How vendors are grappling with ecosystems and IP challenges in the IIoT marketplace

Gimme 3 — Insight Interview with TBR’s Subject-matter Experts

In TBR’s new blog series, “Gimme 3 — Insight Interview with TBR’s Subject-matter Experts,” Principal Analyst Patrick M. Heffernan discusses our latest and most popular research with our analyst team.

This month Patrick chats with Senior Analyst Evan Woollacott about Industrial IoT (IIoT), including how IT services vendors and consultancies must make smart choices around IP and ecosystems.

 

Patrick: This line from TBR’s Digital Transformation Insights: IIoT Market Landscape really jumped out at me: “Perhaps victims of their own success, many IT services providers’ initial IIoT efforts sought to draw the OT [operational technology] and IoT ecosystem to their IP, when they should have used the ecosystem to draw their IP to the opportunity and customer environment.” Which IT services vendor stands out for having made that shift already? Which vendors use the ecosystem and their IP the right way?

Evan: Not to answer the question like a consultant, but, in short: too early to tell. Cloud platform leaders like Microsoft and Amazon Web Services (AWS) have certainly sought to build out their IIoT-enabling technologies at all levels of the IT stack, ranging from the OS layer with offerings like Azure Sphere or AWS FreeRTOS, to edge platforms like AWS Greengrass or Azure IoT Edge technologies for IIoT.

Atop this foundation, AWS and Microsoft have also each sought to allow clients to derive value from this newfound device-level data with their respective Cloud for Manufacturing portfolios, which should allow both companies to begin cultivating ISV ecosystems to optimize manufacturers’ discrete business processes.

That being said, Microsoft’s 2021 launch of Cloud for Manufacturing remains in public preview today, having missed its general availability target date of 3Q22. So, yes, IT services vendors and cloud hyperscalers have the technologies required to support clients’ IIoT aspirations, but the portfolios intended to deliver business outcomes, the Cloud for Manufacturing portfolios, remain in early-stage R&D.

This could be a result of the long list of tech standardization issues present in IIoT that may be delaying partner buy-in with not only familiar, IT-realm partners but also the vast OT end of the spectrum.

Patrick: In describing some common IIoT use cases, you say, “While these examples are not overly complex aspirations, the ecosystem design requirements to enable them inhibit an organization’s ability to scale the use case beyond just a single warehouse and/or the entire warehousing industry.” You also wrote that “no one client will use the same consortium of vendors across their IT and OT environments, a dynamic that — before even considering the rigorous regulatory and compliance laws of an industry like healthcare or pharmaceuticals — reinforces the need for technology standardization across the IIoT technology value chain.” Ecosystem design and evolving technology standards sound like huge consulting opportunities. Any consultancies that stand out as leading in IIoT?

Evan: At the top of the list, PwC’s Connected Solutions division probably has the potential to be an enabler of the IIoT market, relying heavily on its IT services and consulting expertise on manufacturing entities’ business processes, to build solutions atop Microsoft’s Azure.

As PwC identifies high-value solutions, the firm will gain the awareness of not only buyers but also Microsoft to encourage more solution codevelopment and insight into Microsoft’s own R&D road maps to ensure strong future alignment between the two firms. Though PwC’s DNA is professional services, this more ISV-led partner approach could provide lessons to PwC on how to develop solutions by leveraging Microsoft’s technology expertise. So, certainly PwC Connected Solutions is one to keep an eye on.

 

Patrick: You noted that “smart professional services vendors that recognize OT buyers are used to dealing with third-party suppliers will increase their focus on building relationships with the likes of Nokia, Bosch, Caterpillar and GE to ensure they have the ear of the OT buyer.” With all the other changes happening in services and technology alliance ecosystems, are you asking too much from the services vendors, by suggesting they broaden their ecosystem plays even further and manage even more alliances?

