As the group celebrates its 50th anniversary, we talk to local CEO about the challenges of the changing consulting marketplace, what digital and customer transformation is doing to IT and services buyers, and finding growth
Innovative service design that addresses the new digital paradigm and buyer, and a commitment to mid-market customers, are just some of the ways Capgemini is hoping to reposition itself in the increasingly convoluted consulting and agency space.
This year marks the 50th anniversary of Capgemini, one of a host of IT services and management consulting groups now battling it out with traditional media and creative agencies, digital upstarts and IT integration and implementation players for the growing pot of spend being allocated to digital and customer transformation.
And as its local CEO, Nicolas Aidoud, told CMO, the client-side buyer isn’t just the remit of traditional IT leaders, it’s also increasingly marketing, customer operations, digital teams and even the CFO procuring technology and services.
In line with its milestone year, Capgemini is about to embark on a new business strategy that will not only see it put more emphasis on the Asia-Pacific region, and Australia particularly, but also invest in specific capabilities to shift from its fast follower history behind the likes of Accenture and Deloitte.
According to Aidoud, 50 years on from its early days as an IT services company in France, the company is “big enough and strong enough in the market to change our positioning and start to become a leader in specific areas and sectors”.
Capgemini today boasts of 200,000 staff globally across 44 countries and an annual turnover of 12.5 billion Euros. The business’ services are broken into four key areas: Consulting, technology and engineering, applications and other managed services such as infrastructure.
The first component of the strategic shift is geographic, and Aidoud cited an ambition to generate at least 10 per cent of group revenue from Asia-Pacific, up from 8 per cent currently.
“We have also significantly reinforced our country specific capabilities. But via a new form of consulting, with people who are able to design the strategy but also be clear with all the digital components, recognise the customer journey but at the same time, focus on better user experience,” he said. “It’s about service design, and we have reinforced that in terms of recruitment.”
As an example, Aidoud pointed to Capgemini’s recent appointment of Paul Bennett to head up Capgemini’s digital strategy practice, as well as new COO, Olaf Pietschner.
“We have also recruited people from Deloitte with the target being to select people who don’t represent the management approach of the past, but the people who can manage the new order of consultation,” he said.
The second strategic shift is around embedding technological components to ensure Capgemini has teams not only for useful for sizeable projects, but can also deliver value at the smaller end of town.
“Most of the emphasis by consulting houses has been on catching the big fish in enterprise, and big projects,” Aidoud said. “The word ‘small’ is no longer part of our vocabulary, it’s about the impact we can deliver.”
What’s become apparent is that the budget and drive for digital transformation often starts small and organically.
“People want to test and learn and if you are at the beginning of the journey, you don’t know anything,” Aidoud commented. “In terms of technology, we have created teams who can work on smaller projects, but still offer high expertise. The shift in the business has been significant as we need to be profitable with smaller project work but high qualified people and get a return on investment. It’s a bigger transformation for us in terms of management.”
Aidoud also argued most business innovation today comes from the mid-size space, rather than the top of town.
“In terms of competition, we are in the middle of the mix so we need to be able to beat both the mid-size and big players,” he said. “That requires having the right balance of innovation but also having the ability to plan big things.”
Acquisition is part of the strategy and Capgemini is set to announce a deal in the coming month. The group has made a number of acquisitions over its history to build its international footprint, including the consulting division of US player, Ernst & Young, in 2000 to establish its US presence; US IT services player, Kanbay International in 2007; Brazil-based IT services company, CPM Braxis, in 2010; and American company, Igate, in 2015. Capgemini also runs a design services consultancy, Backelite, which launched originally in France in 2006 and debuted in Australia in 2016.
But Aidoud raised the question of quality of local companies up for sale, pointing out the volatility of resources is high.
“So when you buy a company, you need to be sure the assets are going to be stable, and there are limited buying options,” he said, adding the average annual attrition rate locally is about 30 per cent.
“Media and advertising is converging with IT services and consulting. Most of the agencies in the media space today don’t have the right model and they need to find new ways of going to market. They don’t have the right capability and need to find it,” Aidoud continued.
“You only have to look at the financial results of Publicis Group and its list of competitors. One is OMD, but there is Accenture and Deloitte in that list as well. They have merged so many outfits, and that competitive landscape is dramatically changing.”
At the same time, it’s almost impossible to develop a system without having user experience as part of it today, Aidoud said, noting at least 10 per cent of capability sold by Capgemini today is focused on the user experience at the point of interaction.
“To do that, you need at least a minimum understanding of the customer, and you start to touch around architecture, and it’s all intertwined,” he said.
But while Capgemini’s competitive landscape is tough and unpredictable, Aidoud was convinced there was significant opportunity to grasp, arguing spend is growing not only in terms of what’s available, but also who’s buying it.
“You have the CMO spending now, but also operations and the CFO. We’ve sold four projects recently of more than more than $2m to automate finance processes. So it’s multiple buyers driving these internal transformations,” he said.
“We used to sell to the CIO and when the RFP came through. Now it’s about proactively pitching to all these job functions, showing cases and starting the conversation as investment or proof of concepts. That’s how you create the connections.
“And it is a growing market. For us, it’s not about surviving or trying to find solutions to survive, it’s about finding solutions to grow.”
The biggest challenge in all of this is managing talent. To help, Capgemini has launched a graduate program aimed at creating a pool of talent, rewarding the graduate with the biggest social network impact a permanent contract.
“Some will stay, some leave and come back, helping power the individual experience level,” Aidoud said.
It’s not just about recruitment, it’s also retention. Every month, one graduate follows Aidoud around for one day, immersing them in the organisation. “That also shows us new ways of thinking,” he said.
Capgemini was first founded as Sogeti in 1967 by Frenchman, Serge Kampf. It became the first IT services company in Europe to branch into organisational consulting in 1970, and picked up the ‘Cap Gemini’ name along the way, fully rebranding to Capgemini in 1996. The company also debuted on the French stock exchange in 1985.
Just two men have sat at the helm of the group in its 50-year history: Its founder, and now chairman and CEO, Paul Hemelin, who took up both job titles in 2012.
In honour of the 50-year celebrations this year, Capgemini launched the InnovatorsRace50, a global content that gives five early-stage startups the opportunity to secure equity free funding and a contract as a Cap Gemini partners. The judging-based program attracted more than 1000 entries across 37 countries and resulted in winners from the UK, France, Canada and Sweden covering fintech, mobility, data and security, digital processes and transformation, consumers and well-being, and government and social enterprise.
The winners also received a Serge Kampf Entrepreneurship and Innovation Award, an annual scheme launched this year to recognise entrepreneurs. This year’s milestone was also marked by the new MoveFifty global program, aimed at encouraging employees to raise up to 100,000€ by clocking up kilometres through movement and sharing their achievements on social media using the 50th anniversary hashtag: #Capgemini50. The program cracked this goal in October and supports three charitable projects: Ciudad Quetzal, Enlight and Cap Sur Le Code.
All of this is being supported by a refreshed brand identity, launched in November.
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