the first asset that Atos sold as part of this strategy was their remaining stake in Wordline.

This was announced on June 14, 2022.

“As a result of the placement and derivative transaction, Atos has raised net proceeds of ca. €220 million” (link)

The second intended sale of a non-core asset was announced on November 17, 2022. At that date Atos put out a press release informing us of entering into exclusive negotiations to sell Atos Italia S.p.A.

Atos, a global leader in digital transformation, today announces that it has entered into exclusive negotiations with Lutech S.p.A. (“Lutech”), an Italian provider of IT services and solutions, for the sale of its Italian operations (“Atos Italia”) with a 100% cash consideration. (link)

The size of the 2nd sale of a None-Core Asset is not fully disclosed. And Atos says that with this sell they would achieve 2/3 of the intended 700 million euro divestment program. So with the 220 million from selling their remaining stake in Worldline, we can now guestimate the size of this Atos Italia deal to be around 240 million euro.

The third part of the divestment program to raise the announced 700 million euro, is yet to be disclosed. There might be even more parts following.

However, according to Diane Galbe (senior vice president in charge of strategy and mergers and acquisitions at Atos), confirmed in an article in the Financial Post that “…Atos was still seeking a buyer for some of its Unified Communications & Collaboration (UCC) legacy activities.“. This can then be the 3rd leg under their divestment program, or maybe more legs will be needed.

We will have to wait and see how this plays out. But it seems Atos is well underway to secure financing of their ambitious plans for 2023.

Disclaimer: Paul, who is the author of this blog post, holds at time of writing a small amount of stocks in Atos SE. All information in this blog post is believed to be public information, enriched with the authors personal opinion. No confidential information is being shared.

Tomorrow it starts.

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Tomorrow it starts.

On February 24 I will embark on a monthlong sailing trip from the Netherlands to the south of France. I will be a passenger (and supporting crew member) on Sailing Vessel “De Morgenster”. Very much looking forward to meeting the crew and fellow passengers tomorrow in Den Helder.

MindSphere is missing from Gartner’s Magic Quadrant – is it a big deal? (answer: probably not)

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Platforms
This Photo by Unknown Author is licensed under CC BY-SA

Analyst firm Gartner published their list of Industrial IoT Platform leaders in October 2020. Notably Siemens MindSphere is missing from the list. The Gartner Magic Quadrant ™ however lists Hitachi, PTC and Microsoft as leaders and Software AG as a ‘visionary’.

In contrast, in February 2020, analyst firm Forrester published their Forrester Wave ™ with leading Industrial IoT platforms that includes Siemens, together with PTC, Microsoft and C3.ai.

If we look further in both reports, there are also other differences in the ranking such as IBM being a ‘contender’ in Gartner’s view and a ‘strong performer’ in the view of Forrester.

2020 Forrester Wave (TM) - Industrial IoT Platforms
2020 Forrester Wave (TM) – Industrial IoT Platforms
2020 Gartner Magic Quadrant (TM) - Industrial IoT Platforms
2020 Gartner Magic Quadrant (TM) – Industrial IoT Platforms

Analyst firms

Obviously both analyst firm use their own set of criteria and methods to rank the providers of IoT platforms. It is also not uncommon for providers to work with a limited set of analyst firms, so it could be the case that Siemens decided not to participate in Gartner’s research in 2020.

Participating in analyst firms research is a well-established way to create independent evidence how a solution or product holds up compared to its competitors. In general, the ranking is based on a combination of product related questions, customer references and a product demonstration to the analyst reviewing team. The amount of work for the providers should not be underestimated; there is a significant investment in time needed to address the many questions and solid customer references. I have done it multiple times in the past and can testify that it is an intense process.

Relevance

However, if we look at the topic of this Magic Quadrant ™ and Forrester Wave ™ I want to raise an important question: what is the relevance of researching a platform?

Comparing IoT platforms with each other is a bit like comparing Linux to Windows or macOS. These operating systems exist next to each other and a choice for one or the other is not necessarily based on their underlying functionalities. The real value is created by choosing the available applications, scalability and developer ecosystem. In my opinion the same applies to (industrial) IoT Platforms.

A choice of IoT platform should be based on these 3 elements, combined with the amount of access to trained staff and product specialists for implementation and maintenance.

Concluding

Finally I would maintain the opinion that standardization within the company is an important aspect. Choosing one platform and sticking with it allows for scalability and efficiency, two cornerstones of any IoT implementation.

