Will the quantum computing investment summer of 2021 continue?

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Volume of information being released around quantum initiatives leads TBR to believe the so-called quantum winter has passed

Last year the demand for agile solutions to persistent global challenges helped raise awareness of quantum computing’s potential. Investors took notice, as the quantum computing industry saw unprecedented backing from investors and progress in alliances around innovation, commercialization and workforce development. TBR believes this uptick in enterprise interest in quantum potential will continue throughout 2022.

In 2021 we saw some of the main hardware players continue to hit development road map milestones, new entrants in the market, and increased commitment to the technology stack, all of which we discuss further in our recently published 4Q21 Quantum Computing Market Landscape. While intimidating performance development gaps remain, the amount of funding that has been committed to the industry has provided clarity in a critical ingredient of innovation.

To access the entire 4Q21 Quantum Computing Market Landscape or speak with our subject-matter experts on quantum’s impact on your business, sign up for a 60-day free trial of TBR Insight Center™.

Additional developments highlighted in our recent 4Q21 Quantum Computing Market Landscape include:

  • Rigetti, the only pure play superconducting quantum computing startup, announced plans to become a public company via Special Purpose Acquisition Company (SPAC), Supernova Partners Acquisition Company II Ltd. As is customary with SPAC acquisitions, the deal will result in Rigetti receiving a massive cash infusion of $358 million, plus additional investor funds and $100 million in Private Investment via Private Equity. Rigetti would be the second company to go public, after IonQ, which went public in October. The $458 million Rigetti is to receive from this SPAC deal would well position the company to refocus on R&D objectives and invest in the system development race. To do so, the company would need to hire aggressively, as the talent pool that has the capability to lead and contribute to quantum system development is extremely limited. Based on the timeline of the IonQ deal announcement to execution, TBR predicts Rigetti will become public in May or June 2022.
  • It seemed to only be a matter of time until Amazon Web Services (AWS) launched its own initiative to build a quantum computer. In October the cloud computing division announced it has built and operationalized AWS Center for Quantum Computing, located in Pasadena, Calif., officially launching AWS into the quantum computing race. AWS plans to build its quantum computers based on the superconducting architecture, positioning it to compete directly with IBM, Rigetti and Google. AWS has teased its intent to build a quantum computer hosted on Amazon Braket, its quantum computing resource provisioning service via AWS Cloud, and has released several quantum research papers, most notably one regarding a new method to build a fault-tolerant quantum computer based on Schrödinger’s cat qubits. The theoretical method incorporates both active and passive quantum error correction to combat the two main types of errors prevalent in quantum computing, bit flip and phase flip errors. It should be noted that, to this point, AWS has not yet realized a full prototype, or at least has not made such progress public.
  • IonQ, a leading vendor in the development of ion-trap quantum computers, made international commercial progress with its partnership with South Korean car manufacturer Hyundai Motor Company. The two companies plan to codevelop what will be the largest Variational Quantum Eigensolver algorithm run on a quantum system to date. The purpose of the algorithm is to simulate the properties of lithium oxide to improve battery technology used in electric vehicles. This partnership marks the second major alliance in South Korea, after IonQ’s three-year deal with Quantum Information Research Support Center at Sungkyunkwan University. TBR believes this activity is largely a result of co-founder and CTO Jungsang Kim’s strong ties to the country. Kim attended Seoul National University, widely regarded as the top university in the country, before receiving his Ph.D. in physics at Stanford University. In addition to his role at IonQ, Kim is a professor at Duke University and serves as a member of the National Quantum Initiative Advisory Committee.
  • Quantinuum, the newly minted business combination of Honeywell Quantum Solutions and Cambridge Quantum Computing, released one of the first true quantum offerings in 2021 in its cryptographic key generator service, Quantum Origin. While relatively narrow in use, the service generates truly random cryptographic keys, something that could previously only be simulated. In January the company announced a deal to make Quantum Origin available within the Strangeworks ecosystem. Strangeworks is attempting to create value in the enterprise space via a quantum ecosystem that allows members to access quantum offerings, software tools and educational services as well as a community of quantum-involved companies.
  • Capgemini and IBM announced a partnership to explore quantum use cases, particularly in the quantum communication and sensing areas, and to launch Capgemini’s Quantum Lab, which has quantum computer facilities in the U.K., Portugal and India. Capgemini will also serve as an IBM hub, meaning IBM will build an on-premises quantum computer for Capgemini, which will effectively expand IBM’s quantum system reach to European customers with lower latency. The deal includes IBM’s latest 127-qubit quantum processing unit, Eagle, which it released in December. 

