Sonata Pushes Platform Approach in Europe

Every company would love to become the Amazon, Uber or airbnb of their industry sector. 

But for the vast majority, the challenge of overcoming their legacy baggage in terms of structure, IT and culture makes this seem like a distant dream. 

One IT services vendor that is aiming to help businesses become more like these brands is Sonata Software, which has put building the kinds of platforms on which they run at the heart of its proposition.

The company’s VP and head of Europe Tridip Saha told PAC this week that Sonata is working with clients to build platforms that are open, scalable, connected and intelligent. These platforms are designed to enable businesses to make more informed decisions based on clear data insight, respond with new services at a faster pace, and plug into broad ecosystems of partners. 

Sonata, whose latest annual revenue rose by 16% to $380m, helps clients build these platforms in three ways. Firstly, it has built and acquired a number of proprietary platforms for its main target industry sectors – retail, distribution and travel – which are designed to bring together a lot of the functionality that organisations need to support their digital strategies. One key product comes from the acquisition of US-based Rezopia, which brought a cloud-based travel reservation system.

The second path is to deploy third party platforms such as SAP Hybris, Microsoft Dynamics 365, , and the third is custom development, which uses its Halosys and Rapid tools to support mobile development and devops. More than 15% of its IT services revenue is now IP-led, and clients range from large global organisations (such as TUI, its anchor customer in the European market) to mid sized organisations. 

Sonata is one of the most intriguing companies among India’s medium-sized IT services players. Its splits its business into two halves: a domestic infrastructure services unit, and its international IT services operation. Europe accounts for around 30% of the latter area (which works out a shade under $50m in revenue), and Saha says that the region is growing at close to twice the rate of the overall business. 

Sonata reinvigorated its European activities three years ago, and it was here that the company made the most recent of its four acquisitions, purchasing a stake in Danish consulting firm IZARA in December 2017. The Nordic region is one of Sonata’s three main target regions within Europe, in addition to the UK and Ireland, and the DACH countries.

Saha acknowledges that perhaps Sonata’s biggest is to engage at the right level in its clients and prospects if it is to get beyond being pigeonholed as “just another offshore partner” and to have conversations about platforms rather than applications. But it is clearly getting something right as it has more than tripled its number of accounts in Europe in the last 18 months.

In PAC’s view, Sonata is benefiting from picking its battles well in terms of industry sector and account. By being able to focus its portfolio and sales force around three core domains, it has been able to punch above the level of the traditional IT function leaders and – in many cases – engage at CEO level. 

Most IT services vendors have found it hard to push proprietary product plays, particularly outside of their domestic region, and Sonata’s biggest opportunity in the short term may be to sweat its relationships with the likes of Microsoft and Hybris, where it can draw upon an expanding set of references and capabilities. For example, it is one of only a handful of Microsoft’s ISV development partners, and has more than 1,000 of its 3,600 staff focused on MS technology. 

This focus will help Sonata to rise above a highly competitive field where it can come up against the greater scale offered by bigger international players, the onshore presence of local agile specialists and the growing ambitions of a number of internal digital functions, particularly in sectors such as retail. We’ll watch Sonata’s progress with interest.