Capgemini in the downturn

[Niels van der Zeyst]

SAP in the downturn.

An SAP sponsored CEO event boasted some interesting insight into the IT priorities of CEO’s in the current Economic downturn. The complete article can be read here: https://www.sdn.sap.com/irj/scn/weblogs?blog=/pub/wlg/12118

What struck me as interesting, and we should be somewhat weary of marketing speak, were the following comments concerning downturn strategies. I would like to start a discussion around opportunities for Capgemini: I have already provided a number of open door opportunities… lets discuss this list and build on it.

- Buy market share and revenues through M&A
(opportunity: Integration)

- Reduce nonessential services
(opportunity: OS and Saas / cloud computing)

- Invest in infrastructure (shared services and some IT services)
(opportunity: Saas / cloud computing / ssc facilitation)

- Implement better analytics capability (this was the most mentioned)
(opportunity: BIM / BI)
- Increase supplier collaboration (design and manufacturing)
(opportunity: supply chain integration but also the implementation of services to enhance collaboration through for example social computing)

- IT infrastructure investments are now decided at the CFO or Board level for even 500-1B size companies / CIOs are many times not in the "strategic planning loop"
(opportunity: talk with the CEO about strategic ICT / Business technology decision: Technovision can help us here)

Many private equity firms encouraged their portfolio companies to invest in the following technologies in a downturn:
- Analytics solutions (demand, supplier performance, working capital, capacity)
(opportunity: sector focused BI / BIM)

- Collaboration (design, forecasting and manufacturing)
(opportunity: pushing business technology from an interactive business model pointn of view: collaborate to lead)

Best opportunities in strategic transactions:
- Forecasting and demand management, CRM

What do you think, any ideas? Additions / Omissions?

Regards,

Niels

[Richard Fahey]

- Greater use of Social media
(opportunity to reduce Advertising and Marketing costs by focusing on Socialmedia to advertise and engage with target audiences)

[Rick Mans]

- crowdsourcing, (like ideastorm, or even better: like lego factory http://www.crowdsourcingdirectory.com/?p=64)

[Niels van der Zeyst]

great guys... keep em coming!

[andy mulholland]

I saw a some what different side to this at the BUsiness Week European Leaders Conference last week in a gathering of some 130 CEOs mostly of well known businesses. They had some simple comments;

1) dont focus on the shareholders as they are locked in, not able to support rights issues, etc so focus on getting the company right in in shape and direction and not on breaking everything to maintain illusionary quarterly positive results

2) dont worry so much about your share price as there is a low chance of an outright takeover as everyone else has low share prices as equity for a takeover and wants to husband cash

3) its all about cash stupid - in a world of almost no borrowing or at prohibitive costs - then you cant fund with debt and payback doing good investments in your busienss - or IT - so its all about OPEX and not about CAPEX

now try testing the remarks on what to do on this!

regards andy

[Richard Fahey]

It's slightly off topic but Andrew McAfee had a good blog post yesterday on his recovery plan for the 3 major car makers. I think you can relate many of his suggestions to Capgemini also. Check it out at http://blog.hbs.edu/faculty/amcafee/index.php/faculty_amcafee_v3/th...

[andy mulholland]

thanks Richard

hadnt seen this and McAfee is usualy excellent value

[Niels van der Zeyst]

Seeing more and more the added value of initiatives such as RDV and Rain in this one... its like you said earlier Andy; getting aboard by helping clients get done what they have to do but then better, faster and more flexible?

[Jason Maxham]

There is definitely an advantage to be able to get in and quickly develop a solution or facilitate a decision-making process with RDV. Successful short-term solutions will help build relationships and (hopefully) lead to future long-term possibilities for us when the economy recovers.

[Chris Yapp]

Niels,

Just to add to Andy's response many large customers are looking at sale and lease back of functions. This appears to be HP/EDS approach.

Also in UK the market data emerging suggests limited growth or investment in IT but large growth in shared services. I mean specifically NOT Shared IT services but HR Finance procurement etc. Now IT is then part of that offloading but it's then a different customer...

Peter Haviland I and I shared an aidea around Agile Integration Services for the M&A field. The idea was a 30 day 90 day and 180 day plan to help a client focus on their business and get returns from M&A. By creating a menu of services across all our internal disciplines we can simplify our sales messages and demonstrate group value..

[Doug Houseman]

Having read the thread and thought about things a bit, I will put in my 2 cents (about what it is worth). I think that people will outsource, if and only if it gives them value in several dimensions (1) reduced direct costs (2) reduced indirect costs (3) long-term - no loss in agility or capability (4) clear ability to bring it back in house in a hurry ...these are the standard any time things, in the downturn there are additional requirements (5) give me cash - buy the service from me upfront and give me real cash - give me 3 or more years of the cost of the service (6) let me hand you people and you deal with the issues around those people and their costs (7) make sure it does not look like I am off shoring work - it is bad to be seen as taking work out of my home country in a downturn when people are un-employed. (8) Now that I have your cash, let me buy the service on credit for the first year, so I can use your cash for other needs. (9) bring me something more than I had that really adds value, but don't give me something that my competition can get.

In terms of new technology - give me something that is very innovative, with a proven track record of reducing costs to operate. Again you fund it and let me have credit terms. New ideas that you can not prove will offer a better operating cost will face an uphill battle and in the US at least Accenture is being sued for promising to deliver savings and then failing to do so.

Companies with Cash will do well in this downturn and those without are in trouble. So you are a company's friend if you have cash to give them.