PCs in a pandemic

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Join Ezra Gottheil and Eric Costa Sept. 23 for a presentation on how the global COVID-19 pandemic is affecting the PC business as well as the use of PCs. As people use PCs to work, learn and play at home, what are the implications for the types of PCs they are using, the environment in which PCs are used, and the future relationship between users and PCs, even after recovery?

Don’t miss:

  • How social distancing has affected how PCs are used and how the PC business runs
  • The long-term effects of the economic crisis beyond recovery from coronavirus
  • The effect of the crisis on the PC total available market as well as the implications

From boom to bust and back: COVID-19 changes dynamics of consulting-led digital transformation programs

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Rising uncertainty from the global COVID-19 outbreak combined with competitive pressures in traditional and emerging IT service areas such as digital, cloud and cybersecurity is challenging IT services and management consulting vendors’ performance. The pandemic has driven massive changes in human resource management and is creating opportunities for IT services vendors to enable clients’ remote working models. Client retention amid this disruption and the global economic slowdown will be the single most important strategic imperative.

Join Patrick Heffernan, Bozhidar Hristov, Elitsa Bakalova and Kelly Lesiczka July 29 as they reveal key findings around leading IT services and management consulting vendors’ performance as well as evolving buyer expectations around service delivery and vendor consolidation.

Don’t miss:

  • Key trends in IT services and management consulting during the first half of 2020
  • Go-to-market strategies used to create new solutions
  • Enterprise sentiment toward digital transformation initiatives in the time of COVID-19

Federal IT moves past COVID-19

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Despite the inevitable short-term impact of COVID-19 on federal technology outlays, IT infrastructure modernization will eventually return to the top of the list of federal IT spending priorities. The pandemic has disrupted award activity and contract delivery while creating resource deployment challenges at federal IT vendors and their agency clients. While the pandemic will cause a shift in some IT outlays, it appears the foundation of digital transformation, analytics, AI, big data, cloud, cybersecurity, mobility and machine learning will remain intact and federal IT budgets will continue to give precedence to the adoption of these technologies.

Join John Caucis and Brian Baker Sept. 30 as they review the results from TBR’s 2Q20 Public Sector IT Services Benchmark report and discuss the trends shaping the federal IT market as the federal government’s fiscal year comes to a close.

Don’t miss:

  • Revenue growth and profit drivers for federal IT vendors
  • Federal IT providers that are winning in the COVID-19 environment and why
  • Factors driving new solution introductions, alliance formation and acquisitions by federal IT vendors
  • The lingering impact of COVID-19 on federal IT spending patterns and vendor activities
  • Outlook for federal fiscal 2021

Quick Quantum Quips: Vendors lay the groundwork for regional and technological differentiation as commercialization of quantum computers looms

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Welcome to TBR’s monthly newsletter on the quantum computing market: Quick Quantum Quips (Q3). This market changes rapidly, and the hype can often distract from the realities of the actual technological developments. This newsletter will keep the community up to date on recent announcements, while stripping away the hype around developments.

For more details, reach out to Stephanie Long or Geoff Woollacott to set up a time to chat.

June 2020 Developments

Various developments and investments in quantum computing highlight the vastness of the opportunities that exist in this field for vendors willing to endure the long haul between research and development and commercialization. While major players continue to make strides, quantum computing startups still stand strong in the market, receiving additional funding and forming strategic partnerships to push forward with their individual goals. Globally, skills shortages remain a challenge and a threat to rapid commercialization once the technology is available. As such, courses at the high school level are being developed so students are familiar enough with the technology to know if they would be interested in pursuing a related degree at the higher-education level. This is essential as in some ways, introducing students to the quantum field after they have entered college may be too late as many of these students may have already decided on their specialization.

