Capgemini taps Gravitant for cloud broker role

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1 Capgemini taps Gravitant for cloud broker role Analyst: William Fellows 1 Aug, 2014 Capgemini is using Gravitant's CloudMatrix decision engine and portal within its cloud broker service. The Gravitant software is being used by the State of Texas, which is also Capgemini's marquee reference customer, to access IT services as part of a large cloud broker deployment. The 451 Take Systems integrators view themselves as natural heirs to the service-integration market, which is ultimately how services delivered from various types of clouds will be procured and used. That the likes of Capgemini and General Dynamics are experimenting with a broker capability at such an early stage of the market indicates how they see the wind blowing. Cloud is said to be having a positive impact on Capgemini's business, but it'll need to expand by volume to make up deal value shortfall versus its traditional business. Context Capgemini's approach to cloud is geared to the long term. While there has been some early cloud adoption among enterprises, it's only the tip of the iceberg. Mainstream adoption is beginning to happen and Capgemini believes that companies' need for trusted advisors and partners will increase. The future state of IT will be characterized by hybrid IT environments mixing cloud and non-cloud infrastructure, but it will be one in which the workload defines the destination. Customers need a path to meet this need as the role of enterprise IT becomes that of service provider to the business. Copyright The 451 Group 1

2 Given that premise, Capgemini talks less about VMs and pricing and instead about workloads and best execution venue. Capgemini recognizes that its traditional customers are moving from legacy insource or outsource to a new style of procuring applications and IT services and that it will be a multi-player world. For systems integrators then, service integration is the way forward. Within this context, that means enabling customers to understand what they are getting, to contain and manage it and to exercise whatever level of control they want. To that end, Capgemini recently created a Dynamic Services group to house all of its cloud activities and global consulting. Dynamic services Capgemini believes more than 75% of organizations have cloud-adoption strategies. New applications and new business initiatives are the 'cloud first' drivers of activity, while cost and scalability are the most important business and IT drivers. Security, data sovereignty and lack of integration remain the key concerns, while the business is now the key buyer/sponsor of the cloud. Capgemini's cloud strategy is predicated on supporting these drivers with an asset-light model, creating partner cloud ecosystems, and supporting hybrid environments, workload mobility and capacity brokerage. In this context, Capgemini offers products in the form of assessment and readiness services, tooling, an operational brokerage platform and consultancy services within its Dynamic Services portfolio. Specifically, it creates a state profile for a company's application assets to determine what could be suitable for moving into the cloud, what needs re-platforming or substantial work and what will need to stay. Cloud broker The broker service that Capgemini offers extends this to enable customers to source from a range of what it calls its best-of-breed suppliers. The company has pre-contracted with nine or 10 cloud providers (including Skyscape in the UK). Within the Dynamic Services portfolio, Capgemini can simply sell clients the tools, independent of process, and implement them. Alternatively, Capgemini can replace the office of the CIO, using consultants to set up the blueprint for processes. The platform, managed by Capgemini, then offers cloud service brokering between its cloud providers. The Dynamic Services portfolio includes app and service stores as the delivery mechanism, a service orchestration engine, service integration, cloud services brokerage and service aggregation. Service orchestration is provided by the Cloud Orchestration Platform (COP), which has been under development by Capgemini and VMware. In cloud-brokered services, Capgemini delivers a portal-based service store (membership access) to offer services from a master catalog. It's a multi-tenant, single source of service provisioning. Copyright The 451 Group 2

3 Clients can also receive a customized version of services via 'standardized' APIs. A policy engine governs 'what, where, when and how' services may be provisioned. The engine triggers the provisioning of services via APIs. A billing engine consolidates all the metering information related to a specific customer account and provides automated billing. Performance management, incident management and general user support is provided as a consolidated service. Capgemini is packaging all of this as an offering to manage separate suppliers and deliver the SLA on behalf of clients. Capgemini provides as much management resolution as required run completely or buying and implementing the product only. Capgemini sees two use cases among current broker customers. The first is where users buy directly from Amazon Web Services or Azure and want to own the contract(s). The user can load use parameters (geography, size, cost, etc.) into its decision engine to determine who can access what services, where and how. This is typically the need from organizations that are spending $100m or more annually on their IT. The second is where customers simply want access to cheap application developer resources and use Capgemini to source and manage the access. Most will use Capgemini's contracts to operate the relationship with the cloud provider (although the customer still holds the paper on that cloud provider relationship), although some will want to retain control. For the decision engine, Capgemini is using Gravitant's CloudMatrix (and Capgemini has become Gravitant's biggest customer as a result). The COP provides the back-end provisioning and execution. Capgemini captures all of the data into its standard service integration stack both a data warehouse and a CMDB for billing and usage reporting. This, it believes, will forestall the sprawl of shadow IT and can be optimized with different rules to support CIO, line of business or other role-based needs. The goal is to enable a user to provision, self-service, in three clicks. The State of Texas (Department of Information Resources) is Capgemini's marquee reference customer for Dynamic Services. There is $1.6bn of spending being managed. ACS State & Local Solutions (now Xerox State & Local Solutions) is the other key service integration contractor on the deal. It is Gravitant's CloudMatrix cloud broker software that is used under the hood here the portal from where services are accessed. Gravitant's broker portal is being supplied to the contact by General Dynamics, which has licensed CloudMatrix. The State has cooperative contracts set up with the vendors, which means other states can also buy from these contracts. It's not yet clear whether or how much additional business can flow from this, but Capgemini has already said that the revenue opportunity in these kinds of deals will be on average just 13% of what it has historically been used to earning (and less than 10% of contract value, which in this case would be a high watermark of $160m); however, margins are at least 10% higher meaning Capgemini will need to win more of them. Copyright The 451 Group 3

4 Competition IaaS, PaaS and SaaS have turned service delivery into a very different animal from the one traditional systems integrators grew up with. Coping with this change while meeting the demands of continuous delivery and new-style IT is challenging for all suppliers in this sector most challenging, however, for the likes of Accenture (flat revenue), CSC (revenue decline) and Capgemini (just better than flat). By contrast, the Indian-heritage players TCS, HCL, Infosys and Cognizant are averaging 12-16% year-on-year growth. All have staked out roles as chaperones on the journey to new-style IT services rather than becoming cloud operators per se. Firms operating their own shared infrastructure cloud services such as IBM, HP, Fujitsu and VMware have less appetite to participate in the rush to cloud brokering, unlike the systems integrators and consultants and other firms such as Dell. SWOT Analysis Strengths Weaknesses Capgemini has always had strong partnering skills, which are a prerequisite for cloud brokering. It's put in much effort here by creating a Dynamic Services portfolio to house its cloud interests. Capgemini will need to increase the number of deals it does as its share of contract value declines in an ITaaS world, especially in a brokered model where there are multiple players. Opportunities Threats For Capgemini, the headwinds of offshoring (margin erosion) and cloud (revenue erosion) are mostly offset by the tailwind of cloud's contribution to SMAC innovation (social, mobile, analytics and cloud) and growth opportunities around services. Despite all the hype and excitement, there are significant roadblocks inhibiting organizations from reaching the cloud phase of their IT transformation. These roadblocks are human- and business-related rather than technology-related. Many organizations are being held back by non-it roadblocks, such as cultural resistance, vendor selection, regulatory compliance, data security and privacy, time and resources. Copyright The 451 Group 4

5 Reproduced by permission of The 451 Group; This report was originally published within 451 Research's Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: Copyright The 451 Group 5

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