2022 Predictions: Cloud

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Join Practice Manager and Principal Analyst Allan Krans, Senior Analyst Catie Merrill and Senior Analyst Evan Woollacott Thursday, March 10, 2022, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of TBR’s three 2022 Predictions special reports on the cloud market — Cloud Partnerships, Cloud Applications and Cloud Infrastructure & Platforms — each part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

Don’t miss:

  • Customization becomes the standard for cloud applications
  • Vendors prioritize partner ecosystems in their go-to-market strategy
  • PaaS emerges as the source of differentiation as vendors embrace open hybrid architectures

Mark your calendars for Thursday, March 10, at 1 p.m. EST,
and REGISTER to reserve your space.

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2022 Predictions: Digital Transformation

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Join Practice Manager and Principal Analyst Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst Evan Woollacott and Senior Strategy Consultant Geoff Woollacott Thursday, Feb. 3, 2022, at 1 p.m. EDT/10 a.m. PDT for an in-depth, exclusive review of Top 3 Predictions for Digital Transformation in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

At the end of 2021, TBR declared, “Digital is dead; long live business transformation.” In this webinar, our team will discuss the trends and shifts in 2021 that led enterprises to focus increasingly on the business transformation and change management aspects of digital transformation as well as what will come next as emerging technology adoption continues to accelerate.

Coming around to specific vendors, the team will highlight which firms will outpace peers in the 2022 market, including a look at how innovation and transformation centers will — or will not — provide differentiation. Building on a key prediction around leadership and talent, they will also examine whether IT services vendors, consultancies and their technology partners have invested smartly in building, training and equipping their executive leadership ranks.

Don’t miss:

  • How will the business side of digital transformation eclipse technology imperatives in 2022
  • What will consultancies and IT services vendors do to stay relevant in a fast-changing market
  • Whether executives are prepared to lead in a post-pandemic world.

Mark your calendars for Thursday, Feb. 3, at 1 p.m. EDT,
and REGISTER to reserve your space.

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2022 Predictions: Data Center

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Join Principal Analyst & Practice Manager Angela Lambert Thursday, Feb. 17, 2022, at 1 p.m. EST/10 a.m. PST for an in-depth, exclusive review of the Top 3 Predictions for Data Center in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

Data center infrastructure vendors are racing to further entrench themselves into customers’ ecosystems, from managed services to hybrid cloud enablement, to diversify their revenue beyond hardware and create more reliable revenue streams. During this webinar, we will discuss three key areas where vendors are innovating and reinventing to carve out space in evolving markets.

Don’t miss:

  • How hardware subscription offerings will be refined to boost traction
  • How infrastructure vendors will embrace ecosystems
  • How vendors will attempt to gain share in edge compute

Mark your calendars for Thursday, Feb. 17, at 1 p.m. EST,
and REGISTER to reserve your space.

Related content:

  1. Top 3 Predictions for Data Center in 2022

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2022 Predictions: Telecom

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Join Principal Analyst Chris Antlitz Thursday, Feb. 10, 2022, for an in-depth, exclusive review of Top 3 Predictions for Telecom in 2022, part of TBR’s Predictions special series examining market trends and business changes in key markets, such as cloud, IT services, digital transformation and telecom. 

Don’t miss:

  • How supply-demand imbalances could impact the pace of 5G market development
  • Why hyperscalers are shifting focus from central cloud to edge cloud
  • Which vertical is expected to spend the most on private cellular networks over the next few years

Mark your calendars for Thursday, Feb. 10, 2022, at 1 p.m. EST,
and REGISTER to reserve your space.

Related content:

Top 3 Predictions for Telecom

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2022 Predictions: IT Services, Management Consulting, Federal IT Services and Global Delivery

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Join Practice Manager and Principal Analyst Patrick Heffernan, Principal Analyst Boz Hristov, Senior Analyst John Caucis, Senior Analyst Elitsa Bakalova and Senior Analyst Kelly Lesiczka for an in-depth look at TBR’s predictions for the IT services market, including management consulting, federal IT services and global service delivery, in 2022 as well as trends they expect to see during the year.