  1. D-Wave and NEC partnered on quantum computing sales and marketing opportunities in addition to product development to bolster the prevalence of the technology globally. This partnership in particular increases D-Wave’s presence in Japan and provides NEC with assets to compete against Fujitsu in their respective local markets. The product development portion of the partnership combines NEC’s supercomputing technologies with D-Wave’s quantum expertise to bring hybrid compute solutions to market. Early activity in the quantum space suggests a hybrid compute model is the most likely way early quantum computers will be leveraged commercially.
  2. Honeywell claims to have the world’s highest-performing quantum computer as of June, leveraging IBM’s measuring tool for quantum computing, called Quantum Volume, to back up its claim. The system has a quantum volume of 64, and marks the delivery of promises Honeywell made regarding quantum computing performance in March. TBR notes that a key customer example Honeywell leveraged in the March announcement was JPMorgan Chase, which is also a strategic quantum customer for IBM and highlights the highly fluid nature of the quantum systems space, which will see systems vendors leapfrogging each other’s performance claims for the foreseeable future.
  3. Fermilab designed an introductory quantum computing course for high school and lay people interested in gaining a grasp on the subject without prior quantum mechanics familiarity. TBR believes this is a win for both the quantum space and the education space in the U.S. Public education increasingly emphasizes STEM and this course falls squarely in this area, reinforcing some public education goals while also working to improve knowledge of quantum computing at the high school level, which in turn will encourage students leaving high school and entering college to pursue degrees related to the subject. As the skills gap in the quantum field remains large, which will hinder scaling the technology’s commercial use, promoting quantum-related fields in higher education is paramount to the long-term viability of the technology at the commercial level.
  4. IQM, a Finnish startup that produces quantum hardware, secured another round of funding in June. This news came while the Finnish government announced it would acquire a quantum computer for the VTT Technical Research Centre of Finland. Multiple European countries are making similar investments, with Germany also commissioning at least two quantum computers. With its team in Munich, IQM also has the potential to capitalize on investments in Germany in quantum systems. TBR notes these government-centric quantum system purchases are currently for research purposes. These developments highlight that despite having clear front-runners in the quantum computing space, such as IBM, Google and Honeywell, there is still a well-defined space in the market in which startups can thrive. In some cases, there are regional advantages that major players cannot capitalize on as well as startups. For example, governments outside the U.S. and China have a perceived threat of taking advantage of quantum technologies that are not locally native due to the potential security threat the systems could cause. As such, vendors such as IQM and Atos are able to secure funding in Europe that other players cannot.
  5. QC Ware entered a research partnership with AISIN Group, a major manufacturer of automotive components, to develop ways to leverage quantum optimization and quantum machine learning algorithms for automotive applications. QC Ware has partnerships with Rigetti Computing and D-Wave for quantum computing hardware, and this partnership with AISIN grants it access to their hardware capabilities too. A key advantage of this relationship with AISIN Group for QC Ware is not only increased exposure of its value within the quantum computing industry but also an expanded presence in Asia.

If you would like more detailed information around the quantum computing market, please inquire about TBR’s Quantum Computing Market Landscape, a semiannual deep dive into the quantum computing market. Our most recent version was just released in June.

Cultural readiness and technology savvy: Another view of Egypt’s IT outsourcing ecosystem

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With technology a given, cultural readiness differentiates Egypt IT sector

In a recurring point of discussion, CrossWorkers CEO Hans Henrik Groth described Egyptian technology professionals as creating an atmosphere of high “cultural readiness” for working with Europe-based clients, partly because Egyptians travel frequently to Europe for business and Europeans travel frequently to Egypt for tourism. The cross-cultural experiences have provided many Cairene software developers with a useful level of cultural understanding for European clients and have made working for Europe-based companies attractive, given the likelihood of travel to the continent as part of the job. As an example of cultural readiness, Groth contrasted different ways of handling client concerns regarding the European Union’s General Data Protection Regulation (GDPR). In his experience, IT professionals with little cultural context will see GDPR as an obstacle to be circumvented or a set of checklists to be papered over. More attuned professionals understand the European mindset around GDPR and the (general) willingness to adhere to the standards and demonstrate compliance. Overall, Groth cautioned that the technology requirements of providing managed services from an offshore location could be easily met in most situations. The challenges arose with making a cultural match between the lead software engineers and their European clients.

