Cloud vendors make the most of their COVID-19 stimulus

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Join Allan Krans, Nicki Catchpole, Evan Woollacott and Catie Merrill for a glimpse into the continued acceleration of cloud adoption as the COVID-19 pandemic abates. The discussion will shed light on how the value of cloud was reinforced during the pandemic, leading to accelerated spending as conditions have stabilized and improved in the first half of 2021. 

Don’t miss:

  • How technology and business strategies have changed for cloud customers and vendors
  • How mission-critical workloads are now moving to hybrid and cloud delivery methods
  • The role consumption-based pricing options are playing for customers

Mark your calendars for June 9, 2021 at 1 p.m. EDT,
and REGISTER to reserve your space.

Blockchain: 2Q21 insights from TBR’s Digital and Services teams

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Transforming the economic engine one block at a time

Join Patrick Heffernan, Boz Hristov, Evan Woollacott and Geoff Woollacott for a webinar examining the state of adoption for blockchain as well as the impact on buyer’s digital transformation initiatives. The need for a community approach will require frenemies to collaborate but only if enabled by public-private frameworks. TBR will discuss blockchain-specific use cases through the lens of a multienterprise business network (MEBN) framework and unpack insights around the impact of blockchain on business models of technology and services vendors.

Don’t miss:

  • Key trends driving the evolution and adoption of blockchain, as well as the current state of the market
  • Use cases for blockchain through the lens of an MEBN framework
  • Overview of the ecosystem including implications to vendors’ business models and the role of blockchain as it relates to digital transformation  

Register today to reserve your space

COVID-19 will fade, but cloud reliance will remain

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The COVID-19 pandemic and its wide-ranging effects forced businesses to adjust in 2020 and now into 2021, but these changes will persist much longer than the pandemic. Most businesses made a wide range of changes to their IT strategies over the past year, but there are a number of commonalities. The first commonality is that technology is at the heart of how organizations have adjusted to COVID-19’s effects, to service their own employees and the changing needs of their customers. Cloud-delivered technology, in particular, has been core to providing the speed and scalability needed to support these adjustments in the most agile manner possible. The other commonality in COVID-19 responses is that organizations found a way to support increased technology spending, even in a time of much economic uncertainty. Cloud investments were prioritized during the course of 2020, which is reflected in the overall stability and continued growth of the market throughout the year.

Figure 1

AWS, Microsoft Azure and Google Cloud Platform are even more critical to the IT industry

While the market continued to grow and leading firms maintained their momentum, they were not unscathed by the effects of COVID-19. Vendors experienced a dip in revenue growth rates during 2Q20, at the height of uncertainty and pessimism. The dip was driven by businesses pulling back spending in anticipation of a pronounced economic slowdown. Even though COVID-19 infection rates grew worse through the end of 2020, economic expectations recovered and the uncertainty around how COVID-19 would impact business results diminished, putting cloud revenue growth from the leading vendors back on previous trajectories. Though the business strategy and dynamics were much changed, the continued growth of the leading firms was back on track.

In many ways, COVID-19 accelerated but did not actually alter the course of cloud technology’s impact on the IT market. As a delivery method, cloud was already eroding traditional IT and far outpacing the overall growth in spending. Most customers had some level of cloud investment prior to 2020, with many using cloud solutions for mission-critical elements of their enterprises. After a year of dealing with pandemic-driven disruption, cloud utilization has grown significantly. Cloud adoption happened faster than most organizations planned moving into 2020, as business changes forced customers to overcome cultural, budgetary and technological barriers in making adjustments to their operations. The good news for cloud vendors is that this change in behavior should last well beyond the direct impacts of COVID-19. The challenge is how to meet this enhanced level of demand, which requires investment now to get additional data center capacity and services online ahead of increased needs. The market may have reached this place eventually, but both customers and vendors are accelerating their cloud strategies to account for the more prominent role cloud will play in the overall IT market moving forward, even as COVID-19 fades, hopefully sooner rather than later.

Quick Quantum Quips: The quantum industry introduces its first public company

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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 keeps the community up to date on recent announcements while stripping away the hype around developments.

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

March 2021 Developments:

Quantum developments this month saw IBM score its first on-premises quantum computer deal, Honeywell push the ball forward by achieving a record quantum volume (QV), more newcomers join the IBM Quantum Network, and the first pure-play quantum computing startup to sign a deal to go public.

IBM: IBM announced a partnership with Cleveland Clinic, dubbed Discovery Accelerator, to utilize quantum computing for scientific research and discovery. What makes this partnership particularly unique is that IBM will supply Cleveland Clinic with a quantum machine on premises — a major milestone as the first order for an on-premises quantum installation. Other quantum engagements up to this point have utilized quantum computing through cloud infrastructure providers such as IBM, Amazon Web Services and Microsoft Azure.

Despite the nascency of quantum applications in real-world scenarios, the IBM-Cleveland Clinic partnership makes sense for multiple reasons. For starters, “wet labs” for scientific and novel drug discovery are one of the hypothesized earliest use cases as healthcare organizations have the means to purchase and house the popular superconducting quantum computer architectures, which require extremely cool environments, much like the Pfizer vaccine does, albeit at considerably lower temperatures. Additionally, the practical compatibility of early quantum applications for optimization problems creates large incentives such as increased scientific discovery efficiency, which reduces time & materials and labor costs. Moreover, the sharp increase of investments into the healthcare and quantum industry, catalyzed by COVID-19, put the two industries on a collision course.

