December 2022

TBR releases exclusive market and competitive intelligence webinar content from 4Q22

HAMPTON, N.H. (Dec. 27, 2022) — Technology Business Research, Inc. (TBR) announces the on-demand availability of its 4Q22 webinars. Topics discussed this quarter included channel partner strategies in partnerships and acquisitions, tips for benchmarking alliance performance, supply chain issue impact on 5G network market development, pure plays’ disruption of the cloud market, and more. Click on any of the links below to start watching now.

How to use objective data metrics to benchmark your alliance performance

Learn the objective data each type of ecosystem participant — platform vendor, hyperscaler, systems integrator, large enterprise software vendor and small independent software vendor — should benchmark ; objective data metrics emerging to monitor ecosystem performance; and how these measurements, in the form of contractual commitments, need to be simplified to suit the ecosystem rather than the participant’s operating model

Pure plays are disrupting the original cloud disruptors

Learn who the most notable pure play disruptors are and why; the advantages these pure plays are using in competition against larger vendors; and which markets and customer segments are more apt to utilize pure play solutions

Supply chain issues delay private 5G network market development

Learn why the private 5G market has been developing relatively slowly; when the private 5G market is now expected to scale; and which verticals and use cases will drive growth in the private 5G networks market

Hyperscalers accelerate business model disruption in telecom

Learn the business model hyperscalers are employing for network connectivity; key use cases for which hyperscalers intend to leverage their networks; and implications of hyperscalers’ new business model for connectivity on telcos and cablecos

Channel partner strategies: Services, acquisitions and partnerships

Learn how channel partners performed in the wake of the pandemic, as well as market expectations for the remainder of 2022; how leading VARs and distributors are positioning for growth; and opportunities and challenges in adopting more services-centric go-to-market models

TBR webinars are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. A recording of the webinar is sent to all registrants the day after the live airing. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

To find out what we are discussing in 1Q23, visit the Webinars page of our website.

Amid macroeconomic uncertainty, AWS looks up the stack to enable complete solutions for customers

12.20.22/in Special Reports /by Catie Merrill, Senior Analyst

Overview

Despite some of the macroeconomic challenges that have stalled many IT projects, AWS (Amazon Web Services) continues to invest, testing customers’ use of the cloud, and ultimately prepare for a boon in adoption across SaaS, PaaS and IaaS once markets normalize. To support demand, AWS announced several offerings at re: Invent, which, in addition to the usual cadence of updates and features released in response to customer demand, included solutions less customary for the IaaS leader to offer, such as industry-specific modules and a service parallel to a true SaaS business application. When Selipsky took the helm as CEO in May 2021, we speculated how his experience at Salesforce would tie into an infrastructure-centric company like AWS. A year and a half later, it is clear that Selipsky is bringing AWS into a new chapter, one that looks beyond general-purpose infrastructure toward data and application services that will support the next wave of innovation and cutting-edge workload requirements.

New Supply Chain service marks AWS’ foray into enterprise SaaS

With infrastructure services responsible for its large revenue volume and industry-leading margins, AWS is naturally less associated with the SaaS space. Often marketed as business applications, AWS’ SaaS portfolio offerings consist of productivity apps, such as Amazon Chime and Amazon WorkDocs, as well as front-end offerings like Amazon Connect. That is, until now.

AWS used re:Invent to preview AWS Supply Chain, an application-level service that combines Amazon software with AWS’ IaaS and machine learning (ML) services to provide businesses with more visibility into their supply chain operations. With the new solution, users can connect to ERP systems like SAP Business Suite 4 HANA, EDI (electronic data interchange) feeds and other data sources to automatically provision a data lake, import data into a unified model and contextualize it in real time. In his opening keynote, Selipsky argued that getting a complete view of supply chains often requires complex, third-party integrations, but with AWS’ solution, customers can have a unified place for their data, potentially allowing them to consolidate point solutions. This could end up being a tough sell for AWS, however, considering the hold that vendors like Oracle (NYSE: ORCL) and SAP (NYSE: SAP) have on the market, especially as these vendors offer full-suite SaaS solutions, such as ERP and CRM, thus easing many supply chain integration pain points by default.

