CSC acquires UXC – Boosts Capabilities in Australia

On October 6th US IT services firm CSC announced that it was entering a five week due diligence period to acquire Australian listed IT Services firm UXC. The acquisition price is US$300M, or A$420M. UXC has revenues of just under A$700M, and approximately 3,000 employees.

This transaction will almost double CSC’s revenue in Australia and place it close to Accenture from a revenue point of view in Australia. UXC is, or was, the largest independent Australian owned IT services provider. Whilst UXC has capabilities in other geographies, it is very reliant upon Australia for revenue.

The CSC UXC deal is not a shock. There have been rumors of UXC as a potential acquisition target by global vendors for many years. Most of the legacy vendors have taken a good long look at it over the past few years but clearly could not get the price and integration alignment. Now CSC is clearly confident it has.

As are result, the surprise is that the deal took so long. Unless there is another bid or some other major market disruption, it is reasonable to expect that UXC shareholders will accept the bid.

At a corporate level CSC is trying to rebuild its identity post their split in the US with its US Public Sector group. The shift towards cloud and the as a service economy has placed significant pressure on the CSC business globally and in Australia. It has divesting non-strategic elements of the business, (eg in 2012, the Australian recruitment business Paxus) , so the acquisition to acquire the UXC strengths is not a surprise as the realignment slowly continues.

The decline over the past two years of the Australian dollar would have changed the economics of acquiring UXC for a US based organization, particularly if there are capabilities that can be leveraged globally. CSC gains capability improvement in several areas. UXC has a strong Oracle, SAP and Microsoft offering. It has strengths in government, particularly at the state level that will be attractive to CSC. Due to UXC having separate brands operating in a federation model, the brands of the business have high visibility in the market, adding to their attraction.

The acquisition also show that whilst the Australian market does not have the growth numbers from a percentage value of other Asian markets, it does have several attractive elements for that make local investments well worth the time. The level of skill demand in the market is at a premium, as is engagement relationships that independent vendors have with a range of customers. Furthermore the size of the Australian market is large enough that even smaller growth numbers can provide significant increases in market opportunity from a dollar perspective in comparison with smaller AP markets.

CSC and UXC will have to focus on what could be an interesting integration process. CSC is a well established conservative organization. UXC operated as a federated company. The various subsidiaries that have been acquired over the years kept their own identities and in some cases were effectively encouraged to compete against each other. Whilst UXC was moving to operate in a more integrated model, the independent approach will be compromised with the ingestion to CSC.

Now the focus will be if the likes of HP and Fujitsu show an interest in some of the remaining Australian firms. Whilst there is not a plethora of available firms to acquire, if these firms are to maintain or enhance their market position, inorganic growth in Australia or globally may prove to be essential.

Focus Point

If the CSC transaction with UXC is completed, then it will reshape a significant part of the Australian IT Services marketplace. CSC will get strength in key market areas such as SAP and Microsoft and will be integrating a strong set of both customers and skills from the employee base of UXC. This is proof that even mature markets such as Australia have strong opportunities for growth in scale if vendors are able to be aggressive in the market.

As with every acquisition, most of which are a major struggle is to get the integration of culture and capabilities correct and do this at speed. If CSC/UXC can do this it will be great for employees, clients and partners. If not, it will join the overly long list of troubled acquisitions.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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Dreamforce 2015 Winners and Losers

Dreamforce is over for another year. This year there were 170,000 attendees, 400 partners and 1,600 sessions. In any measure the event is a big deal and the Launchpad for Salesforce through the next year.

The winners for the event loomed large this year, as they tend to do.

  • Salesforce itself is clearly a winner to garner the attention of the technology community to the extent that Dreamforce is arguably the highest profile tech event and is a creator of cloud energy like no other vendor with the possible exception of AWS
  • The integration of Microsoft and Salesforce, was very significant. Clearly the relationship is very deep between the two vendors. The integration of Salesforce into the Microsoft platform is very clear, the interface is consistent and user friendly. This was the biggest deal for Dreamforce for mine.
  • Microsoft second coming as a device and platform agnostic software provider now.
  • The increasing horizontal depth of SF with IOT and Analytics. Whilst the IOT capability in particular is immature and still a lot of slide-ware, the intent is real, and the history of Salesforce is clear in suggesting that it can execute.
  • Salesforce increased focus on Industry based solutions. This will continue to become a critical agent of the strategy as it matures in the next 12 months.
  • The depth of collaboration of the Salesforce ISV ecosystem that is unmatched in other major software vendors
  • Independent System Integrators providers – The acquisition of Cloud Sherpas by Accenture just changed their dynamic, and increased their value in the eyes of investment bankers

