Relaunched Security Benchmark highlights emerging security trends

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TBR’s Security Benchmark makes its return to the data center portfolio this week, covering many of the current trends impacting the enterprise security market. With a new look and feel, the Security Benchmark now covers insights into emerging security trends, in addition to the traditional eight TBR segments of the enterprise security market. For example, in the upcoming report TBR explore the implications of the post-quantum world on RSA encryption and some IoT-centric security trends. Analysis and data on 25 strategic enterprise security vendors can be found in this report as well. See analysts Stephanie Long and Eric Costa for details.

Additional assessment publishing this week from our analyst teams

“As Accenture closes on another successful fiscal year, we are looking into how the newly appointed CEO, Julie Sweet, will make her mark on the company and its performance. In the meantime, we expect Accenture to continue diversifying its portfolio and global footprint to prepare itself for navigating the IT service market in the post-digital era. Investments in quantum and blockchain will accelerate as the company increases its use of automation to drive sustainable, nonlinear growth. While continuing to grow at a double-digit rate, Accenture’s cloud business is entering a phase of maturation, especially as the company seeks to solidify its relationships with key technology partners and buyers. Supporting multicloud environments through automated, fit-for-purpose IP and certified staff will help advance Accenture’s evolving relationship with IT.” — Boz Hristov, Senior Analyst

Also this week, join Ezra Gottheil for a webinar on IoT: “IoT, a technique for applying technology to generate new outcomes, has been a focal point for a wide set of IT and operational technology vendors interested in being involved in the wave of digital transformation and driving new business. In 2019 vendors are starting to solidify unique go-to-market strategies and the construction of new ecosystems and channels is taking place.”

Canonical doubles down on multicloud in defense of its strategic position against Red Hat and VMware

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TBR perspective

At Canonical’s 2019 Analyst Day, the company displayed a compelling business model and a clear road map toward achieving its desired business outcomes. However, TBR believes the long strategic strides Canonical has taken over the past year have only propelled the company so far due to the increasingly competitive field that Red Hat and VMware (NYSE: VMware) are creating. It has been just over two months since IBM (NYSE: IBM) completed its purchase of Red Hat, so it was not a surprise that Canonical emphasized the competitive landscape IBM has shifted with its $34 billion purchase. Even less surprising was Canonical’s dive into specific areas, including public cloud and data center, where it expects to sidestep its two biggest competitors, Red Hat and VMware, both of which Canonical is also most often compared to within the market.  

Navigating a competitive landscape

While Canonical boasts that its multicloud strategy is unique, the vendor’s approach to multicloud aligns with that of major public cloud providers as Canonical aims to run Kubernetes on its Linux-based operating system (OS), Ubuntu, to solidify its place at the interoperability layer. In his opening remarks, Shuttleworth alluded to the fact that open infrastructure is just beginning and that the pending explosion of open source will occur at the applications layer; on top of that, Canonical claims PaaS will not account for more than 10% of applications. TBR believes Shuttleworth’s comments take direct aim at VMware Cloud Foundry and the fact that VMware does not own any applications. However, while Canonical boasts that its approach goes beyond infrastructure with its Linux app store, VMware is close behind given its recent acquisition of Bitnami, which specializes in application packaging, supporting VMware’s application ecosystem strategy.

As one of the few remaining OpenStack providers, Canonical has positioned its proprietary OpenStack offering, BootStack, to still be very much part of the company’s value proposition while other vendors like IBM, Rackspace and Mirantis are de-emphasizing the technology. As part of its private cloud strategy, Canonical maintains support for OpenStack private clouds on Ubuntu, whereas in public cloud Canonical places Ubuntu on the platforms of partners, such as Amazon Web Services (AWS; Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOGL), Oracle (NYSE: ORCL), Rackspace and IBM. TBR expects IBM will shift its current Ubuntu-based workloads to Red Hat Enterprise Linux (RHEL) now that its purchase of Red Hat is finalized, resulting in the loss of business for Canonical. Presentation materials also highlighted opportunity around fully managed infrastructure services. TBR notes the managed services opportunity around OpenStack was far more prominent 10 years ago, whereas now the opportunity is around creating a managed services portfolio that emphasizes higher-complexity workloads as well as IoT. Canonical noted it is not attempting to build a managed services empire, yet further development in this area presents an uphill battle for the company, especially as IaaS leaders AWS, Microsoft and Google make it easier for enterprises to navigate the challenges of a hybrid environment, which in many cases OpenStack cannot serve.

