Can management consulting survive digital transformation?

Join Patrick M. Heffernan, principal analyst, and TBR’s Professional Services senior analysts as they discuss the management consulting competitive landscape, highlighting specific vendors’ performances while diving deep on three specific themes: asset-based consulting, convergence of strategy and technology, and maturing digital transformation/innovation centers. The team will examine leading vendors, such as Deloitte, McKinsey, PwC, EY, Accenture, Capgemini and IBM, and discuss how these firms have adjusted to consulting in an era of digital transformation.

Don’t miss:

  • How consultancies bolt IP and emerging technology assets onto traditional consulting engagements
  • Expected impacts from the blending of technology and strategy consulting engagements and vendors’ practices
  • Which consultancies led the pack in TBR’s Management Consulting Benchmark
  • The next evolution of digital transformation and co-innovation centers

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Postcards from the edge: Complexity is here — wish it were not

“Analog dollars to digital pennies” is a phrase used to discuss the continued compression on technology price points as Moore’s Law economics, coupled with continued IP abstraction, creates economic trigger events aimed squarely at legacy business model best practices. Recently, I attended analyst events in New York City — one sponsored by Lenovo and one by Canonical — that outline these economic trigger events, albeit from different sides of the same coin.

Canonical CEO Mark Shuttleworth used the term “economic trigger events” often in his opening remarks. The idea is that technologies and new price points create trigger events that result in new economic fundamentals where some participants will be disruptors and some will be disrupted.

The rise in the hype cycle around edge computing as it joins forces with cloud, artificial intelligence (AI)/machine learning, and Internet of Things (IoT) creates a veritable Gatling gun of economic trigger events. These events accelerate business model disruption as we pivot to the Business of One era.

The disruption sits atop the continued economic pressure from commoditized hardware. What’s behind it all is that while infrastructure is valuable, it is not valued. In short, the margin moves out of infrastructure and into the business outcome. Technology enablement is less constrained by affordability and more by determining what business value can be derived from the application or use case.

Rather than being the lead decision in business investment decision making, infrastructure acquisition becomes the derived decision. The service attach rate or services drag becomes the fuzzy guide point for new inventions and new business models. Broad, ubiquitous ecosystems become imperative to generating sufficient margin in the digital penny world to justify the ongoing development, monitoring, and maintenance of secure flexible infrastructures that won’t break and will keep data secure and private.

For Canonical, this means focusing on the connection between operating system and cloud control planes to ensure a single code set operates silicon as large as high-performance computers (HPCs) and as small as single-purpose IoT devices. Compute infrastructure is assumed to work, until it breaks, and then users realize just how valuable that hidden infrastructure provisioning is.

As Canonical is hardening the abstraction layer to ensure seamless interoperability, Lenovo (and many other hardware manufacturers) create purpose-built appliances optimized for edge workloads. In some instances, these will be small appliances simply capturing data and routing it back to clouds for ingestion into massive analytics engines. In other situations, it will be very-high-performance compute engines with GPU accelerators in simple, easy-to-operate form factors where AI inference in real time has to be performed at the edge. Here again, the assumption will be that the edge appliance can operate (in a retail convenience store, for example) without the need for any technically savvy personnel to monitor, manage or provision the device on-site.

Look for more detailed special reports from TBR on the Lenovo and Canonical industry events in the next few weeks.

 

As the 2018 finish line nears, will McKinsey continue its breakaway or slip back into the peloton?

Every six months, we review McKinsey’s performance, analyze its strategy and consider likely scenarios for the firm in the near term

Back in June, we said, “If McKinsey truly gains market permission to take digital transformation from design through execution, its peers will be pressured to emulate the firm.” In advance of the November profile, we’ve considered how the firm performed through the first part of 2018 and put together a couple quick thoughts as the end of the year nears, specifically around some McKinsey moves in France and a potentially pressing market trend.

As part of a burst in recruiting at McKinsey France, three partners with specializations in robotics and automation relocated to the firm’s Paris office, filling in portfolio gaps. McKinsey also launched a high-profile and seemingly civic-minded skills-development program to combat stubbornly high unemployment across France. Along with Bain & Co., Oliver Wyman and others, McKinsey seems to be sensing new growth in the France consulting market, likely driven by Brexit and digital transformation. Brexit’s pending implementation constrains consultants working between the U.K. and members of the European Union, making the French consulting market more congested as well as more lucrative for well-positioned and staffed consultancies. French companies have also accelerated efforts around digitization and digital transformation, driving consultancies such as McKinsey to place more emerging technology resources on the ground in Paris.