Evan: It is a lot to ask of IT services firms, no doubt, but this is what the clients will be asking as well. A client will be grappling with the need to manage their technology providers across both IT and OT realms as they pursue IIoT aspirations. I think it is important to recognize that the IIoT opportunity remains in its infancy today, with new use cases being found each day as clients harness additional data and discover ways of integrating it within their existing business processes to optimize their operations.

As more devices are connected, the needs around partner management will grow exponentially. To answer your question a different way, though, perhaps this all speaks to a need in the market, an opportunity for an IT services and consulting vendor to build its value proposition exclusively around IIoT. As we have said in various reports authored through TBR’s Digital Transformation practice, no one vendor can enable DT outcomes for clients.

IIoT is just a microcosm of DT, exclusive to asset and device-intensive customers with a seemingly never-ending list of use cases. Just as technology firms should never try to become service providers and vice versa, in the context of IIoT, maybe the Accentures of the world shouldn’t try to spread themselves too thin and cover this opportunity as well, but instead find the dedicated partner that has invested for years in its OT services resource bench to solve the IIoT market development issue together, not alone.

 

Well, Evan, tell us what you really think about how IT services vendors and consultancies should play in the IIoT space! A good point, honestly, and one that we make often in talking about the business of technology: Do what you do well and stick to it. Vendors that wander get lost. And readers, keep an eye out for an upcoming video with TBR Principal Analyst Bozhidar Hristov further discussing the topics Evan touched on in this blog.

 

Automatically receive next month’s edition of Gimme 3 as well as weekly free resources and upcoming webinar invitations

 

Telecom industry will face an unprecedented level of uncertainty and risk in 2023

2023 will likely be one of the most uncertain and challenging periods in the telecom industry’s history. A confluence of negative shocks will concurrently impact the industry in 2023, with telcos and cablecos bearing the brunt of the impact and vendors suffering knock-on effects.

 

Join Principal Analyst Chris Antlitz Thursday, Feb. 9, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of Top 3 Predictions for Telecom in 2023, part of TBR’s 2023 Predictions series.

 

In this FREE webinar you’ll learn:

  • How inflation, rising interest rates and the impending global recession will impact the telecom industry
  • What post-peak communication service provider spend on 5G infrastructure means for the vendor community
  • Why and how certain U.S.-based cablecos are building their own cellular networks

 

 

 

Predictions is an annual TBR series examining market trends and business changes in key markets. 2023 covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services, and telecom.

 

Previous TBR 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].

Transparency, consistency, quality: Winning formulas for IT services, digital transformation and consulting in 2023

After years of IT services vendors and their technology partners telling clients (and analysts) that “data is the new oil” and that “every company is a technology company,” we are finally reaching a tipping point at which vendors cannot sell the promise of data but need to sell the results. Clients expect returns on their investments in digital transformation, analytics and cloud, pushing IT services vendors to deliver more transparently, with more consistency and at a higher quality.

 

Join Principal Analyst & Practice Manager Patrick M. Heffernan and TBR’s Professional Services team Thursday, Jan. 19, 2023, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of Top 3 Predictions for Professional Services in 2023 and Top 3 Predictions for Digital Transformation in 2023, both part of TBR’s 2023 Predictions series.

 

In this FREE webinar you’ll learn:

  • Why IT services and consulting clients have moved on from exploring data, and now expect faster ROI on their emerging tech investments
  • How the breakups of various IT services vendors and consultancies will, and will not, impact the competitive landscape
  • Which IT services vendors and consultancies have been winning the war for talent (Hint: none of them)
  • What is compelling some IT services vendors and consultancies to build metaverse capabilities
  • Why AI enables transformation and automation fosters cost containment
  • How hyperscalers flipped the vendor selection switch on IT services and consulting

 

 

 

Predictions is an annual TBR series examining market trends and business changes in key markets. 2023 covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services, and telecom.

 

Previous TBR 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].

The bull market in federal IT will continue in 2023

The Biden administration’s federal fiscal year 2023 (FFY2023, ending Sept. 30) budget looks to be a windfall for federal IT contractors, with a double-digit year-to-year increase in civilian IT spending, significant expansion in cybersecurity outlays across defense and nondefense sectors, and generous funding boosts for public health IT infrastructure and veteran care.