The losers for the event were just as clear

  • The keynotes. They need some reinvigoration, the customer examples, in particular Cisco was cringe worthy from both a script and “acting” perspective. Just get new Cisco CEO, Chuck Robbins up there, not Salesforce execs in tech coats.
  • Large SI’s. capioIT has highlighted the strength of Accenture in the SI space for cloud services. The acquisition of Cloud Sherpas only reinforces this. A lot of the legacy SI’s risk being left behind, and quickly unless they act soon. IBM, Tata Consultancy Services and Infosys are at the front of the queue of vulnerable providers.
  • The Salesforce “No Software” Logo. If Co-founder Mark Benioff is correct and Salesforce becomes the 4th largest software provider next year, then the gimmick, whilst successful has more than run overtime.
  • The Microsoft Dynamics team. I understand co-opetition better than most, but this was not a good moment for Dynamics. Microsoft clearly, and rightfully considers Office to be the primary application to protect, not Dynamics.
  • Stevie Wonder – You are the Dreamforce of my life. Part of my soul died with that line. “Everyone has a price” is more true today, than at any other time in human society

Focus Point

Dreamforce is clearly one of the most important events on the calendar for the integration of technology and business. It captures the attention of millions of professionals. In 2015, the clear winners were Microsoft and Salesforce. Expect these two vendors to get even closer before we hit Dreamforce 2016.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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capioIT turns Five. A Sincere Thank You for the Support.

It is very exciting to let you know that today, September 23rd, capioIT celebrates our fifth birthday. As any other Australians would have been more successful than any of the four Australian Prime Ministers in this time. I founded capioIT recognizing that small business is tough, any statistics will tell you that more than half of businesses do not last five years. We have beaten that, and I am immensely proud to say that.


I am highly satisfied of the way in which my wife (who looks after the finance, admin etc. in an inspiring and dedicated manner) and I have overcome some of the difficulties that all small businesses managed by couples face. We still can sit side by side in our office without too much stress.

When I started capioIT, after five years, I did not think it would operate like it does today. The fact that it is different to that original ideas or visions I have is neither right or wrong.

It is what it is, I am very proud of the work we do for clients. Today alone, I have helped a major government with their Microsoft license renewal strategy as they shift to cloud. This evening I have worked on a cognitive computing project for a client, and will finish the night reviewing a regional CTO strategy for yet another client. We are supporting clients as they look to shift to the digital world and manage that transition with the best possible outcomes for their internal and external stakeholders.

Our research efforts in analytics, digital engagements, business IT, cloud, emerging markets and many other areas are now so important to what we do. The IT and business world is changing, we are flexible enough to be able to change with the market.

Whilst I am unsure what we will look like in five years, I hope that they are as rewarding as the past five, although, sometimes we would hope for less stress and quicker decisions.

Of course I want to thank all the people that have supported capioIT. This is both vendors and buyers of technology, where I have had to successfully juggle both perspectives to help both parties. Clearly without these clients we would not have lasted.

Finally I want to thank the analyst community, from AR professionals, industry watchers and of course my fellow analysts. Without the support, friendship and insight I would not be here today. I love the analysts ecosystems and am constantly amazed that I have had the privilege to be a voice in our market in Asia Pacific, emerging markets and globally.

Thanks again to everyone for their support. I can’t wait to see what the next 5 years will bring.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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Accenture Acquires Cloud Sherpas – Cloud Services Provider Consolidation reaches new heights

It was no accident timing wise that the first major news of Dreamforce, particularly from a partner point of view, was that Accenture had acquired Cloud Sherpas. Accenture is of course the leading integrated SI in the world. Cloud Sherpas is a 1,100 person strong cloud services integrator focusing on Salesforce, ServiceNow and Google applications. The acquisition will spearhead the announced Accenture Cloud First Applications group.

