Vendors respond to customers’ accelerated IT transformations​

Hardware vendors will race to further entrench themselves in customers’ ecosystems

While storage, hyperconverged infrastructure (HCI) and servers are the main products being sold by data center vendors, they are hardly noticeable in the go-to-market messaging that is being pushed out to customers. These vendors are more focused than ever on selling the outcome over the hardware itself,  whether that outcome is building a hybrid cloud environment to serve remote workers or deploying an edge solution on a factory floor. Data center vendors are looking to capture more of their customers’ environment, from managed services to hybrid cloud enablement, to diversify their revenue beyond hardware and create more reliable revenue streams.​

Building ecosystems is at the forefront of data center vendors’ go-to-market strategies to add value and create stickier offerings. This ranges from building management consoles and expanding software capabilities to refining “as a Service” offerings rolled out over the past 18 months. For leading vendors, this is done with an eye toward helping customers reap the same benefits they seek in public cloud alternatives — agility and simplicity — while also providing flexibility and cost control. ​

The road to a more diversified revenue stream is not without hurdles. Customers have already developed preferences for management tools and development platforms from cloud providers and ISVs. Markets like edge compute are complex with customization and industry nuance. Selling subscription models requires sales and delivery transformation for not only vendors but also partners, and a sales strategy that delivers on values that resonate with customers. In 2022 TBR expects to see further proliferation of the journey vendors embarked on in 2021, building out solution portfolios one use case at a time by identifying areas ripe for transformation that also benefit from on-premises hardware.

2022 data center predictions

• Infrastructure vendors’ “as a Service” offerings will gain traction as the offerings are refined for specific use cases
• Hardware vendors embrace the ecosystem
• Vendors will carve out niche specialties under the broad banner of edge compute

 

Download a free copy of TBR’s Top 3 Predictions for Data Center in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Where the money flows, IT services follow

Federal spending priorities shifting to favor civilian agencies

In three areas, the Biden administration’s pivot from defense spending to shoring up civilian agencies will have immediate effects on the federally focused IT services vendors. First, accelerated cloud adoption and new spending bringing cloud to civilian agencies will create partnerships and acquisition opportunities, as well as additional revenue streams. Second, IT services vendors well positioned for that pivot will increase their market share. Third, increased AI, analytics and cybersecurity deployments, supported by new federal dollars flowing to civilian agencies, will further separate federally focused IT services vendors that have built capabilities and talent during the last several years.

Civilian sector IT spending has recovered vigorously from the COVID-19 trough in 2020, thanks to civilian agencies’ ongoing drive to digitize their IT infrastructures, and the shifting budget objectives of the Biden administration will further accelerate civilian IT outlays. Health IT is emerging as a major growth driver on the civilian side, owing to ongoing COVID-19 response initiatives, electronic health record modernization, and IT projects to enhance the interoperability of health IT environments in the federal, state and local government sectors. Even amid the expected deceleration in defense spending, the Pentagon will leverage cloud infrastructures to connect IT platforms for combat operations across service branches, while cloud computing will become essential to transmitting, sorting and analyzing mission data.

Federal systems integrators also have an eye on the transformative technologies and methodologies that are becoming commonplace in the digital modernization of federal IT infrastructures. For example, federal IT services vendors will increasingly utilize low code as they execute cloud implementations, enabling the rapid development and scale-up of cloud-based software tools. Federal IT contractors are also pondering the effects of 5G and quantum on cybersecurity, while upgrading existing mobile and IT communications systems into more open and interoperable networks embedded with AI and analytics technologies.

2022 federal IT services predictions

• Increased U.S. federal cloud spending upends the IT services market
• Vendors prepared for flattening defense budgets and accelerated civilian spend will see early gains
• Investment in advanced digital technologies will accelerate across all federal sectors

 

Download a free copy of TBR’s Top 3 Predictions in Federal IT Services in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.