During our discussion with Groth, TBR asked about three aspects of doing business in Egypt: government, IT and physical infrastructure. On the first, Groth noted the gaps and delays between political decisions and practical impacts, but added that the talent pool in Egypt and the country’s current political and economic climate did not necessitate a heavier role from the government overall. On IT, he lamented the high cost of internet service in Cairo, explaining that CrossWorkers needs two means of connectivity — airborne and traditional cable — to ensure constant communications. Even the best fiberoptic cables, as Groth noted, could be undone by someone with a shovel. For an offshore IT services vendor, high internet costs and unreliability would be constant concerns. Lastly, regarding the physical challenges of working in a city as large and densely populated as Cairo, Groth acknowledged traffic presented a constant source of pain and commented on the three-hour drive — on a good day — from Cairo’s airport to the Information Technology Industry Development Agency (ITIDA), located west of the city. To combat this problem, Groth located CrossWorkers’ offices closer to the airport, allowing clients from Europe to see the facilities and meet the talent without enduring too much of Cairo’s traffic. Groth’s depiction of Cairo’s infrastructure confirmed many of TBR’s previous discussions and assessments and pointed to potential areas for immediate improvements, which could accelerate IT services offshoring growth in the country.

After reading TBR’s assessment of Egypt as an offshore IT services hub, Hans Henrik Groth, CEO of CrossWorkers, contacted TBR to provide additional insights and commentary about Cairo’s IT services environment, highlighting the differences between Cairo and other cities Groth has worked, including Islamabad, Pakistan, and various locations in eastern Europe. This special report reflects the hour-long discussion and TBR’s analysis, including from our Spring 2020 Global Delivery Benchmark.

The Big Nine are trailblazing paths to economic value of the digital era; incumbent players need to determine their roles

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Big Nine aim to own the foundational, intelligent innovation platforms of the digital economy

The Big Nine — Alibaba (NYSE: BABA), Alphabet (Nasdaq: GOOGL), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Baidu (Nasdaq: BIDU), Facebook (Nasdaq: FB), Microsoft (Nasdaq: MSFT), Rakuten  and Tencent — view 5G and distributed computing as innovation platforms on top of which value will be created in the digital economy. The Big Nine are building “brains” in their central cloud environments that will autonomously orchestrate and manage the fundamental platforms upon which the digital economy will be built.

A recent example of this trend by the Big Nine to own the intelligence layer and build these platforms is seen in Microsoft’s recent actions, whereby the company acquired Affirmed Networks and Metaswitch (pending) and struck partnerships with ecosystem providers such as Federated Wireless to build out digital marketplaces that enable end users to consume network resources directly from the cloud.

Over time, webscales will become the centerpieces and backbones of the global digital economy and will enable the ecosystem, which includes communication service providers, to innovate and participate in the value creation of the digital economy.

The Webscale ICT 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.

Business resiliency and people centricity: Fujitsu prepares for post-pandemic world

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Putting people first, so they can put the customer first

In the early weeks of the pandemic, Fujitsu’s global delivery centers quickly shifted to all-remote work environments, transitioning in waves as COVID-19 lockdowns moved from Asia to Europe and the Americas. Fujitsu’s leaders and on-the-ground managers passed along lessons learned in Japan, China, the Philippines and elsewhere in Asia to colleagues facing imminent transitions. Perhaps surprising even Fujitsu’s leadership, some of the later transitions happened in less than 48 hours. In Poland, for example, the entire delivery center adopted all-remote work arrangements over a single weekend as the news coverage of COVID-19 shifted opinions and raised concerns about being in close proximity to coworkers in an office. Fujitsu experienced similarly rapid transitions at other facilities, including global delivery centers in Portugal and India. According to Fujitsu’s global delivery leadership, the transitions had no impact on Fujitsu’s delivery or customer satisfaction: “The SLAs [service-level agreements] hardly twitched.”

In TBR’s view, Fujitsu’s emphasis on its own people — ensuring safety, providing assurances around employment and meeting technology demands — likely had a positive ripple effect on the way employees delivered to Fujitsu’s clients. Fujitsu’s leaders noted the company’s commitment to “focus on people, and enable those people to focus on customers,” underscoring Fujitsu’s overall approach of putting its own people first. One example Fujitsu’s global delivery leaders shared with TBR centered on the company’s travel and visitor policies. Early changes reflected a slowdown in travel, but “not a strangulation.” Fujitsu’s employees believed they were still empowered to deliver to clients, traveling for work as necessary, but cognizant of coming changes and able to include their own feedback on company policies.