This is a big deal in the cloud and SaaS services space. When capioIT ranked the leading Salesforce SI’s last year, Accenture was ranked first in terms of capability. Alongside two other cloud specialist SI firms, Bluewolf and Appirio, Cloud Sherpas was ranked in the Top 5 vendors, so Accenture has bought quality.

One of the most significant stats that capioIT saw last year was the fact that in April 2014, Cloud Sherpas with then 1,000 employees had more job openings for salesforce skills than a combined IBM, Accenture, Infosys and TCS. Those firms had then 800,000 employees. This outlines the level of disruption that the likes of Cloud Sherpas provided to the services market. 

Furthermore the Salesforce SI market was perhaps the only services market globally that had three of the top five ranked providers (Deloitte rounded out the five) as independent cloud specialized providers.

The three providers all came to their position from different angles. For example Bluewolf was the first Salesforce partner, and Cloud Sherpas came to scale through a significant number of acquisitions.

The fact that Cloud Sherpas was snapped up is not a major shock. All three vendors provide scale into the cloud services space, and a different mindset to legacy IT Services providers, particularly those enmeshed in the offshore everything approach.

One key area that Accenture will have to manage is attrition. The cloud only focus of Cloud Sherpas and the kick against the establishment approach of both cloud services providers and Salesforce itself is a factor that may be diminished if the Cloud Sherpas team is treated like the rest of Accenture, and subsequently leave. To be honest, I expect that the acquisition will lead to some more start up services providers in the next couple of years as retention clauses unravel.

Finally, what does it mean for the remaining “born cloud” providers. Firstly, their price is now a bit higher than it was yesterday. The potential list of suitors for the remaining two providers is easy to develop. IBM, NTT Data, Fujitsu, Infosys, TCS et al are all relative subscale in the space and need to do something quickly if they are to retain leadership. If discussions are not underway, then they will be regardless of how much the remaining independents seek to remain independent. In the modern world, every investor has a price.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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Why is GIS still stuck in the 1990’s

When I was doing my undergraduate degree and started working as a (Geographic Information Systems) GIS professional over 20 years ago GIS was considered cutting edge across a range of industries from retail, to environmental management and defence. It drove so many issues from store location, weed management and mining analysis.

At Lend Lease back in the late 1990’s we were able to differentiate ourselves as leaders in the retail property sector because of the GIS investments and prowess particularly around trade area analysis and competitive modelling. It enabled us to have a point of difference against the larger Westfield group for leasing managers and fund managers alike.

We are now in 2015 and the best use cases of GIS are still store location, environmental location and demographic analysis. Every vendor case study I see has store location and resource management just as it was in the late 1990’s. Every user and even (sometimes with a gentle arm twist) laments the lack of progress in GIS.

The contrast to the explosive growth of other technology is overwhelming. In that time we have seen the rise of the laptop, Microsoft Office, email, the Internet, iPhones, Tablets, SaaS, Cognitive Computing yet GIS still appears to be stuck in a time warp of the 1990’s.

Even though I was primarily an Atlas GIS user, I was smart enough to realize that ESRI dominated then as it does now from an enterprise perspective; it has many challengers across the environmental, education and broader enterprise industries perspective but no-one has been able to match the depth of ESRI. For mine, that is the heart of the problem. I am a big believer that innovation comes from competition. Too many GIS markets that lack innovation, lack competitive scale from the platform, data and users and this is the central handbrake from the industry.

Of course there is Google Maps. Alongside ESRI this has been both a blessing and a curse for the industry. It has opened up location and mapping to be a central part of professional life and of course personal activities, but it has not lead to enough evolution.

Focus Point

The promise of mobility, analytics, IOT and many other facets of the Digital experience rely upon location as the central core. The location industry needs to wake up from the peak 20 years ago and help drive the relevance of GIS and location for enterprises large and small. Without it, the digital experience will not be enough.

If you require further information, please contact Phil Hassey,  Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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To survive IT services vendors must develop a multi-brand strategy

No-one will argue that the level of disruption for technology buyers and sellers is at an all time high. Everything is up for the disruption and will be for the foreseeable term in business time-frames. Therefore every option to win needs to be considered.