IonQ: IonQ officially announced a deal to became the first pure play quantum computing company to go public, via a merger with dMY Technology Group III, a special purpose acquisition company (SPAC). The entity has an estimated combined market cap valuation of $2 billion. It is a significant milestone for the still-nascent quantum computing industry. Notably, however, IonQ did not choose the IPO route in going public, which may indicate wariness to test the public appetite for not-yet-commercially-ready quantum. Additionally, merging with a SPAC has several advantages, including bypassing the arduous IPO process, securing a prequantifiable cash infusion and gaining experienced guidance from leadership of the SPAC.

Honeywell: On the hardware system side, Honeywell achieved a QV of 512, a new record in the industry, on its latest form factor, System Model H1. QV is a metric developed by IBM in the pursuit of a better way to measure quantum computing performance, in place of the less-than-objective measure through qubit count. This achievement by Honeywell’s System Model H1 is notable as it debuted in September with a QV of 128.

On the commercial side, BMW announced a dual partnership with Honeywell and Entropica Labs to run a quantum proof-of-concept for BMW’s supply chain. The presumed role of Honeywell is as the supply-side quantum hardware vendor, while Entropica Labs provides the demand-side algorithms required for BMW to reap the benefits of quantum computing tied to the automaker’s bespoke problem set.

Cambridge Quantum Computing (CQC): On the scientific discovery side of the quantum industry, CQC published a paper demonstrating that quantum machines can employ machine learning (ML) techniques to “learn to infer hidden information from broad probabilistic reasoning models. The implications of these findings open the door to quantum applications in previously unconfirmed use-case scenarios. The biggest near-term beneficiaries are expected to be quantum hardware and software developers as well as ML scientists.

Phasecraft: This U.K.-based quantum software company joined the IBM Quantum Network, a global consortium of hundreds of quantum computing companies, startups, academic institutions and research organizations in the name of wholistically advancing quantum development from physical systems to algorithms and applications. Phasecraft currently develops algorithms aimed at optimizing and utilizing near-term quantum computers.

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 latest edition, published in December, focuses on the software layer of quantum systems.

Note to readers: As of the March edition of Q3, Stephanie Long, the creator of this blog, has moved on from TBR Inc. and bestowed this series to me, Jacob Fong. TBR and I would like to thank Stephanie for all her phenomenal work and analysis at the company and through this blog series on the ever-fascinating industry that is quantum computing.

Atos firing on all cylinders as it overcomes COVID-19 headwinds and expands in North America

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Building industry-specialized expertise increases Atos’ value proposition around delivering business outcomes to clients

While Atos’ (Nasdaq: ATOS) revenue growth and profitability in 2020 were negatively affected by the pandemic, the crisis pushed the company to strengthen its focus on clients and industries. Atos is working with clients to enable business continuity, such as by facilitating work-from-home environments, providing agile infrastructures and tackling cybersecurity challenges, and to address client priorities, such as cost optimization, deployment of digital workplaces, and acceleration of digital transformation. The company’s pivot to an industry-aligned go-to-market approach to better address clients’ specific business challenges and its consistent acquisition strategy over the past year to gain niche capabilities in segments such as digital security, cloud and applications consulting, systems integration, AI and big data consulting, and decarbonization services improve the company’s ability to alleviate external revenue growth pressures due to tight spending.

Atos reached its financial targets during 2020 despite the challenging pandemic environment

Market uncertainty and volatility brought on by the COVID-19 pandemic forced multiple IT services vendors to forgo setting financial objectives for 2020. However, Atos was confident about its performance and, in April, established its 2020 revenue, operating margin and free cash flow objectives, which the company achieved by the end of the year. Atos estimated that revenue would decline between 2% and 4% organically for 2020 due to the negative effects of COVID-19 and reported a 2.3% year-to-year organic revenue decline, in line with the company’s projection. Operating margin before other expenses decreased to 9% of revenue in 2020 from 10.3% in 2019, an anticipated contraction due to pandemic-driven revenue declines; however, the metric was within the targeted range between 9% and 9.5% of revenue for the year.

The company’s efforts to reshape its portfolio, including by expanding its offerings around digital, cloud, security and decarbonization, and align its go-to-market approach to six industry groups positively affected commercial activity. Atos’ highest quarterly bookings level since 1Q19, continual emphasis on digitally certifying its employees, and investment in 12 bolt-on acquisitions since February 2020 will support revenue growth improvement in 2021. Atos’ goal is to grow revenue between 3.5% and 4% year-to-year in constant currency in 2021, and TBR expects Atos to meet its revenue growth goal as the company expands its portfolio, such as through the OneCloud initiative; continues it active acquisition pace; and maintains a strong deal pipeline.

2021 Atos North America Analyst and Sourcing Advisor Event: Social distancing, country lockdowns and travel bans due to the pandemic pushed Atos to continue hosting the virtual analyst event series the company initiated in June 2020 with its first global Atos Analyst Days event. Focusing on Atos’ North America regional business, the March 2021 event provided analysts with rich content through prerecorded executive presentations on topics such as strategic priorities, sales and business development, talent advancement, and Atos|Syntel business updates as well as deep dives on six regional industries: the media, the public sector and defense, retail, manufacturing, healthcare and life sciences, and financial services. The sessions were augmented by live one-on-one meetings with Atos’ executives, which enabled TBR to gain a deeper understanding of the topics and valuable insights from Atos’ executives as well as provide our own view and assessment on the covered topics. Having access to prerecorded presentations several days prior to the one-on-one meetings allowed TBR analysts to watch the videos at our own pace.