 

Join Principal Analyst & Practice Manager Patrick M. Heffernan, Senior Analyst John Caucis and Research Analyst James Wichert Thursday, Feb. 9, 2023, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of the Top 3 Predictions for Federal IT Services in 2023, part of TBR’s 2023 Predictions series.

 

In this FREE webinar you’ll learn:

  • The 2023 outlook for the federal IT market, including our expectation for a surge in spend to new highs on the back of digital modernization and cybersecurity investment
  • The key market dynamics driving federal technology investment in the year
  • Market acquisition activity expectations for 2023

 

 

 

Predictions is an annual TBR series examining market trends and business changes in key markets. 2023 covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services, and telecom.

 

Previous TBR 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].

After rapid pandemic-related growth, the PC market will shrink in 2023

Following the pandemic-related surge in PCs, demand has slackened, supplies are plentiful and margins are down. But what will the market see in 2023?

 

Join Principal Analyst Ezra Gottheil, Analyst Ben Carbonneau and Research Analyst Alek Maxfield Thursday, Jan. 26, 2023, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of the Top 3 Predictions for Devices in 2023, part of TBR’s 2023 Predictions series.

 

In this FREE webinar you’ll learn:

  • How PC companies are preparing for a slower, more price-competitive market
  • How the role and perception of PCs have changed
  • What changes to expect in PCs in 2023 and beyond

 

 

 

Predictions is an annual TBR series examining market trends and business changes in key markets. 2023 covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services, and telecom.

 

Previous TBR 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].

Cloud vendors will use predictable strategies for unprecedented times in 2023

2023 will mark the first time the mature cloud market is tested. While cloud served as an alternative IT cost-savings measure in the wake of the 2008 financial crisis, it is no longer an insignificant portion of the average customer’s IT budget.

 

Join Principal Analyst & Practice Manager Allan Krans, Senior Analyst Evan Woollacott and Senior Analyst Catie Merrill Thursday, Jan. 12, 2023, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of the Top 5 Predictions for Cloud & Software in 2023, part of TBR’s 2023 Predictions series. This discussion will span the entire cloud market, including IaaS, PaaS and SaaS, as well as all elements of the strategies we expect to see as cloud vendors navigate an unprecedented competitive environment.

 

In this FREE webinar you’ll learn:

  • How cost will come back in vogue
  • Why both big and small vendors will get bigger
  • The reason we believe all growth in the cloud market will come through partnerships
  • The ways hyperscalers will invest in PaaS and infringe on partners
  • Why SaaS vendors will pursue solution upsell and cross-sell tactics to weather economic pressures

 

 

 

Predictions is an annual TBR series examining market trends and business changes in key markets. 2023 covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services, and telecom.

 

Previous TBR 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].

PTC’s Corporate Experience Center: Experiencing software in a physical world

In September TBR toured the PTC Corporate Experience Center (CXC). The meeting space, located at the company’s Boston headquarters, serves as the demonstration showcase and is filled with examples of PTC’s (Nasdaq: PTC) work with a wide range of manufacturing and industrial clients.

 

In this review of PTC’s CXC, we describe an innovation and transformation center that breaks molds while building on previous lessons learned and sets a new standard for how a technology-centric demonstration center can excel. Critical to note: PTC’s CXC is not completely comparable to what TBR has termed “innovation and transformation centers,” as detailed in our Market Landscape of the same name. PTC intentionally changed both the name and the focus when the company shifted from a Customer Visit Center, which hosted client briefings and executive visits, to the CXC, described in full below.

 

 

Top 3 Predictions for Professional Services in 2023

 

Breaking rules, partnering smartly, and separating today and tomorrow

Embracing the headquarters-based showcase model reflects PTC’s strengths

PTC broke three of TBR’s cardinal rules for designing innovation and transformation centers: The PTC CXC is physically colocated with the company’s main offices, designed as a showcase, and built to be a single entity, without plans to open similar centers closer to clients. But with all three, PTC has seemingly made the right decisions.