Don’t miss:

  • Services is still people, even as compelling new forces like environmental, social & governance initiatives and emerging technologies challenge IT services vendors  
  • Managing talent and restructuring and building decarbonization credentials will drive management consulting in 2022
  • Federal spending priorities shifting to favor civilian agencies
  • Fallout from the pandemic will lead to the most disruptive year in global delivery since the start of outsourcing

Mark your calendars for Thursday, Jan. 27, 2022, at 1 p.m. EST,
and REGISTER to reserve your space.

Related content: 

  1. Top 3 Predictions for IT Services 
  1. Top 3 Predictions for Management Consulting 
  1. Top 3 Predictions for Federal IT Services 
  1. Top 3 Predictions for Global Delivery 

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With Cerner, Oracle buys into an industry that is actively embracing cloud and outpacing total GDP growth

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A deal would indicate revenue potential, but the evolving competitive and technology landscapes raise questions

On Dec. 20, 2021, Oracle (NYSE: ORCL) announced plans to acquire Cerner (Nasdaq: CERN), a front-runner in the healthcare IT (HCIT) industry, for $28.3 billion. The announcement comes as COVID-19 continues to strain global healthcare systems, driving up demand for digitized workflows and processes that can help improve efficiency, enhance service quality and reduce costs. The announcement also comes as Oracle faces a turning point: After six consecutive quarters of corporate year-to-year revenue gains, net-new buyers, not just those inside the Oracle ecosystem, are showing interest in the company’s feature-rich suite of back-office applications and second-generation cloud infrastructure.

As such, by drawing on some of the successes of its previous acquisitions, including Peoplesoft and NetSuite, Oracle hopes to use Cerner, whose business has similarly been on an upward trajectory, to enter a new phase of growth that is more on par with the 30%-plus growth rates recorded by competitors Amazon Web Services (AWS) (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), and Google Cloud (Nasdaq: GOOGL). Should the deal close, this growth could stem from multiple areas, including onboarding electronic medical record (EMR) and electronic health record (EHR) workloads to Oracle Cloud Infrastructure (OCI), and using AI services like Oracle Assistant to kickstart conversations with the clinical, operational and financial branches of healthcare in a land-and-expand approach.

Despite the growth potential, investors appear skeptical, with Oracle’s stock price falling 5% on the day of the announcement, largely due to concerns around the company’s cash standing and ability to position Cerner as a more notable alternative to Epic and other competing HCIT firms. In some ways, this skepticism stems from Oracle’s lack of comparative experience in the industry cloud space and, perhaps to a larger extent, investors see the acquisition as another one of Oracle’s attempts to buy revenue, similar to the company’s failed TikTok deal and subsequent fallout.

Regardless, Oracle’s biggest challenges stem from the evolving technology landscape that is actively favoring not only the cloud but also open, hybrid multicloud delivery methods. Oracle plans to use Cerner to bolster its cloud position, but given the company’s later-to-market standing and perception for locking customers in, it is unclear the extent to which Cerner will actively support Oracle’s cloud vision. Furthermore, competitors, including those with deeper pockets and arguably more open partner ecosystems, only add to this skepticism.

Cerner would be the largest buyout in Oracle history, but valuation is reasonable

After the announcement, sticker shock was inevitable, as the deal came at a price tag in line with some of the largest acquisitions in software history, including Microsoft’s purchase of LinkedIn and IBM’s purchase of Red Hat. However, based on Cerner’s 2020 and projected 2021 financial results, Oracle valued the deal at roughly 5x Cerner’s annual revenue, a level that is typical in industry acquisitions, especially those that include firms with more transactional business models. COVID-19’s halt on upfront spending impacted Cerner’s license business and overall revenue growth in 2020, but the company has quickly bounced back in 2021 and is expected to meet its annual revenue guidance of 5% year-to-year growth.

A key part of Cerner’s strategy has been accelerating organic top-line growth through platform modernization and emphasizing SaaS-like delivery methods. This approach aligns with Oracle’s strategy, which similarly emphasizes revenue growth through annuity-based cloud services. Another priority for Oracle is gaining share through OCI, which will be a difficult feat given the highly saturated nature of the IaaS market. Oracle will help Cerner overcome challenges entering global markets, especially in an unpredictable industry like healthcare, to meet its growth objectives.

Although Cerner management boasts leading market share in many markets outside the U.S., in the U.S. EHR space, the company currently sits at about 25% market share and is losing out to Epic, which is nearing an estimated 30% market share. As such, Cerner’s, and Oracle’s, biggest opportunities could come internationally. Oracle will play a key role in helping Cerner, which currently derives 89% of its revenue from domestic customers, expand its international presence.