As February ended and the virus’s global sweep became apparent, Fujitsu employees were prepared for a shift from limiting travel to limiting visitors to office locations, primarily to provide employees with additional safety and protection from COVID-19 exposure. Another example centered on employee communication and support to ensure well-being. Fujitsu holds ongoing check-ins with employees through coffee sessions and distributed surveys to keep everyone connected and engaged, confirming the employees responded positively to the company’s approach to COVID-19. Fujitsu executives noted to TBR that over 80% of employees felt positive about the approach and execution of its COVID response. The meetings recognized employee needs beyond workload constraints, taking personal COVID-19 challenges in consideration. Overall, TBR believes Fujitsu’s global delivery leadership made a critical decision to focus on employees first, which eased the challenges related to moving to all-remote working through Fujitsu’s additional protection for employees’ well-being as well as protection for their families from COVID-19. Further, by coordinating across countries and regions so that successful strategies could be repeated and mistakes could be avoided, Fujitsu made it possible to sustain customer satisfaction and consistent services delivery.

In a wide-ranging discussion with Fujitsu’s global delivery leaders, including Head of Global Delivery Tim White, Head of Global COVID-19 Response and Chief Information Security Officer Clive Tillotson, and Specialist Marketing Manager Charlie Ayling, TBR analysts heard about the company’s immediate responses to the COVID-19 pandemic, ongoing operations and expectations for the post-pandemic world. This special report includes some highlights from the discussion. Additional information will be included in TBR’s quarterly analysis of Fujitsu Services. 

EY tackles COVID-19 and prepares for Next and Beyond

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Now, Next, Beyond: The perfect framework for our COVID-19 present

In a wide-ranging discussion centered on COVID-19, EY’s global leaders detailed for TBR the firm’s views on the current situation, the immediate needs and opportunities ahead in 2020, and what the post-pandemic reality will be for EY and its clients — Now, Next and Beyond. As an EY framework for a couple of years, Now, Next, Beyond perfectly suits the current moment, when enterprises across the globe need assistance addressing immediate operational challenges, from supply chain to financing to human resource management. At the same time, EY’s clients have already begun planning for or taking the early first steps in implementing changes necessary to survive and grow in the near term, the next few quarters and years. And for EY, the deepest client partnerships are forged through transformations, in which EY serves as trusted partner.

Now: Know your business, know your environment, become resilient

In the Now, EY has brought clients multiple trackers — tools that provide enterprises immediate insights into their operations and expected near-term challenges — while helping to build greater resiliency over time. Even though the pandemic’s impacts vary widely by location and seemingly change daily, assessment and resiliency tools, in EY’s view, remain essential for most enterprises, partly because very few companies came into the pandemic with a data and technology strategy.

As part of the response to COVID-19, the firm rolled out its Enterprise Resilience Assessment Tool and overall COVID-19 Enterprise Resilience Framework to help clients understand the current state, map a route to resiliency and track progress. Extending beyond the enterprise, EY has developed a suite of trackers to help clients follow and understand the constantly changing impacts of the pandemic. EY’s Trade Tracker, for example, provides clients updates on government changes to trade rules, a kind of one-stop trade policy shop. Other tracker focus areas include tax policy, labor and employment law, and immigration. In TBR’s view, these tools — and EY’s emphasis on the big picture, not simply operational needs — underscore the broader value the firm brings to transformational engagements, which should benefit EY as clients move from COVID-19 response to post-pandemic strategy.

Next: Bringing technology to bear in a way EY has not done before

“As one EY professional explained, ‘When we solve a problem through applying tech, and thus creating an asset or tool, we want to productize and commercialize and globalize.’ Like a ship making course corrections while still navigating toward a desired destination, EY has adjusted its business model, folded asset-based consulting and managed services into traditional consulting, and committed to emerging technology.” — TBR special report Now. Next. Beyond.: EY’s road map for moving from current to future, May 2019

Turning to growth, EY’s leaders noted that clients increasingly speak to the firm about the need for technology at speed and innovation at scale, with humans at the center. For a firm with a relatively new foundation in technology at speed, EY provided TBR use cases and details around how the firm meets those clients’ technology demands.

Over three separate hourlong briefings with EY leaders in Europe, Asia and the Americas, TBR analysts heard details on the firm’s initial response to the COVID-19 pandemic as well as its strategies for serving clients in the post-pandemic world. While this special report contains information provided by EY as well as TBR’s analysis, a more complete assessment of the firm can be found in TBR’s recently published semiannual Management Consulting Benchmark.