 

PTC’s CXC takes up roughly two-thirds of the 17th floor of the company’s corporate headquarters, stretching in a semicircle from a massive packaging machine demonstration to conference rooms to the xR wall to the Reality Lab, operated in concert with the Massachusetts Institute of Technology.

 

Since PwC first opened a stand-alone Experience Center in Hallandale, Fla., removed from PwC’s local offices, TBR has maintained that separation from corporate headquarters helps facilitate, for both clients and employees, a more creative mindset and an environment unconstrained by previous ideas about what clients can expect from the vendor. PTC made a different calculation. By colocating the CXC with PTC’s corporate global headquarters, the company can more easily bring business line leaders and subject matter experts into customer sessions and demonstrate to new and current employees the full breadth of PTC’s capabilities and the company’s value to clients. And reinforcing a critical success factor described below, keeping the CXC in the headquarters allows PTC’s CEO to drop in on any client session.

 

In another TBR truism, innovation and transformation centers cannot be primarily technology showcases. Relying on static displays or moderately interactive demonstrations too frequently limits clients’ perceptions of the vendor’s value and may not be consistently relatable in every client engagement. For example, a retail store mockup will not resonate with an oil exploration company.

 

Because algorithms, platforms and code do not display particularly well, PTC embraced demonstrating its core products through its clients’ use cases, allowing CXC visitors to see and physically touch, among other displays, connected taps, a Volvo truck engine, and, as mentioned above, a $1 million full-sized and fully operational industrial packaging machine. The showcases, intended to be rotated with enough frequency to ensure returning CXC visitors do not see the same demonstrations every time, allow PTC to effectively tell stories about the value of their solutions across a range of client use cases and industries (admittedly, with a focus on manufacturing and industrial applications). In every case, the client provided PTC with the necessary equipment, and PTC’s CXC leadership noted that clients frequently ask whether their use case can become part of the CXC tour.

 

Lastly, TBR has seen the most effective innovation and transformation centers replicate themselves across the globe, bringing the vendors closer to clients while building a talent pool of design thinkers, innovative technologists and consultants fully versed in digital transformation. For PTC, the COVID-19 pandemic provided an immensely valuable testing period for virtual delivery from the CXC to PTC offices globally as well as clients’ physical and virtual environments.

 

By refining effective virtual delivery — first by recognizing and facilitating the need for communication between all participants, whether in person or remotely — PTC realized it could maintain the quality and freshness of demonstrations without compromising the client experience. While PTC maintains large offices in other countries, the company has no immediate plans to replicate the CXC abroad and will instead maintain a strategy centered on delivering either completely in-person or completely virtual engagements from Boston.

 

For PTC, focusing on building CXC capabilities exclusively at the company’s headquarters reinforces company culture and ensures consistency in delivery. Long-term, TBR anticipates a steady accumulation of case studies, lessons learned and highly trained professionals will lead PTC to create a similar facility at another large PTC location, closer to clients in Europe or Asia.

Following proven approaches, but with a PTC twist

While PTC broke a few cardinal rules, the company also adhered to some of the core characteristics TBR has identified among the elite innovation and transformation centers, notably a willingness to embrace ecosystem partners, a dedicated staff, and an openness to the local community. TBR previously reported on PTC’s inclusion as a branded partner at EY’s Nottingham Spirk innovation center in Cleveland. At PTC’s CXC, the company includes partners as diverse as KPMG and Nokia (NYSE: NOK) as clearly branded logos when those partners have been integral to the solution on display.

 

Clients understand and expect every vendor they engage across the consulting, IT services and technology ecosystem — from McKinsey & Co. to Wipro (NYSE: WIT) to Nokia — will play a part in solving their business problems and delivering on digital transformation in some way. Including partners in innovation and transformation centers strengthens a vendor’s brand, a lesson many consultancies and IT services vendors took years to learn while PTC leapfrogged into implementing a partner-friendly approach.