In other words, customers will by no means rip-and-replace their current systems, but they may still find themselves evaluating their current supply chain management (SCM) products to see if the level of predictive insights matches that of Amazon SageMaker, the ML engine powering AWS Supply Chain. Currently available in preview, the new solution is already gaining traction among companies like Accenture (NYSE: ACN), Lifetime Brands (Nasdaq: LCUT) and Traeger (NYSE: COOK). Amazon-owned retailer Whole Foods is also deploying the solution to improve inventory management and get a real-time view showing when products will arrive at its distribution centers.

The launch of Supply Chain comes just months after Amazon made a notable organizational shift, transitioning Dilip Kumar from VP of Physical Retail and Technology at Amazon to VP of Applications at AWS. This change highlights an ongoing intersection between the commerce and cloud sides of the business, and how Amazon is leveraging AWS to expand the reach of retail solutions like Just Walk Out and, from AWS’ perspective, access unique IP that can help it build new industry applications. Because AWS’ new solution essentially acts as a repository for supply chain data, we do not see it as directly comparable to the traditional SCM solutions on the market, as it is designed more to supplement these companies’ systems rather than replace them. It is still early days for AWS Supply Chain, but regardless, the new service suggests AWS is looking up the stack and building new applications, and Selipsky, with his former experience at SaaS giant Salesforce, could be giving us an early preview into AWS’ transformation to a full-stack vendor.

Customers across industries are building with AWS

With customers becoming more vocal about their need for industry customization, AWS has adapted its go-to-market model to align sales teams by both products and an underlying vertical. With AWS’ competitors making big bets on industry cloud, Selipsky is prioritizing industry solutions, which for AWS largely consist of adding specific rules and policies within popular tools like SageMaker and, in some cases, layering on ISV solutions to address a specific use case. This approach does not necessarily act as a big money maker or help AWS hone in on a particular industry, but nonetheless helps it get a foot in the door with both large enterprise and midmarket customers.

Showcasing some of its latest innovations in healthcare, Selipsky welcomed Lyell Immunopharma, a T-cell testing startup, to the stage. The head of the company described a compelling edge use case, in which they developed an IoT solution on AWS to collect data from medical equipment and process it in real-time via the cloud. This eventually led Selipsky to reveal Amazon Omics, a new Health Insurance Portability and Accountability Act (HIPPA)-compliant solution that allows customers to store, query and analyze genomics data and predict vulnerabilities to target and prevent diseases through SageMaker.

Meanwhile, in financial services, AWS highlighted a deal win with Trust Bank Singapore, which chose AWS as its primary cloud provider and in the course of six weeks has onboarded over 300,000 customers to its digital banking platform. Trust Bank Singapore chose AWS for its user-friendly interfacing and developer tools, which will help the firm build new digital products, and appears willing to fill any industry gaps with third-party software available via the AWS Marketplace. AWS has over 1,600 ISV partners listed on the marketplace, many of which may be wary of AWS building out its own software, including industry-specific apps that could be sold into more strategic accounts. That said, partners should be somewhat reassured by the fact that AWS is still an IaaS provider at its core and AWS Marketplace partners are key to helping customers easily buy software and ultimately expand their AWS consumption.

AWS unveils new services and integrations to become more entrenched in its customers’ data pipelines

Swami Sivasubramanian, AWS VP of Data and ML, delivered the third keynote of the conference and spoke of the importance of an end-to-end data strategy, which he contended is made up of three core components: a strong data foundation, data connectivity and data democratization. According to AWS, the data foundation includes areas customers cannot compromise on, such as reliability, security and scalability. AWS showcased several innovations that address these areas, including Redshift support for multiple Availability Zones, which allows Redshift clusters to run on multiple instances at once to protect critical applications in the event of a data center outage, and Amazon GuardDuty RDS Protection, which extends threat protection capabilities to data stored in Aurora.

Perhaps the most notable release addressing the data foundation was support for a zero-ETL (extract, transform, load) integration between Amazon Aurora and Redshift, which will allow customers to bring data from Aurora databases into the Redshift data warehouse, without requiring them to build and manage ETL pipelines. In addition to addressing a top pain point among data scientists, this announcement marks AWS’ push toward what the company is calling a “zero-ETL” future, one that heavily automates a process that has defined the database market for decades.