HCLT’s groundbreaking apprenticeship initiative: Long-term vision, near-term effects

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In the battle for talent, prepare for the long war

Recruit, retain and train. Every IT services vendor over the past couple of years has been pulling every lever to find, manage and reward talent in a chaotic market in which new competitors and newly empowered professionals have spiked attrition across the board and strained HR staffs as never seen before. The pandemic brought about a new appreciation for employee well-being while proving virtual engagements and delivery could work for IT services vendors. As 2022 starts, filling talent gaps in the near term will continue to challenge every vendor. Notably, HCL Technologies (HCLT) has begun investing in the long term with a program that is perhaps unique among IT services vendors and certainly, in TBR’s view, timely, a little risky and genuinely good for society. 

On Dec. 9, TBR spoke with Ramachandran Sundararajan, HCLT’s EVP of Human Resources at HCL America, and Rohan Varghese, HCLT’s VP and global head of Analyst Relations and Customer Advisory Board, both of whom provided details on the new apprenticeship program. The following reflects that discussion and TBR’s ongoing analysis of HCLT.

Flexibility, STEM and a 5-year apprentice journey  

With the company’s new apprenticeship program, announced in November, HCLT has crafted an expansive, flexible, multiyear journey for students intent on joining the IT services and science, technology, engineering and math (STEM) ecosystem. The core program begins with a year spent at HCLT as a salaried employee, including a three-month “boot camp” that introduces apprentices to various aspects of HCLT’s IT services, consulting and technology businesses. The second phase focuses on practice-based learning. Sundararajan emphasized the “practice” part, noting that apprentices would have exposure to and gain experience working across many of HCLT’s core areas, such as SaaS, cloud, security and networking services. Over the final three months of the first year, apprentices join a live project environment, supporting and providing help at an appropriate proficiency level and putting to use skills learned from working in sandbox environments.

When apprentices graduate from this last phase, they become eligible for an HCLT-funded college program and can fully appreciate the flexibility that HCLT offers. Graduated apprentices can enroll in a four-year STEM program at any university, with HCLT picking up the tuition and fees and keeping the student on the company’s payroll. Apprentices can also choose an associate degree track to move more quickly to full-time employment. Or apprentices can opt for industry-recognized certifications, moving even more rapidly into the full-time workforce. In all three journeys, HCLT pays the academic costs, allowing the apprentices to earn a degree without any student debt.

Looking beyond the usual boundaries while staying aligned to HCLT’s core

Notably, HCLT has designed the apprenticeship program to seek candidates both geographically and economically diverse from the standard STEM talent pool. HCLT wants to attract students with fewer financial advantages than the average college student and will be recruiting most heavily in cities away from the technology hubs of Silicon Valley; Austin, Texas; and Boston. Sundararajan said HCLT will work with community groups in Cary, N.C.; Hartford, Conn.; and Sacramento, Calif., among other cities, although HCLT would welcome apprentices from any part of the U.S. In addition to throwing the net wide in terms of who and from where, Sundararajan said the goals of the program centered on building skills for the future, recognizing that the technical skills, who has them, and where they live will have lasting effects across their communities.

Top 3 Predictions for Devices in 2022

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Devices demand to decelerate in 2022

Devices market will see growth return to pre-pandemic levels throughout 2022

Many thought the initial surge in devices demand would quickly fade after the start of the COVID-19 pandemic, but that has not been the case. Revenue growth across the ecosystem, especially in PCs and tablets, has been much higher in recent quarters than traditional single-digit growth. However, this current elevation is unsustainable.

Over the past two years, the devices market has seen a major industry shift in supply and demand that has reshaped the ecosystem and has led to strong and consistent growth from most device vendors. It began with factory closures that hurt early 2020 supply chains and revenue growth, followed by a major spike in demand for devices used to entertain, work and learn from home during the pandemic. A shortage of components has led to this demand being unmet as of the end of 2021, leaving TBR to question whether vendors will be able to maintain revenue growth, unit sales and average unit revenues in the long term.

TBR expects a drop in demand and revenue growth by the end of 2022 due to these unsustainable conditions; however, other factors will emerge to help stabilize the devices market at pre-pandemic levels. These trends include continued revenue growth, albeit at a decelerated, low-single-digit pace rather than the 20%-plus year-to-year growth seen since mid-2020, as well as vendors’ releases of Windows 11 PCs and additional 5G device enhancements to drive refreshes in the coming year.