 

  • An important tangent: PTC raised the concern that its technology at partners’ locations could be unintentionally misrepresented or improperly demonstrated if PTC’s professionals were not involved. TBR has considered embracing technology partners’ capabilities and brand to be a critical success factor at innovation and transformation centers, but PTC’s caution reflects an important nuance in how consultancies and IT services vendors incorporate alliance partners’ technologies into client engagements. PTC smartly relies on delivering up-to-date and high-quality demonstrations remotely from its CXC when the company believes the particular use case, the specific client and the partner require PTC’s intimate involvement.

 

PTC staffs its CXC with professionals trained to present the company’s technology and use cases while tailoring the storytelling elements to a client’s specific needs, industry or interests. Sales professionals prepare the client for on-site visits after the CXC staff, in coordination with PTC’s leadership, reviews the business case to organize one- to two-day sessions. Subject matter experts elsewhere in the building can be summoned to assist should a client raise questions beyond the assigned staff’s immediate knowledge.

 

In all, PTC’s CXC staffing model echoes that of similarly sized innovation and transformation centers and seemingly lacks only consulting specialists adept at drawing out business challenges and reshaping engagement sessions while they are happening. Further replicating successful strategies at other centers, PTC has embraced the local community, opening the CXC for social or less structured sessions outside of scheduled business hours. In Boston’s seaport district, PTC and the CXC benefit from the technology-oriented business community and easy access to universities and startups.

Delivering something different: PTC’s CEO, Hollywood and a view of tomorrow

In addition to breaking innovation and transformation center rules, PTC’s CXC contains a few unique elements. First, as noted above, PTC benefits from a CEO who wants to participate in every engagement at the CXC and a leadership team that resides in Boston should a client need to hear directly from the company’s decision makers.

 

In TBR’s analysis, while most innovation and transformation centers have used a variety of metrics to evaluate their effect on their company’s bottom line, the most successful centers have leveraged initial leadership commitments to sustain long-term strategies and investments, with or without counting the number of client sessions, pull-through revenue, or other measure of success. PTC’s CXC staff tracks the effectiveness of its client engagements, reporting quarterly to PTC’s leadership, while enjoying the attention – and pressure – of a highly engaged CEO.

 

In addition, PTC’s CX Studio and extended reality (xR) wall bring a Hollywood-level quality to virtual presentations and engagements. For a company that, according to its website, purports to “use digital technology to improve the physical world,” having a truly state-of-the-art capability to produce digital content and broadcast globally reinforces the company’s potential value to clients. During TBR’s visit, the PTC CXC professionals noted that the sheer technological prowess of the xR wall allowed PTC to punch above its weight in the crowded software and services market, allowing the company to deliver differently and meet emerging expectations around the quality, versatility and interconnectedness of virtual delivery.

 

  • A second important tangent: PTC will not engage in hybrid client engagement sessions. Everyone is either on-site at the Boston CXC or remote (typically in Europe or Asia). In PTC’s experience, every hybrid engagement includes a suboptimal experience for at least one group of participants. While a necessary compromise during the pandemic, PTC currently insists on one common delivery experience, with the xR wall greatly improving what can be done virtually. TBR predicted hybrid engagements would eventually become the norm as consultancies, IT services vendors, technology providers and clients adjusted to the post-pandemic world. PTC’s decision to jettison hybrid strikes TBR as in keeping with the company’s independent and practically minded culture, even as TBR believes many of PTC’s ecosystem partners will continue to rely on hybrid for innovation and transformation engagements for the near future. As the pandemic fades, PTC will likely prove to be ahead of peers as hybrid’s limitations fail to overcome convenience.

 

PTC’s final unique element comes from the physical and intentional separation between today and tomorrow. Most of the CXC’s space illuminates what PTC can deliver today, with demonstrations of clients’ use cases and ample room to engage with client decision makers, PTC subject matter experts and professionals, and PTC’s technology partners. In contrast to innovation and transformation centers that focus on the art of the possible, PTC’s CXC stays rooted in what can be deployed today.