Not all will be wine and roses — or champagne and irises — as McKinsey faces a market trending toward transparency even as the firm manages the fallout from several high-profile mistakes (e.g., South Africa, Eskom)

Competitors have always complained about McKinsey’s business practices, and clients have always complained about the firm’s pricing and failure to follow through on implementations. Customers and/or markets emphasizing transparency may be far less forgiving of McKinsey’s methods, and larger consultancies with positive brand strategies and market presence — such as EY, PwC and Deloitte — may be well equipped to displace McKinsey, given the opportunities. Even as McKinsey adopts risk-sharing and outcomes-based pricing for some engagements, tech trends such as cloud, Global Data Protection Regulation compliance, analytics and SaaS, point to increased transparency and visibility into actual results, with clients potentially assessing whether McKinsey’s high consulting fees are justified.

We will be marking all these moves in our upcoming Management Consulting Benchmark, comparing McKinsey against 12 other consultancies across four service lines and countless metrics. In June we quoted a longtime partner at a Big Four firm, who said, “I don’t know what McKinsey will do next. I do know they’ve consistently been a couple steps ahead of us.” Maybe the timing is right for those competitors to catch up.

 

NFV/SDN prepares operators to support 5G era use cases and helps drive network efficiencies

According to TBR’s 3Q18 NFV/SDN Telecom Market Landscape, operators will further adoption of virtualized network solutions by capitalizing on 5G use cases and strengthening security capabilities. Integrating NFV and SDN technologies will enable operators to more effectively support network technologies that will become prevalent in the 5G era, including network slicing and edge computing, which will play a pivotal role in supporting 5G use cases such as advanced Internet of Things (IoT).

Operators are under pressure to invest in NFV and SDN to reduce total capex and opex spend as well as introduce new services and stay competitive as they prepare to offer 5G services and search for new network use cases. The shift to software-defined network architectures is extremely disruptive to the vendor community.

Graph showing total NFV/SDN spend by capex and external opex for 2017 through 2022

Incumbent network vendors are under increasing pressure to move up the network value chain, from hardware to software and software-related services. They are increasingly disrupted by the adoption of white-box hardware and the utilization of ODMs as operators search for avenues to reduce network costs. Deploying white boxes provides significant cost savings for operators as well as greater flexibility by allowing carriers to deploy the most appropriate virtual network functions for their environments without being limited by the constraints of propriety hardware. Though the ODM threat has not manifested in the telecom operator customer segment to the extent it has in the webscale segment, incumbent vendors must remain on alert and attempt to mitigate this threat.

The NFV/SDN Telecom Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

Super 7 webscale total capex spend will reach $123B in 2022

Infographic showing webscale "Super 7" capex forecast for 2017 through 2022

 

Data center builds and expansions as well as AI investment drive growth

According to Technology Business Research, Inc.’s (TBR) 3Q18 Webscale ICT Market Landscape, webscale ICT capex for the “Super 7” will grow at a 26.2% CAGR from 2017 to 2022 to more than $69 billion as these top webscales aim to future-proof business-critical infrastructure and map network capacity to data traffic growth, which is expected to increase exponentially through the forecast period.

Webscales are investing tens of billions of dollars in new data centers, either to support their core businesses or to increase the scale of their cloud services businesses. Capex spend is spiking in 2018 as many of the Super 7 build new facilities on land they acquired in 2017. Amazon’s 30.4% year-to-year ICT capex growth rate in 2018 is noticeably lower than that of its peers, which is largely due to its leading presence in the cloud services market. Challengers Microsoft, Alphabet and Alibaba will grow 2018 ICT capex 73.6%, 100.3%, and 101.6%, respectively, year-to-year in a bid to catch up to market leader Amazon Web Services.

The OEM landscape is being upended as webscales embrace ODMs and open-source technology. A growing number of ODMs aim to take share from incumbent hardware vendors such as Cisco and Dell EMC. Webscales often possess the talent necessary to design their own equipment, then outsource production to an ODM. In these instances, the software is disaggregated from the hardware and the code is written by webscale software engineers. This threat gives webscales negotiating power over incumbents. Some vendors, such as Cisco, mitigating the threat from ODMs with acquisitions, strong customer relationships and litigation.