At Canonical’s 2019 Analyst Day, CEO Mark Shuttleworth and other company executives got together with industry analysts to highlight the company’s revamped business strategy, one that emphasizes four competitive battlegrounds including public cloud, data center, edge cluster and IoT. The event featured presentations from Shuttleworth, Finance Director Seb Butter and VP of Public Cloud Christian Reis, among others. The event also incorporated presentations from key partners, including from Atos VP of Cloud Engineering Bob Seddigh and BT Group Chief Architect Neil McRae.

EY’s Managed Services: A co-sourcing partner for value creation

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EY’s approach to managed services is a boardroom rather than operational discussion  

While the nuances around the definition of managed services vary across vendors and buyers, the common theme of supporting organizational functions resonates with all. As a result, there is a fair amount of confusion and sometimes little-to-no differentiation among suppliers that are simply trying to expand client mindshare. While the advent of AI, cognitive and similar technologies, along with the firm’s desire to participate in the “as a Service” space, has fueled EY’s efforts to build its information systems management capabilities, the firm’s position in the managed services space is largely determined by its role as a trusted tax partner. While buyers have engaged with EY for years around its tax expertise, outsourcing and/or in some cases co-sourcing, tax technology and tax operations are somewhat newer areas of opportunity for the firm. Delivered through EY’s Tax and Finance Operate framework, the firm’s relationship with the CFO buyer allows it to capture strategic tax activities typically managed by in-house tax professionals including financial crime, tax policy administration and cyber, among others.

EY has seen its fair share of success in the space, most recently signing a long-term managed services agreement with Nokia (NYSE: NOK), which followed a similar deal with a global insurance provider back in 2018 for managing tax and compliance. As part of the Nokia deal, EY will provide tax, finance, data and technology managed services supporting the mobile provider across 127 countries, leveraging EY Global Tax Platform and global delivery centers.

Adding technology to a business framework, as EY did with the inclusion of Microsoft Azure in the EY Global Tax Platform, and platformizing micro-processes to support corporate applications, including corporate income tax, provisioning and value-added tax, is one way EY’s Managed Services practice is trying to bridge the gap between tax services and IT, which can then drive other opportunities, including in advisory services. As digital permeates all services and the regulatory environment across the globe continues to evolve, EY’s investments position it to carve a niche applicable to its strengths rather than building one inorganically, similar to rivals that have been investing heavily in areas such as marketing operations to better appeal to the CMO buyer.

HPE’s CMS unit reemerges as a software-centric contender in the new network architecture

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TBR perspective  

TBR believes HPE’s CMS unit has the potential to become a significant disruptor in the telecom space. CMS, which had been marginalized in prior years while Hewlett Packard Co. split into HP Inc. and HPE and as HPE executed divestitures, restructurings and developed a new strategy, has received new life after obtaining corporate sponsorship from HPE’s relatively new CEO, Antonio Neri, and CFO, Tarek Robbiati, who was formerly the CFO at Sprint (NYSE: S). CMS leadership reports directly to Robbiati. With the C-Suite and board of directors providing corporate support, the telecom vertical will become a key growth pillar for HPE going forward, given the technology transformation and business model transformation that is being prompted by 5G, edge computing, AI and automation. 

The CMS unit represents only a small percentage of HPE’s total revenue, but the unit is a key gateway into emerging opportunities that are impacting the telecom vertical. CMS is reestablishing itself in the market as a growth engine for HPE corporate and is receiving the funding and support required to drive its portfolio, particularly in the management and orchestration (MANO), 5G core, and digital identity spaces. TBR believes CMS is positioned to be a key vendor in the new network architecture, which will be microservices-based, cloud-native and distributed.

CMS faces some notable hurdles, including the negative perception of its capabilities that followed the bad press it received as a supplier and the prime systems integrator for Telefonica’s (NYSE: TEF) software-defined transformation initiative back in 2015. The company was eventually replaced by several other suppliers. TBR believes the lingering effects of this situation have hindered CMS’ growth over the past few years, but notes that CMS has put the incident in its rearview mirror and is making significant headway moving forward.