2022 devices predictions

  • PC market growth unsustainable, will return to single digits in 2022
  • Tablet market revenue growth set to decelerate in 2022
  • DaaS will lead all PC services in revenue growth through 2022

Learn more in our webinar 2022 Predictions: Devices

Download a free copy of TBR’s Top 3 Predictions for Devices 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.

Humans at the center: EY’s People Advisory Services in the post-pandemic workplace

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Transforming the employee experience for EY and its clients

In late October 2021, TBR met with senior partners from EY’s People Advisory Services, including Kim Billeter, principal, Americas People Advisory Services leader; Jonathan Sears, principal, Americas Organization and People leader; Gerard Osei-Bonsu, EMEIA Integrated Mobility leader; and Agi Donnithorne, associate director of Global Analyst Relations, to discuss their firm’s ambition, investments, people and place within the broader people advisory market. The following reflects that discussion and TBR’s overall research and analysis of the current human management consulting market.

Throughout the entire discussion with TBR, EY’s People Advisory Services leaders emphasized that their whole practice revolved around placing “humans at the center,” an approach that has been embedded natively into every EY service line, including Consulting, Tax, Strategy & Transactions, and Assurance, reflecting EY’s firmwide and global approach to talent issues. EY’s leaders also emphasized deploying and testing solutions internally before introducing them to clients and continually working to “simplify complexity” across every element of the hire-to-retire people advisory spectrum.

Notably, the EY leaders said their main clients have expanded beyond the chief human resources officer to now include chief operating officers, chief financial officers, and line-of-business leaders more attuned — possibly due to the pandemic — to the vast array of human capital management challenges, including office space, productivity tools, immigration, and risk management. While human capital management consulting includes, potentially, an impossibly diverse and almost unmanageable set of capabilities, offerings and consulting services, Billeter and the rest of the EY team kept the discussion focused on two key components: prioritizing a “humans at the center” approach and transforming the employee experience, starting with a reimagining of EY’s and its clients’ workforce agendas.

In TBR’s view, every company has faced human capital management challenges during the pandemic and some lessons have spread quickly (for better or worse). As spiking attrition, return-to-workplace issues and the war for talent all heat up across professional services and the broader workforce, EY’s decision to ground humans at the center while thinking about how long-term transformation should resonate with clients while helping the firm maintain its own employee morale and culture.

EY Skills Foundry designed to meet upskilling and reskilling demands for digital transformation

In briefing TBR on the full scope of EY’s People Advisory Services Practice, the EY leaders described transformation solutions; capabilities including talent management, workforce planning, HR transactions, and digital assets such as the Learning Experience Platform and EY Mobility Pathway; and strategic alliances with IBM, Microsoft, SAP and ServiceNow. Turning to the EY Skills Foundry, the EY team reiterated that the seemingly relentless need for digital transformation (DT) among all enterprises drives upskilling and reskilling talent among professional services and technology firms. Clients’ workforces must change as well, and clients, according to EY, are not prepared and lack skills, capabilities and scale.

The EY Skills Foundry, which the firm initially deployed and refined internally, includes three components: a live heat map of skills across an organization, showing both supply and demand and allowing for more rapid decision-making around reskilling investments; a content aggregator EY described as “learning intelligence” designed to add speed and scale to training; and “a validated, secure digital record of employees’ skills and experiences,” which can help clients more rapidly deploy the right person to the right opportunity. The EY team stressed that the firm tested the foundry platform over the last couple of years, applying automation when possible and seeking input and refinements from clients.

While still nascent, with fewer than 10 live clients, TBR believes the EY Skills Foundry has two key attributes likely to separate EY’s offering from that of its competitors in the crowded human capital consulting field. First, the firm can prove the business case and almost ensure success by pointing to EY’s own internal results across a global firm with nearly 300,000 professionals. This “customer zero” use case resonates with clients, particularly for offerings blending technology and change management. Second, EY has prepared itself to sell, deploy and support the EY Skills Foundry through multiple business models, including traditional consulting engagements, SaaS and managed services.

Expanding how EY engages with clients extends the firm’s reach within clients and enlarges the potential market EY can serve. TBR’s November 2021 Digital Transformation: Voice of the Customer Research includes the following analysis: “Improving HR operations and employee efficiency slid to the bottom of the objective list in 2021 — down from No. 3 about 18 months ago, just after the pandemic began — confirming that the emphasis on employee experience was short-lived and buyers quickly reshuffled priorities to ensure shareholders’ expectations are met.