Multi brand approaches are real. They work for airlines, retail, hotel chains, auto manufacturers and many other sectors of the economy so why have IT solution providers not considered a multi-brand approach. The Gap group has Old Navy, Gap and Banana Republic, Qantas has Qantas and Jetstar, Volkswagen Group has VW, Skoda Audi amongst many examples. The time has come for IT Solutions vendors to meet distinct client requirements and frankly not let revenue walk out to competitors.

Let’s take a look at the model enjoyed by leading Asia Pacific airlines such as Qantas, and Singapore Airlines. These three airlines, whilst more than capable of frustrating their frequent fliers, have a very strong premium brand. When you fly them you know what you will get. The schedule is usually robust, and if there is a problem it can be resolved, you get experienced crew, and an overall premium experience (I know, a little idealistic perhaps).

If you fly Jetstar, or Scoot you know that you still get from A to B, it is just with less frills and services, and often some tears, but of course, all things being equal, you play less money.

From a car perspective, even though they can share the same platform the experience and cost outcomes between an Audi and Skoda is considerable

The legacy IT solutions vendors need to adopt this model if they are to stay relevant in what is of course an exceptionally disruptive environment. Maintain the premium brand for those organisations who need the full service and can invest the resources. Then create a tiered brand that services those clients who do not want bespoke solutions, rather those who want faster deployments.

The tiered model opens up the smaller sized organisations, specific industry offerings and partnering opportunities that are not always available to the premium model. Just as Qantas found with Jetstar it introduces new economics for potential customers that were either untapped or just went to the other competitors.

A key point is that some will say that this is the role of partners, but it is not as simple as letting the no frills work go to the channel. The partner environment is important but cannot please every engagement or client.

Characteristics of the premium services brand

  • Integration depth and testing across Applications, processes etc.
  • Availability of premium resource level
  • Bespoke service provision
  • Core business processes

Characteristics of the no frills services brand

  • Stand alone project engagement
  • Strong asset and automated solution base
  • Inability to significantly modify or customise
  • Secondary business processes

The core point is that currently there is not the flexibility to provide such a model. Vendors get themselves caught up in being both premium and no frills. This is where it gets difficult. The success of Qantas, Gap et al is because they know where one brand begins and the other ends. They price and deliver consistently to this benchmark. They also value customer experience and outcomes, just in different ways. 

The other area of debate relates to core versus secondary business processes. This is of course debateable, but it is clear that some processes need more technology investment focus than others.

Focus Point

The IT market is undergoing extreme change. The services market is no exception. Whilst it met the challenge of offshore, this is no guarantee that it will meet the challenge of cloud and digital more broadly.

Legacy vendors must consider the multi-tier model that has been so successful for the business model of brands such as Gap, Qantas and Volkswagen. This enables the opportunity to change the dynamics of the services market and have a better chance of winning during the disruption.

If you require further information, please contact Phil Hassey,  Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,

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Want digital employees – hire graduates, retrain existing employees

Graduates and graduate recruitment programmes have never been more important in enabling the Digital outcome for both providers and users of digital solutions in all measures. 

Rampant short term thinking in organisations has mean that many graduates were traditionally looked down upon because of “a lack of experience” and the time required for productivity factors. Certainly over the past 20 years I have noted many organisations have cut back on graduate programs, or narrowed focus.

Now we are accelerating through the digital age the tide has turned rapidly. Graduates are Digital Natives. They live act and breathe the new economy more than any jaded worker with 25 years of experience.  Social media, analytics, mobility are second nature in professional and personal capacities. Imagine the skills that the next generation of workers will have in say 10 years as they come through knowing absolutely nothing else but integrated digital functions.

Clearly this has resulted in a significant reduction in time to productivity for graduates, in fact the model may well have been turned on its heads. Arguably the existing long term employees are the ones who need to realign skills due to the time required to make them more productive.

One point, whilst the suitability of new graduates for the new economy cannot be questioned, it would be naïve to think that academia has caught up with the shifting skill base and requirements. In general it hasn’t so more transformation is required.  From a technology graduate point of view the problem becomes the choice between training a general graduate in technology, or training a technology graduate in business.

Capture Point

Graduates have never been more important, subsequently, nor has a revitalised graduate recruitment program. Focus on training will increasingly be needed to reskill older legacy workers not younger Digital Natives.

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