That said, in our view, zero-ETL, like so many other concepts in the cloud industry, is somewhat of a marketing term; even as customers benefit from having data automatically replicated from Aurora to Redshift, they will still likely have to perform some level of ETL on the data sitting in Redshift, whether it is extracting data from third-party files or transforming SQL queries. AWS is also not the first cloud provider to innovate in the space, with Google Cloud (Nasdaq: GOOGL) bringing its support for Bigtable data on BigQuery into general availability this past August. With this integration, Google Cloud, like AWS, looks to eliminate manual aspects of ETL pipelines and make it easier for customers to copy data into its data warehouse solution, BigQuery.

The new zero-ETL Aurora and Redshift integration is an indicator AWS is trying to fend off competition from cloud-native database peers, some which are benefiting from more open, infrastructure-agnostic approaches that AWS has yet to adopt. Even legacy database giant Oracle has taken steps to make its database services available on competing public clouds, including AWS, to retain market share. In general, existing customers — 94% of whom reportedly use 10 or more database and analytics services — will appreciate steps AWS is taking to automate the data pipeline, but a promise of a zero-ETL future may not be enough to sway customers outside the AWS database ecosystem.

New connectivity, governance and management capabilities help AWS deliver promise of an end-to-end data strategy

Already strong in the foundational aspects of the data life cycle such as storage, querying and analytics, AWS rounded out its portfolio with new connectivity, cataloging and governance solutions. One of the more notable announcements in this area was Amazon Data Zone. As highlighted by the head of product for Amazon Data Zone, Shikha Verma, the new solution offers customers a unified environment where both data producers and consumers can access, share and utilize data. For instance, Verma laid out a scenario where a marketing team wants to run a campaign and therefore needs to access and analyze sales data, which is dispersed across a data lake, data warehouse and third-party systems. The sales team can use Data Zone to import and cleanse data and provide the marketing team with access to the data so they can effectively run their campaign. Looking to improve data access, AWS also announced 22 new data connectors for AppFlow, its integration service, including support for Google Ads, Zoom Meetings, MailChimp and Stripe.

Making data more accessible throughout an organization, including to the line-of-business domains, remains a key issue that many pure plays and AWS partners are trying to solve. For instance, TBR also attended Informatica World 2022, recalling a similar scenario where the marketing analyst needed more data to run a campaign and with the Informatica Data Loader tool was able to pull data from a third-party system and ingest it into Google Cloud’s BigQuery. At re: Invent, AWS announced support for Informatica Data Loader on Redshift, so customers can similarly copy data to AWS’ data warehouse solution. This integration may provide AWS with inroads to cross-sell newer offerings, including Data Zone, and is one example of strong partner synergies at work between the hyperscalers and pure play PaaS vendors.

That said, these synergies do not come without risk. AWS’ rapid exploration and innovation of new markets poses a challenge for partners as AWS offers customers native alternatives that, if competitive enough in features and capabilities, may cause customers to re-evaluate their use of point solutions. Through 2023, AWS will have to walk a fine line between where it innovates directly and uses partners. This is especially true as Microsoft (Nasdaq: MSFT) and Google Cloud are partnering to build out end-to-end cloud data services, including those that can run across clouds and on premises.

In the final stages of his talk, Sivasubramanian touched on the concept of data democratization, which starts by democratizing access to education. In TBR’s own findings, executive pushback and lack of sufficient skills are among the leading factors preventing businesses from productizing their data and viewing it as an asset, which is why AWS and so many of its partners are investing in training and education programs to advance careers in technology. AWS announced it has trained 310,000 developers on ML technology through DeepRacer and launched 18 new courses for the education platform in 2022 alone. At the event, AWS also announced Machine Learning University, a program for community college educators that offers courses in areas like natural language processing, computer vision and responsible AI.

AWS leads with custom silicon to power a new wave of workloads

AWS’ ability to look up the stack and cross-sell data services to its existing client base is only as good as the breadth and depth of its underlying infrastructure. Aside from being first to market with EC2 in 2009, AWS continues to benefit from the scale of its infrastructure footprint. And while some competitors may tout a greater number of cloud regions, the capacity of AWS’ facilities, in addition to micro data centers suited for latency sensitive workloads, remains largely unmatched. This diverse footprint joined with the Nitro system, which optimizes performance by offloading capabilities like network access and local storage to SmartNICS cards, is key to AWS’ success and helps the company sell its own proprietary processors and capture more critical workloads.

