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Capgemini’s Product Engineering Testing Business Prioritizes Portfolio Expansion and IoT

Capgemini Group recently briefed on its R&D services/product engineering testing capabilities in its Sogeti High Tech subsidiary.

Background

Sogeti High Tech (SHT) is a subsidiary of Sogeti (itself a subsidiary of Capgemini). It provides product engineering services (PES)/R&D services. The company has a background in servicing key aeronautic sector clients. The company has expanded its client base to other verticals, e.g. railway equipment, energy, defence, life sciences and automotive. Sogeti High Tech is present mostly in the South of France as well as in other Airbus Group countries.

With the July 2015 merger with Euriware’s project services business (the former captive of nuclear energy specialist Areva), Sogeti High Tech is active mostly in two areas: physical engineering (40% of revenues) and software engineering (30%), with the rest coming from systems engineering, PLM services, consulting and testing.

NelsonHall estimates the pro-forma revenues of Sogeti High Tech to be ~€300m, with a headcount of ~4.5k.

Sogeti High Tech’s Testing Practice Overview

Within Sogeti High Tech, testing is one of the smaller service lines: its headcount nevertheless is ~500 (including Euriware personnel), of which 400 are in France.

Sogeti High Tech’s testing practice (SHTTP) services the same client base as Sogeti High Tech, having historically a stronger focus on the aeronautic industry (60% of its revenues) and on the transportation/railway equipment industry (20%). Another significant sector is telecom (both on the service provider and OEM sides).

SHTTP provides testing services mostly around physical engineering (together with systems engineering; representing a combined 70% of revenues), and around software engineering (30% of revenues, mostly around embedded systems plus command & control systems, used in industry notably in nuclear power plants.

Unsurprisingly, a lot of the testing activity performed by SHTTP is about handling complexity – arising from the bundling/overlap between embedded software and devices/equipment/hardware, and also from the more technical nature of the product (testing elaborate products is more complex than business applications) and conditions of usage (in a plane, car or a train, rather than being hosted in a datacenter). Consequently, testing effectiveness needs to be much more robust than business application testing.

Influenced by a key aeronautic sector client, Sogeti High Tech’s testing practice has transitioned from staff augmentation/onsite work to work packages (where it is taking ownership of the deliverables, most of the time off-site). Today most of work done for aeronautic clients is through work packages, which SHTTP identifies as being multi-year agreements which drive investment in automation and lay the ground for offshoring. SHTTP is planning in the short-term to perform some of its work offshore in India, focusing on telecom equipment test scenario design.

Key Priority 1: Portfolio Expansion

Unlike the IT services industry, where the number of potential clients is very large, the number of potential clients in R&D services/PES is smaller and found mostly in the manufacturing sector. This lower number of potential clients is driving an account management approach to business development, as opposed to a RFP approach. This is driving the unit overall to invest in diversifying its client base (energy is a priority, thanks to skills brought by Euriware).

Testing service portfolio expansion is also a key priority. This is true for its key aeronautics client that in 2014 completed its main aircraft programs. The client is shifting to supply chain and manufacturing efficiency driven by a massive order book. SHTTP is therefore further developing its service offerings, e.g. prototype testing work, and in supply chain/manufacturing process-based testing.

Other service portfolio expansion priorities include:

  • Consulting services: SHTTP intends to be involved earlier in the decision life cycle of the client and provide TPI-based test process QA, tool selection services, change management, and training services
  • Security: SHTTP currently has ~50 specialists providing traditional assessment services (security compliance, vulnerability consulting, reverse engineering-based risk analysis); implementation services; test services (e.g. penetrating testing, code review, certification and compliance report); and operational monitoring, resiliency services and technology updates. SHHTP’s security services go beyond IT security and include device and facility access security. The experience of Euriware in securing nuclear power plants helps significantly here
  • IPs: developed upfront ahead of client needs, or as part of project work, when commercial tools are not available. The unit is trying to make its tools achieve a balance between client needs and potential reuse by other clients (and moving them to Capgemini Group’s Ready2Series branded IP effort). Examples of IPs include e-lab (testing of electronic boards in embedded systems) and TAKT Engine (testing of voice, video and text content in devices including set-up boxes).

Key Priority 2: Internet of Things

IoT is clearly a key strategic initiative for SHTTP, not only because it fits well within the type of work it provides (testing of bundled hardware and software) but also because of the types of testing activities required: sensor/device security testing, data communication performance and security testing, analytics and big data testing. Key SHTTP clients include large manufacturing forms and utilities for their gas and electricity smart meters programs.

SHTTP is also driving IPs for IoT. Examples include:

  • eObject, focused on collecting data from sensors, where different data transmission protocols can co-exist and communicate. Examples of work include asset tracking of nuclear waste and, for the telecom industry, analyzing telecom usage at the aggregate level or at the individual consumer level
  • Smart Engine for transmitting reporting data to different devices and in particular to smart phones, set-up boxes and PCs.

Summary Analysis

The level of testing complexity handled by SHTTP is impressive. It has a comprehensive set of testing capabilities that are not commonly found in more traditional software testing practices, and is also more comprehensive than the offerings around software products for ISVs and high tech product manufacturers/OEMS.

SHTTP ensures the reliability of equipment in real life conditions, e.g. in a live train or aircraft. This requires more stringent testing work than for traditional business applications. However, Capgemini Group’s Testing Global Service Line does not seem to have leveraged the experience and capability of SHTTP for business application testing , something NelsonHall would like to see. As the world of testing is shifting to digital, especially around e-commerce web sites which potentially process hundreds of thousands of transactions every day, there is surely a great opportunity for vendors with PES testing capability to exploit this expertise in traditional business software testing.

We would also like to see how Capgemini Group plans to handle the complexity arising from overlapping offerings. This applies to security testing, now that Capgemini Group has its own dedicated service line around cybersecurity. And it is certainly applying to IoT, which will require testing capabilities around traditional applications, around embedded systems for  functional and non-functional needs (e.g. IT security and safety), around analytics and big data testing. We expect Capgemini Group to launch another Global Service Line around IoT, a move that has worked very well in the past with Testing Global Service Line, Insights & Data, and more recently with Cybersecurity, as evidenced by growth in revenues.

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