CMS’ mindshare and credibility are moving in a positive direction, and the unit is gaining significant traction in CSP accounts, particularly for its Service Orchestrator and NFV Director MANO offerings. CMS has an impressive roster of CSP customers and has played a behind-the-scenes role in several significant network transformation projects, including SK Telecom (NYSE: SKM) and Vodafone (Nasdaq: VOD). These reference wins will be critical to positioning HPE as a contender in new RFPs, particularly in disruptive areas such as MANO and 5G core.

CMS is challenged by OSS domain incumbents like Amdocs (Nasdaq: DOX) and Ericsson (Nasdaq: ERIC), which CSPs will be reluctant to move on from due to possible migration and integration issues. This hesitancy could also prohibit the majority of CSPs from altering their procurement models to adopt more modular solutions, as webscales have done. CMS’ portfolio is increasingly aligned to this trend. The most difficult challenge may be delivering on helping CSPs become more than the connectivity provider or “dumb pipe” in a 5G world. Vendors will be jockeying to deliver this dream, but HPE may be better served focusing on providing the solutions that will enable CSPs to run the most efficient, cost-effective networks possible.

HPE (NYSE: HPE) hosted its first ever North America Communications and Media Solutions (CMS) Analyst Summit in Boston, bringing along top leadership from the company’s CMS business, who delved into CMS’ strategy and portfolio as well as key customer wins and success stories. Following executive presentations, which were interactive in nature, with industry analysts able to pose questions to presenters, analysts received one-on-one time with CMS VP and General Manager Phil Mottram, CMS Chief Technology Officer Jeff Edlund, CMS VP of R&D and Delivery Mark Colaluca, and CMS VP of Product Strategy and Lifecycle Management Domenico Convertino.

With CMS recently emerging from the shadows of HPE’s Pointnext business and retooling its portfolio to align with demand from communications service providers (CSPs), executives were upbeat about CMS’ ability to take market share and compete with highly entrenched incumbent vendors and startups alike.

Acquisitions and internal changes strengthen Capgemini in consulting

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Every spring and fall, TBR releases a Management Consulting Benchmark with details on 13 leading vendors, including strategies, performance, positioning, and expectations for the next few years. For most of those consultancies, TBR also publishes individual profiles, providing additional details and analysis. The first of those profiles, on Capgemini, will be released this week, with the following assessment from  Senior Analyst Elitsa Bakalova: “Capgemini will continue to grow management consulting revenue in the next two years. A string of acquisitions in the digital segment enables Capgemini to expand into the digital design and consulting space, create a global network of design studios, and gain industry consulting expertise such as through KONEXUS Consulting in the energy and utilities sector. The announced acquisition of Altran will improve Capgemini’s ability to address clients’ IT and operational technology (OT) needs and pull through management consulting opportunities. Capgemini will position as an intelligent industry vendor that can provide solutions around Engineering 4.0 and Industry 4.0. Changes Capgemini made during the past several quarters to its portfolio, organizational structure and sales model enable the company to address demand from clients’ business side, not just in terms of their technology, and strengthen relationships with clients to expand wallet share.”

Additional assessment publishing this week from our analyst teams

Dell Technologies continues to navigate complex market dynamics. In TBR’s 2Q19 Dell Technologies report, TBR explores some of the vendor’s recent strategies to mitigate revenue declines in Infrastructure Solutions Group, including closer ties with VMware to promote a cloud-centric go-to-market message. On the PC side, performance was favorable and investments in ProManage, a new solution announced at VMworld, will be more deeply analyzed. — Stephanie Long, Analyst

Also this week, TBR’s Cloud and Software team will offer insights and analysis during the Cloud pairs well with partners webinar on Wednesday at 1 p.m. EDT.  

Comcast Business targets strategic acquisitions and international expansion to fuel long-term growth

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TBR perspective  

Comcast Business remains in an enviable position and is an outlier in the telecom industry. The cable operator’s business unit continues to post double-digit revenue growth and is taking market share from a range of competitors in the U.S. The company’s core value proposition is its powerful DOCSIS 3.1-based, hybrid-fiber-coax (HFC) fixed access platform, which provides significantly better value in terms of connectivity performance to price paid compared to legacy technologies such as MPLS and DSL. Comcast Business sees at least another $60 billion in market share that is available to take from less competitively positioned incumbent telecom operators in its domestic market. This sizable addressable opportunity will continue to feed the Comcast Business machine for at least the next few years.