Unsurprisingly, AWS used re:Invent to showcase a new set of EC2 instances powered by its own Graviton processors. C7gn instances and Hpc6g instances are designed for network-intensive workloads, such as firewalls and load balancers, and high-performance computing (HPC)-specific workloads, like weather forecasting and genomics processing. A key part of AWS’ strategy is expanding the Graviton portfolio, hoping cloud-native customers will spin-up new workloads on AWS chips, especially as existing Intel users may not be itching to move off their industry-standard hardware anytime soon. To support adoption, AWS also announced the Graviton Delivery specialization within the AWS Partner Network. Partners with this validation have approved software and professional services offerings designed to help customers adopt Graviton and optimize their EC2 usage.

As discussed by David Brown, VP of EC2, managing a networking architecture that meets the needs of administrators, who typically want stricter control over network access, and developers, who want to connect applications without worrying about infrastructure, remains a common challenge. Trying to address both personas, AWS launched VPC Lattice, a networking application that helps users set up service networks within a virtual private cloud (VPC) and apply consistent policies for network access, monitoring and traffic management across AWS accounts. As with some of the new data services announced at re:Invent, VPC Lattice highlights AWS’ strategy of releasing services that appeal to different buyers to help customers consolidate point solutions. For instance, as VPC Lattice expands in global availability and features, network administrators may find they can replace some third-party network solutions. Complementing VPC Lattice, AWS also announced the availability of Network Manager, a new capability within the AWS Management Console that allows customers to monitor network performance in real time.

Making a push toward HPC workloads, AWS announced the general availability of SimSpace Weaver, a managed compute service that allows customers to run spatial simulations across up to 10 EC2 instances. The service is suited for a range of use cases too demanding for the CPU power and memory typically available in a single compute instance, including smart-city planning or stadium development.

Re: Invent showcased several innovations, but multicloud was not among them

Throughout re: Invent there was a consistent theme of supporting customers with data services regardless of underlying infrastructure (e.g., EC2, EKS [Elastic Kubernetes Service], Lambda). As such, AWS is offering deeper integrations between its products with Data Zone’s connection to Redshift, Athena and QuickSight, as well as the zero-ETL integration between Aurora and Redshift, among the leading examples. Despite these integrations, however, it is abundantly clear that AWS is making it easier to consume multiple products, but only if they are powered by its own infrastructure. Multicloud remains one of the core ways competitors target AWS workloads and brand the company as closed-off and prone to locking customers into its cloud stack. While true in some regards, market dynamics like high inflation and labor shortages are giving new weight to monocloud environments, making it easy for AWS to message around product consolidation and cost savings. As such, for the time being, AWS seems content letting customers use tools from Microsoft Azure or Google Cloud Platform to connect to its cloud rather than enabling a true multicloud environment for customers by offering its own services outside AWS.

Marking its shift toward solution selling, AWS unveils new programs and tools for partners

With over 100,000 partners, some of which can pocket $6.40 for every $1 of AWS they sell, AWS has come a long way over the past decade in how it goes to market. AWS does not re-vamp its partner programs often, but last year’s switch from two partner tracks — Technology and Consulting — to five tracks — Software, Services, Training, Distribution and Hardware — was strategic, providing partners with a simplified way to engage with AWS professionals and customers based on the specific type of product or service they offer. In addition to giving partners more chances to work with AWS resources directly, this model, dubbed Partner Paths, has helped AWS support partners exploring new business models.

The most notable example is the large global systems integrators (GSIs) using both of AWS’ Services and Software tracks as they start to build out IP to supplement traditional services models. Leveraging Partner Paths, AWS announced Solution Factory, which is very much in line with the re: Invent theme of providing customers end-to-end offerings rather than one-off services. With Solution Factory, partners within a particular track can work with AWS experts via workshops, demos and storyboards to roll out prebuilt solutions that address a specific business and industry challenge.