 

But in a separate space and enclosed by glass walls, the PTC Reality Lab allows the company to experiment with near-future technologies and demonstrate for clients what could be possible in their IT and operational technology environments. In TBR’s view, this clear delineation between today and tomorrow solves one of the persistent challenges at these centers: bringing immediate value during a client’s on-site visit while positioning for transformation after the client returns to their home offices and facilities.

 

Over the last six years, clients have lamented to TBR that art-of-the-possible sessions imagining an incredible future state have not solved current business and technology challenges. PTC’s approach likely resonates with clients that have visited consultancies’ and IT services vendors’ innovation and transformation centers and walked away intrigued but unsatisfied.

Subtle key to success: Touching the hardware at a software vendor’s showcase

In TBR’s landscape of innovation and transformation centers, PTC’s CXC stands apart for a couple of reasons. First, the center’s focus on client use cases to showcase PTC’s technologies contrasts with consultancies’ and IT services vendors’ typical focus on solving business problems (although PTC tackles this as well). Even as many IT services vendors and consultancies move toward becoming software vendors — or at least selling software “as a Service” — the CXC reflects the core business model differences between those vendors and PTC and the resulting differences in value derived from running a client experience center. Second, the physicalness of the CXC’s use cases provide clients with a visceral experience, a hands-on-an-engine kind of engagement that is both uncommon at innovation and transformation centers and surprising coming from a software vendor.

 

Overall, PTC has addressed clients’ fundamental business needs — tell me what to do, help me do it, do it for me — by creating an experience center that shows what can be done through on-site physical demonstrations, proves that PTC’s solutions can be vital to solving business problems and be deployed immediately, and positions clients to work with PTC on future challenges. Further, the CXC helps PTC build trust and relationships across its entire ecosystem, from partners to clients to clients’ customers.

 

As part of ongoing research, TBR publishes a semiannual Innovation and Transformation Centers Market Landscape, which includes characteristics common to these centers, analysis of trends influencing vendors’ activities and investments, and profiles of a dozen or more leading consultancies, IT services vendors, and cloud and software companies. TBR will publish the next edition in mid-December and will include a special section on PTC’s CXC.

What’s next for Lockheed Martin after being left out of ABMS consortium?

In September the U.S. Air Force selected L3Harris Technologies, Leidos, Northrop Grumman, Raytheon Technologies and SAIC for its Advanced Battle Management System (ABMS) Digital Infrastructure Consortium.
 
Notably, Lockheed Martin (NYSE: LMT) was left out of this cohort, despite ramping up its efforts to underpin the Department of Defense’s (DOD) Joint All-Domain Command and Control (JADC2) vision.

ABMS Digital Infrastructure Consortium

ABMS is similar to the U.S. Army’s Project Convergence and the U.S. Navy’s Project Overmatch. It is compatible with the JADC2 program, under which U.S. military branches are investing in upgrading current Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) programs to support the Department of Defense’s (DOD) vision of instantaneous multidomain interconnectivity.

 

The inaugural members of the Digital Infrastructure Consortium were selected due to their experience with JADC2-enabling technologies. They are tasked with jointly developing the digital design criteria for the new cloud-based command and control system. This system will be part of JADC2’s cloud-like environment, enabling the rapid receipt and transmission of sensor data to interconnected networks.

 

Once deployed, the open architecture framework developed by the ABMS Digital Infrastructure Consortium would improve the data-sharing capabilities of the U.S. Air Force, U.S. Space Force and relevant allies. The framework will use AI and machine learning support to share common operating pictures with decision makers across the military branches, enabling them to better coordinate and make more informed choices.


Top 3 Predictions for Federal IT Services in 2023


 

5G.MIL

In March 2021 Lockheed Martin announced a new partnership with Omnispace to establish worldwide 5G connectivity for commercial and federal customers through a nonterrestrial network (NTN). Then in November 2021, Lockheed Martin announced a new partnership with Verizon (NYSE: VZ). The two allies revealed they were testing if Lockheed Martin’s open mission system frameworks could seamlessly function with Verizon’s 5G Ultra-Wideband Service. The defense contractor and communications technology company also collaborated to design 5G.MIL unified infrastructure capable of supporting JADC2.