For more information, contact Senior Analyst Michael Soper at [email protected].

2018: The year multicloud and hybrid cloud became inevitable?

Just as cloud has become increasingly accepted and adopted by customers, the market dynamics are beginning to change. In 2018 customers put more complex multicloud and hybrid environments into the mix, making them the biggest challenges facing the use of cloud technologies moving forward. The bar has been set for 2019; customers now expect out-of-the-box integration, interoperability and ease of management for their cloud investments. Join us as we recap the developments of 2018, from customers’ shifting perceptions to vendors’ growth achievements, consolidation, new challenges and new ventures, as the cloud market continues to transform.

Join Allan Krans, Cassandra Mooshian, Meaghan McGrath and Jack McElwee from TBR’s Cloud team as they discuss the most salient events of 2018 and look ahead to what changes those events may bring in the coming year.

Don’t miss:

  • Shifts in cloud consumption
  • Cloud vendor adaptations
  • Expectations for 2019

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Why asset-based IT services will rule 2019

Join Patrick M. Heffernan for a roundtable discussion with TBR’s Professional Services senior analysts as they deep dive into one of TBR’s expectations for the IT services market in 2019, including the impact of asset-based IT services on vendors, their partners and the IT services market overall. After exploring basic ideas around asset-based services, the team will examine how this trend will likely play out in 2019 across analytics, management consulting, global delivery, digital transformation and IT services broadly.

Don’t miss:

  • How IT services vendors and their clients manage co-innovation’s impact on services-related assets
  • What shifts asset-based consulting has brought to IT services vendors’ business models
  • What changes observed in 2018 will gather steam in 2019
  • How TBR anticipates vendors will adjust to asset-based services across every service line

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

IT services expectations for 2019: Assets, industries and human transformation

Join Patrick M. Heffernan for a roundtable discussion with TBR’s Professional Services senior analysts on three trends in the IT services market expected to pick up steam in 2019. The team will discuss the shift toward asset-based services and how assets will continue to change the IT services business model. The team will also reflect on the evolution of industry expertise from a differentiator to table stakes and increasingly toward something new. Wrapping up expectations for 2019, the team will debate whether “digital transformation” must give way to “human transformation” before a new era of technology-enabled services can transform companies.

Don’t miss:

  • How IT services vendors and their clients manage co-innovation’s impact on services-related assets
  • What shifts asset-based consulting has brought to IT services vendors’ business models
  • Why industry expertise has forced IT services vendors to refine their offerings and make tough decisions on which industries to serve
  • Which human-caused limitations and roadblocks prevent digital transformation from taking off, and what it will take to overcome those impediments

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

IoT customer maturity

Customers, like vendors, are just beginning to figure out IoT

While Internet of Things (IoT) has been around for decades, for most customers, like most vendors, IoT is still very new. To derive the greatest value from the IoT approach, a customer has to have integrated, coordinated, cross-disciplinary teams creating solutions. Even experienced companies are challenged by the mountain of opportunities presented by current, much less expensive IoT technologies. For vendors to sell effectively and best serve their customers, they must assess their customers’ IoT maturity. Join Ezra Gottheil and Dan Callahan as they discuss how assessing customer maturity can help both vendors and customers.

Don’t miss:

  • What customer capabilities are needed for IoT
  • How to assess customer maturity
  • The implications of customer maturity in go-to-market tactics and delivery

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Crossing the chasm: Transforming from a CSP to a DSP

Communication service providers (CSPs) are embarking on transformation journeys to evolve into digital service providers (DSPs), leveraging nascent technologies such as software-mediated networking (NFV/SDN), cloud, 5G, analytics, automation and artificial intelligence. During the webinar, TBR will provide its definition of a DSP and characterize how a CSP can evolve into a DSP. Join Telecom Senior Analysts Chris Antlitz and Michael Soper for an in-depth review of service provider digital transformation.

Don’t miss:

  • The definition of a DSP
  • The attributes and characteristics of CSPs versus DSPs
  • The steps CSPs must take — and the technologies they must leverage — to transform into DSPs
  • Which operators are leading
  • Which vendors are successfully enabling transformation

 

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].