Based on this there probably is not a ‘best’ platform, there are however the best use cases for a particular organization. And those use cases are the applications that run on the platform. Just like Microsoft Office runs on Windows, applications for preventive maintenance or digital twins are the right software to focus on in industrial IoT.

I am looking forward to the analyst firms to compare the IoT applications and create a list of leaders in use cases. Comparing Operating Systems feels like the wrong investment in time and effort for both the analyst and provider teams.

IoT is not a revolution

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As an IoT specialist I get asked many times about the newest and greatest in the field of IoT. Sometimes investors want to know about the newest start-ups or technologies – ‘where should I invest?‘.

This type of question is difficult to answer as people seem to want to find the next new tool or not-yet-invented method to solve a large array of problems.

It is my opinion that at this time the focus of the questions should not be on technologies or methods; the focus should be on specific use-cases and particular application objectives.

The wave of increased digitalization has brought with it the challenge to find the best place to use these digital technologies, and the search sometimes brings places that are a good fit, but also places that are a bad fit.

We see this in the application of IoT in the consumer space (a microwave with an internet connection?) and in the business space as well.

As a result of this search and the fear-of-missing-out on this new revolution, many proof of concepts are executed and the digital enablement of devices is introduced ‘because we can and it may bring value’.

I have been a witness to many of these proof of concepts where a solid understanding of their impact on the business was not taken into account. This is innovation because ‘we need to innovate’.

The real value is not to be found in the utilization of new technologies or methods, instead it is to be found in the impact on your business process and certainly on the product or service that you provide.

The purpose should not be to monitor temperature of your factory, office, or house; the purpose should be to create a healthier and safer working and living environment.

The revolution is not to measure and use IoT to do so, it is to be found in the improvements you can implement consequently.

My advice to all that are looking for the best new IoT invention, technology or method is to first look at what you want to achieve and I would expect that you would very probably be able to use existing technologies to achieve your objectives.

(About the picture at the top: This Photo by Unknown Author is licensed under CC BY-NC)

My view on IoT platforms

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The text below is from a recent interview I did with Digitala Stambanan. Full reference: https://digitalastambanan.se/interview/interview-with-mr-paul-albada-jelgersma-responsible-for-iot-and-siemens-mindsphere-services-at-atos/

Mr. Paul Albada Jelgersma works at Atos, a global leader in digital transformation with over 110,000 employees in 73 countries and annual revenue of over € 11 billion. At Atos, he is, among other things, responsible for development of services and applications for “Siemens Mindsphere”, which is Siemens’ digital IoT platform for industrial companies.

According to Mr. Albada Jelgersma, many companies now understand that access to data enables new value creation and thus opens up for new opportunities. However, this requires digital platforms to enable the combination of data from different sources. Today there are typically two types of platforms, the generic platform with suppliers like Microsoft, Amazon and Alibaba, and specific platforms with suppliers like Siemens, Bosch, GE, SAP and PTC. Both types have their pros and cons. Generic platforms are adjustable, but as a result require more configuration work, to enable applications. However, as a user you must be on top of the domain competence concerning the application. Specific platforms often have more built in domain functions and knowledge, but generally they are less easy to adjust and customize for use in domains that are outside of their scope.

Mr. Albada Jelgersma foresees that digital platform solutions will possibly be provided to companies free of charge in the future. This, on the condition that ownership of data will be transferred to the digital platform provider, enabling new opportunities and new business models for the digital platform provider. Whether this is good or bad in general, is impossible to judge. Each case is specific and needs to be negotiated separately.

Moreover, one can notice a political influence on the digital platforms of today, says Mr. Albada Jelgersma. This is seen through state laws and regulations which indicate increased local barriers in countries like China. Smaller countries in Europe take on a dual approach. On the one hand an increased focus on the local industry and on cooperation in-between countries can be seen. On the other hand, there is a tendency of some countries to isolate themselves more, e.g. Brexit. One of Mr. Albada Jelgersma´s concerns is that international cooperation in the development of digital platforms does not get as much attention and focus as the national orientation.

Another important trend that Mr. Albada Jelgersma highlights is ethics, which is becoming increasingly important among digital platform providers. When data is feeding autonomous self-learning systems that makes decisions, man is not any longer in direct control of the decisions. How can human values then be maintained?

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