 

Since then, Lockheed Martin has continued to invest in 5G.MIL and build out its partner network with commercial businesses in the cloud, semiconductor and telecom verticals to enable interoperability between networks that utilize IP and those that do not. For example, Lockheed Martin announced a slew of new alliances with businesses including Keysight Technologies (NYSE: KEYS), Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT) to broaden 5G.MIL’s capabilities.

 

Recently, Lockheed Martin has been making progress with these partners. For example, Verizon and Lockheed Martin demonstrated in late September that they could improve situational awareness via 5G.MIL. The two showcased how 5G-leveraging drones could communicate with Verizon On Site Private Network nodes to transmit video and intelligence, surveillance and reconnaissance (ISR) radio frequency (RF) data during military operations.

Space-augmented JADO

Lockheed Martin also announced it has invested further in Terran Orbital and made progress on its Space-Augmented Joint All-Domain Operations (JADO) Environment (SAJE) project.

 

In 1Q23 Lockheed Martin will launch two of its Pony Express 2 smallsats to showcase its HiveStar, SmartSat, mesh networking and tactical communication capabilities. Lockheed Martin will also launch its Tactical ISR Sat (TacSat) with an infrared sensor sometime between 2Q23 and 3Q23. The TacSat features ISR functions and supports communications and on-orbit processing. These three satellites will comprise a JADO test bed and expand Lockheed Martin’s capabilities to support instantaneous interconnectivity across domains.

 

The SAJE project’s test bed has been offered as an option for the U.S. Air Force and other military branches interested in seeing how a Lockheed Martin NTN could enable JADO for them. It will also bring 5G.MIL to space while likely giving the defense contractor a role with ABMS as well as other JADC2-enabling projects as Lockheed Martin will be able to showcase how an NTN can leverage 5G to support military units by better connecting them and improving their situational awareness.

What’s next

Lockheed Martin

The defense contractor will continue to position itself to capitalize on JADC2’s expanding budget and expand the SAJE test bed’s capabilities in 2024 by adding its Active Radio Frequency satellite to the NTN. Lockheed Martin will also further build out the 5G.MIL partner network to enable JADC2 and partner with primes like AT&T and Microsoft as well as smaller innovators to enable interconnectivity across the U.S. military’s branches.

Other defense contractors

Industry peers will also jockey to underpin the DOD’s vision. Northrop Grumman is also leveraging 5G technology to support JADC2 and allied with AT&T in April to unify AT&T’s 5G private networks with Northrop Grumman’s systems to create a scalable open architecture while assessing digital battle networks. L3Harris announced in October that it would purchase Viasat’s Tactical Data Links (TDL) business for $2 billion, expanding its reach by gaining access to Link 16 Multifunctional Information Distribution System (MIDS) platforms and terminals that are already in use across the globe.

Joint All-Domain Command and Control

While there are some concerns about JADC2, the DOD will continue to expand its budget for the initiative. JADC2 funding is slated to grow from between $1.5 billion and $2 billion in FY22 to a minimum of $2.2 billion in FY23 as the DOD looks to improve its intelligence and communication capabilities to counteract hostile threats.

Top 3 Predictions for Digital Transformation in 2023

AI, automation and the metaverse: Why digital transformation won’t be the same in 2023

Top 3 predictions for Digital Transformation in 2023

  1. Your funky chair now floats in the metaverse
  2. Automation will lower costs and AI will transform businesses
  3. They hyperscalers will kill technology agnosticism


Top 3 Predictions for Digital Transformation in 2023


 

Digital = Ecosystems, with AI, automation and Metaverse among the prominent and new(ish) members

Digital transformation (DT) never ends, even if the pilot project scales. Enterprises always need another transformation, and IT services vendors and consultancies helpfully meet that demand with new technology. The metaverse — whatever it actually turns out to be — is the latest shiny new object that drives hype and early-stage investments. Digital transformation cannot escape technology, but as enterprises mature from innovation into iterative improvements, all of DT becomes less about feeds and speeds in a business-context-free vacuum and more about connecting technology with business processes. In a bit of good fortune for everyone involved in DT, AI is the perfect tool to enable that connection.
 