Even with slower growth, management consultancies should come through 2020 positioned to help clients weather disrupted digital transformations

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Management consulting market summary

Outlook

Regardless of whether the pandemic lingers, re-emerges in the second half of 2020 or significantly subsides, TBR expects consultancies will benefit from opportunities created by the chaos of COVID-19, such as uneven responses from government authorities around economic fallout, pandemic protocols and continued uncertainty throughout 2020. Vendors with greater scale, more established technology-centric brands, and deeper partnerships with cloud and software providers will weather the crisis and alleviate pressures on front-end management consulting by price-conscious clients that demand flexible payment terms. TBR expects management consulting revenue growth for the benchmarked vendors to decelerate to 3.5% year-to-year in 2020 but to continue to outperform revenue growth for the benchmarked IT services vendors.

Disruptors

Every part of the global economy, including the IT services and management consulting markets, are experiencing serious disruptions from the global COVID-19 outbreak. Countrywide lockdowns and changes in travel and personal interaction to limit the spread of the virus, have forced changes in human resource management for vendors and their clients, some short term and some likely permanent. Macroeconomic uncertainty due to the pandemic is pushing clients to re-evaluate their spending and shift their priorities from high-touch, large-scale strategic transformational discussions to tactical run-the-business and price-competitive managed services opportunities.

Overview

Benchmarked vendors in the management consulting segment increased revenue 7% year-to-year in 2019, a growth trend that continued to surpass that of benchmarked IT services vendors in TBR’s IT Services Vendor Benchmark, which expanded 1.9% year-to-year in 2019. The Big Four vendor group remained the largest revenue contributor at 55.8% of benchmarked revenue in 2019; however, strategy-led vendors increased their market share by 10 basis points year-to-year to 28%. Big Four and strategy-led firms are expanding their intellectual property assets and managed services capabilities to position as business advisers with holistic service capabilities.

The Management Consulting Benchmark provides key service line, regional, vertical and operational data and analysis for 13 leading management consulting firms. The research program also includes a deep dive into 11 vendors’ business strategies as well as SWOT analysis.

Vendors pursue tactical run-the-business engagements to help clients react to COVID-19 and relaunch business operations

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Management consulting market summary

Outlook

Regardless of whether the pandemic lingers, re-emerges in the second half of 2020 or significantly subsides, TBR expects consultancies will benefit from opportunities created by the chaos of COVID-19, such as uneven responses from government authorities around economic fallout, pandemic protocols and continued uncertainty throughout 2020. Vendors with greater scale, more established technology-centric brands, and deeper partnerships with cloud and software providers will weather the crisis and alleviate pressures on front-end management consulting by price-conscious clients that demand flexible payment terms. TBR expects management consulting revenue growth for the benchmarked vendors to decelerate to 3.5% year-to-year in 2020 but to continue to outperform revenue growth for the benchmarked IT services vendors.

Disruptors

Every part of the global economy, including the IT services and management consulting markets, are experiencing serious disruptions from the global COVID-19 outbreak. Countrywide lockdowns and changes in travel and personal interaction to limit the spread of the virus, have forced changes in human resource management for vendors and their clients, some short term and some likely permanent. Macroeconomic uncertainty due to the pandemic is pushing clients to re-evaluate their spending and shift their priorities from high-touch, large-scale strategic transformational discussions to tactical run-the-business and price-competitive managed services opportunities.

Overview

Benchmarked vendors in the management consulting segment increased revenue 7% year-to-year in 2019, a growth trend that continued to surpass that of benchmarked IT services vendors in TBR’s IT Services Vendor Benchmark, which expanded 1.9% year-to-year in 2019. The Big Four vendor group remained the largest revenue contributor at 55.8% of benchmarked revenue in 2019; however, strategy-led vendors increased their market share by 10 basis points year-to-year to 28%. Big Four and strategy-led firms are expanding their intellectual property assets and managed services capabilities to position as business advisers with holistic service capabilities.

The Management Consulting Benchmark provides key service line, regional, vertical and operational data and analysis for 13 leading management consulting firms. The research program also includes a deep dive into 11 vendors’ business strategies as well as SWOT analysis.