HCL recently announced the closure of the Geometric acquisition 10 months after the initial announcement, bringing discrete manufacturing PLM and engineering services expertise from Geometric together with a broad set of industry coverage, cloud computing data center services, embedded systems, and existing engineering services capabilities from HCL. Geometric states that there is little overlap in customers, and already sees joint opportunity with HCL in the market.
The capabilities and knowledge brought together in this acquisition, namely PLM/engineering services, automotive, high tech, and embedded systems, provide customers with a set of connected products services that can support design through after-market service.
HCL and Geometric are just one example of the expanding and converging ecosystem of IT service partners. This bundled approach to connected products services is what many other services firms have been building over the past few years organically and inorganically, focused on four areas, as I see it:
- PLM: In addition to HCL acquiring Geometric, examples from the past three years on this front include Accenture acquir
ing PRION Group and PCO Innovation for PLM services expertise, and Capgemini acquiring IGATE for engineering services. Services firms are realizing in this age of connected products and digital transformation, that the design, systems modeling, and ongoing improvement of products is a critical element for success.
- Design: To meet the growing need to more rapidly understand customer needs amid dynamic demand and strong competition, services companies such as Infosys (via MIT & Stanford partnership) and Tech Mahindra (Pininfarina acquisition) have been expanding “Design Thinking” practices and design capabilities to help manufacturers with ideation and a broader customer needs management approach.
- Consulting: Infosys acquired Lodestone for strategic consulting, and Noah Consulting for Oil & Gas expertise, and TCS has been hiring industry and consulting expertise in recent years to grow its business consulting practice. Manufacturers recognize the need to more closely tie strategic planning and business process development, with the systems architecture and integration work.
- Products: Another interesting trend over the past few years is services firms developing product capabilities to complement their services offerings: Examples include: Accenture with their “EPIC” PLM portal; Infosys with SocialEdge, their social business platform, and cloud-based software testing company Panaya; IBM’s PLM services support can be delivered in part with Bluemix, Rational, and Business Process Manager, to name a few complementary product offerings.
As digital transformation pervades across industry, systems and processes need to be integrated, data cleansed and analyzed, and organizations need bring their various teams together, working within related systems. Where capability gaps exist at a services firm to meet these needs, expect those gaps to be quickly filled either through hiring process and industry experts, and/or merging with complementary players to round out service offerings. Services companies need focused expertise, but also breadth of expertise, and so are working to grow their service portfolios organically, and through acquisition. For example, industry knowledge, as well as 3rd platform technology and innovation accelerator know-how will be in demand by end users over the near term – areas such as analytics, mobility, IoT, 3D Printing, and advanced security.
Will we see more play in the PLM services market? It’s likely. Manufacturers are moving their systems and processes to open platforms that interconnect applications, data, and people, they are focused on making sense of IoT data from manufacturing processes and products through analytics, and they are beginning to move key business processes to the cloud. In fact, according to our research, manufacturers think cloud services will have the most impact on their business over the next five years. This is just a snapshot of what digital transformation means today, and it’s difficult for manufacturers to accomplish alone.
We’ll continue to follow the ever-evolving IT consulting and services marketplace in 2017 and beyond. As always, I welcome your thoughts.