Everyone involved in DT has experienced the increased importance of ecosystems, with some growing sense that it is only a matter of time before enterprises, IT services vendors, consultancies and technology partners all share data and harmonize processes across one giant multi-enterprise business network. That reality, to quote someone who would not want to be quoted for saying this (Google it), is “a success that hasn’t occurred yet.” While unrealistic for now, clusters of ecosystems might be emerging as IT services vendors and consultancies rapidly pivot away from going to market with technology vendor-agnostic approaches.
 
One more implication to consider as we move into 2023: just as a new ecosystem cluster may emerge, new silos may develop within enterprises. Rather than divisions between lines of business an d IT, finance, and other traditional business groups, silos may form around specific technologies, providing an opening for IT services vendors and consultancies with specialized skills and the capability to advocate around solutions instead of business KPIs. In TBR’s view, IT services vendors and consultancies that help build these silos, or mini ecosystem clusters, will need to keep them open, with the right protocols and API from the technology side and the standards, incentive models and messaging on the business side.
 
2023 will be a rocky year, with a potential global economic slowdown decreasing spending on innovation while compelling investments in cost-cutting. The best prepared and smartest IT services vendors and consultancies will see through to the far side of any recession to rebounding spending on AI-fueled transformation supported by keep-the-email-system-working realities of core IT services.

 
TBR’s 2023 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services and telecom.

Top 3 Predictions for Professional Services in 2023

Transparency, consistency and quality:
3 watchwords for 2023

Top 3 predictions for Professional Services in 2023

  1. Enough with the data lakes and process automation — give me ROI
  2. IT services providers’ toil and trouble wILL not alter clients’ buying behaviors, but will disturb alliances
  3. the talent war grinds on, even as employee experience loses its luster


Top 3 Predictions for Professional Services in 2023


 

After all the emerging tech hype, just bring the best IT services people and consultants, every time, at a fair price

After years of IT services vendors and their technology partners telling clients (and analysts) that “data is the new oil” and that “every company is a technology company,” we are finally reaching a tipping point at which vendors cannot sell the promise of data but need to sell the results. Clients expect returns on their investments in digital transformation, analytics and cloud, pushing IT services vendors to deliver more transparently, with more consistency and at a higher quality.
 
Promises around the benefits of leveraging analytics and cloud no longer meet clients’ demands for clear, tangible outcomes delivered through transparent engagements. IT services vendors must demonstrate upfront the business cases for emerging technologies and then deliver results. Vendors that invested in core services competencies, such as operational excellence and managed services, and in technology skills will continue to grow revenues, even if the global economy slows.
 
IT services vendors and consultancies undergoing organization changes — from branding to P&L to complete splits — must assure their clients they can meet their delivery commitments. Clients’ needs and demands will continue apace, without regard to internal machinations by leaders at IT services vendors and consultancies. Competitors’ upheavals may provide some new openings for opportunistic and nimble players, but the overall picture remains simple: Clients’ IT spending will not disappear, and they will continue to look for vendors and firms that can consistently deliver.
 
Quality depends almost completely on people. Even as IT services vendors implement automation tools and management consultancies dabble in SaaS offerings, talent management remains the critical component to running an IT services or consulting business. And as individual vendors and firms win battles in the war for talent, the overall shifts will come from balancing increasing demands for highly skilled talent with business models that reward scale at the right locations.
 
Transparency, consistency and quality are hardly earthquake-like trends across the IT services and consulting space, but they will be the markers of successful vendors and firms through 2023.

 
TBR’s 2023 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud & software, devices, digital transformation, IT infrastructure, professional services, federal IT services and telecom.