TBR believes Comcast Business also has significant opportunity to sustain long-term revenue growth through international expansion and the company’s evolving sales and marketing strategies. The company is pivoting from a focus on selling its products horizontally across verticals to a solution-centric, verticalized approach, evident in the acquisition of Deep Blue Communications, which specializes in the hospitality, retail and entertainment industries, and also evident in the company’s new product offerings and design principles. Comcast Business is also expanding outside the U.S. and is building presence via acquisitions, in Canada via iTel, in the Caribbean and Mexico via Deep Blue Communications, and in Europe via Sky. Over time, TBR believes the shift to build its international footprint will help Comcast Business win more of the Fortune 1000 companies that have sites in multiple countries and that require global services. In addition, Comcast Business’ acquisition of BluVector, an AI-powered cybersecurity technology company, points to another trend at the company, which is to build out robust security capabilities.

The 2019 Comcast Business Analyst Conference highlighted the company’s business progress and financial performance and detailed initiatives that will spur long-term growth including new acquisitions and portfolio developments as well as Comcast Business’ evolving go-to-market strategies. The event included a State of the Business update by Comcast Business President Bill Stemper as well as presentations focused on areas including the company’s recent Deep Blue Communications acquisition, the ActiveCore SDN platform, network security and Comcast Business’ fast-growing enterprise division.

Technology Business Research, Inc. announces 4Q19 webinar schedule

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HAMPTON, N.H. — Technology Business Research, Inc. (TBR) announces the schedule for its 4Q19 webinar series.

Oct. 16         India-centric vendors defy gravity and all sensible expectations        

Oct. 30         Separating the tricks from the treats in the emerging technology sector

Nov. 13        Enterprise adoption of private cellular networks poses opportunities and threats for telecom industry

Nov. 20        Digital transformation in 2020: How hype gets scale and substance

Dec. 4           Device market disruptors

Dec. 11        Year in review: Shifting from a monocloud to a multicloud and hybrid cloud landscape

Dec. 18        Will ‘new’ management consulting models support digital transformation?

TBR webinars are held typically each Wednesday at 1 p.m. EDT/EST and include a 15-minute Q&A 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].

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IBM z15 brings enterprise-grade, automated and compliant data management to systems of engagement

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IBM expects prominent mention in Chapter 2 of the cloud

IBM asserts with some legitimacy that incumbents have an advantage when it comes to disrupting markets. They possess the account knowledge, have working capital, and, more importantly, have data in their core systems and databases. To build an ecosystem, these enterprises have to unlock the power of that data and distribute it beyond the core platform and into a hybrid multicloud environment, which IBM envisions as Chapter 2 of the cloud.

IBM asserts Chapter 1 of the cloud consisted of experimentation and then scaling of new systems of engagement applications while mission-critical systems of record and their multiple dependencies within enterprises remained firmly ensconced behind the firewall for increased data protection. Chapter 2, in IBM’s thinking, will enable these existing investments to participate in hybrid cloud to leverage business data in inside-out fashion alongside emerging mission-critical systems of engagement.

In historical context, if Chapter 1 of the cloud correlates to IBM’s ill-fated 9370 hardware launch, then Chapter 2 should be on par with IBM’s successful launch of the AS/400 minicomputer, which lives on today in junior and large enterprises and is ripe for modernization and migration to the cloud.

At the very least, that is the bet IBM hedged with its $34 billion Red Hat acquisition, which is still being thoughtfully rationalized with the venerable Z platform as midsize and large enterprise consumption patterns merge in a hybrid multicloud world enabled by the growing popularity of multi-enterprise business networks underpinned by IoT, blockchain and AI.

Success in the data economy rests on ecosystems with low-risk data velocity

New with the z15 is what IBM calls Data Privacy Passports, which enable policy-based data management. Passports act as a data proxy. Queries go to the Passports controller rather than to the database itself. The permissions stay with any copies that are made, and the permissioned access can be modified or revoked at any time. IBM highlights the success of Passports in complying with General Data Protection Regulation (GDPR) requirements, allowing enterprises to control the data even without physical custody of the data.

The net benefit of adopting z15 flows from future-proofed risk mitigation. Enterprises and policy makers continue to evolve data privacy regulations. A software shell that allows for policy-based data management that can quickly convert domain knowledge into automated procedures can ensure continued compliance in the rapidly changing regulatory environment around data utilization. The lower risk likewise accelerates data velocity beyond the core enterprise platforms in a prudent and trusted manner.

IBM’s (NYSE: IBM) development efforts position the latest refresh of its flagship Z offering, the z15, to become the premier enterprise data controller in what the company considers Chapter 2 of the cloud. Namely, the z15 product launch represents a continuation of the engineering, development and customer engagement that IBM has messaged for 50 years in the rapidly developing hybrid multicloud environment. The product is purpose built for enterprise-grade applications and has evolved in line with demand for new iterations to meet changing needs and use cases. If z14 brought data protection to mission-critical systems of record by delivering pervasive encryption, then z15 delivers enterprise-grade data privacy provisioning via software control planes to protect data when it leaves the Z platform for use among emerging cloud-native, mission-critical systems of engagement.

BPO 2.0 is alive at TELUS International in Bulgaria

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On a recent trip to my native Bulgaria, my colleague Elitsa Bakalova and I visited one of TELUS International’s local sites. Country Managing Director Kristina Ivanova and Director of Operations Gergana Ralchovska hosted us in the recently opened TELUS Tower in downtown Sofia. With over 3,000 staff members in Bulgaria split between three offices, TELUS International has grown roots in the community not only to expand its recruitment reach but also to build local trust one event at a time, which is reflected in its extensive corporate social responsibility program.

During the tour of the facility, featuring staff who speak a total of 40 languages to serve many global, regional and local clients, the common themes of innovation, inclusion and collaboration were well displayed. As a vendor that faces the ever-evolving dynamics of the BPO industry, mainly impacted by the advent of chatbots and automation, TELUS International is well prepared for potential headwinds. From offering non-traditional BPO services, including content moderation and content management, to reskilling staff and employee engagement programs, TELUS International in Bulgaria is able to maintain an attrition rate in the teens, well below the industry average of approximately 30%.

In a rapidly evolving market such as Bulgaria, where the IT services sector presents the vast majority of career opportunities for young people, TELUS International’s approach to developing soft skills – a key attribute for working in the BPO industry – differentiates it from its direct and indirect competition. For example, TELUS International offers pre-recruitment assessments, on-site psychologists and ongoing empathy training for employees. Both Ivanova and Ralchovska indicated that the profile of current recruits has changed significantly from five years ago, when speaking one or more foreign languages was enough to get a job offer. Today, both TELUS International’s and recruits’ expectations have evolved to reflect a preference to work for a purpose-driven and customer-focused organization.

Automation means new KPIs

As culture evolves, so do KPIs. With the advent of automation, adopting new KPIs that reflect the shift from human-supported tasks to human-chatbot higher-value services is one way for many organizations including TELUS International to measure utilization and performance. TELUS International’s examples of digitization of client accounts include one client for which 1 million requests were automatically handled by a bot, saving 20,500 productive hours over 90 days, which were later billed to the client for other add-on work.

In TBR’s special report In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter published in March, we wrote, “Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and re-tune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities.”

As TELUS International in Bulgaria serves as one center of the company’s evolving framework, moving from BPO to application services exclusively is highly unlikely, but striking the right balance by blending elements of SaaS and BPaaS will certainly be at the forefront of Ivanova’s, Ralchovska’s and the global leadership team’s agenda in the next three to five years, especially as there is a heightened customer expectations for services vendors to deliver human-centric brand promises.

CSP 5G revenue will be ‘minimal’ in short-term

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“At first, high device prices and the limited service coverage will mean immediate revenue gains are small for CSPs such as Telstra and Optus, according to principal analyst Chris Antlitz.

“However, business customers will provide the greatest opportunity for long-term 5G revenue generation as enterprises are more likely to take advantage of the ultra-low latency and better speeds.

“‘CSPs are positioning to support enterprise 5G use cases by investing in innovation centres and targeting private 5G network customers,’ according to Antlitz.”