With customers clearly seeking end-to-end solutions, particularly at the PaaS layer, we expect Solution Factory will resonate with the ecosystem and drive greater collaboration among AWS partners, such as ISVs and GSIs, who may see opportunities to work together and provide specific outcome-based solutions on top of AWS. VP of Worldwide Channels and Alliances Ruba Borno also announced new features within the AWS Marketplace, including Vendor Insights, which makes security and compliance information for different vendors available to buyers, and new QuickSight dashboards for data visualization.

AWS is clearly taking steps to help partners better build and sell with the cloud giant, promising higher profit margins for those who engage in solution selling via multiple Partner Paths, new programs like Solution Factory and the AWS Marketplace. Nonetheless, these new offerings may only do so much to address the top concern among most partners: keeping pace with AWS’ evolving portfolio of over 220 services. Some of the large-scale GSIs and software vendors may find it easier to take advantage of AWS’ solution-based programs and chase a $6.40 multiplier, but the Tier 2 consultancies and ISVs, which are key to landing greenfield accounts, may be left playing catch-up. Further, while throughout various keynotes AWS has indicated it “can’t go it alone,” some of the new SaaS and PaaS innovations continue to suggest that AWS is indeed trying to go it alone in hopes of becoming an end-to-end cloud provider. As AWS continues to monetize new offerings over time, it risks boxing out partners and marginalizing opportunities, which may make room for competitors to use selective innovation and partner-first approaches to compete.

TBR Takeaway

Leveraging its IaaS foundation to enable entire data pipelines and build new SaaS applications, AWS has a growing aspiration to offer customers “one hand to shake” when it comes to cloud. We expect this approach will help AWS address customers’ concerns around cost and lack of in-house resources in the near term and win larger deals as customers expand their spend levels beyond basic data hosting in the long term. With its industry-leading profitability — at a 26.3% operating margin in 3Q22 — AWS is in a unique position to build out new product and services capabilities internally, but there are still risks to trying to innovate in too many areas too quickly. Further, as AWS looks up the cloud stack to markets far less saturated than IaaS, the company will welcome more competition and will have to be mindful of not infringing on partners — something its competitors are adept at and will continue to leverage to boost margins and offer clients maximum flexibility on premises and across clouds.

AWS re:Invent 2022: This year, TBR analysts were among the more than 300,000 people who live-streamed the immense amount of content at Amazon Web Services’ (AWS) annual conference, including five executive keynotes and 22 leadership sessions. Macroeconomic uncertainty and its impact on global businesses served as the basis for AWS CEO Adam Selipsky to tout the power of cloud computing and argue that AWS — offering not only more than 600 compute instance types but also a broadening portfolio of adjoining platform and application services — is best suited to address the needs of a maturing enterprise.

A streamlined and growing IBM Consulting

12.20.22/in Special Reports /by Elitsa Bakalova, Senior Analyst

IBM Consulting delivers business transformation with an emphasis on industries leveraging IBM’s technology capabilities and growing partner ecosystem

The new IBM Consulting that emerged on Nov. 3, 2021, following the spinoff of Kyndryl is a streamlined and growing company that is a key enabler for IBM’s expansion into hybrid cloud and AI. IBM Consulting, which accounts for one-third of IBM’s total revenue and more than half of IBM’s headcount, is utilizing its established consulting, business transformation and application services capabilities to support clients’ transformation initiatives. IBM Consulting is leveraging proven and emerging technology offerings from IBM, along with IBM’s broadening partner ecosystem, to deliver platform-enabled transformation and innovation.

A notable change for IBM is the shift from a historically closed company that largely relied on IBM technology products and solutions to one that is much more open to partnerships. This shift increases IBM’s and IBM Consulting’s value propositions and, according to IBM Consulting SVP John Granger, drives “a renewed interest and excitement about what IBM is doing in the marketplace.”

Integrating industry skills and security into IBM Consulting facilitates value creation

Granger shared during the opening keynote of the IBM Consulting Analyst Summit that from a go-to-market standpoint IBM Consulting has two growth platforms. The first one enables clients’ journeys to hybrid cloud through application migration, application modernization and managing cloud environments. The second platform focuses on the delivery of business transformation through intelligent workflows, process expertise, AI-enhanced methods, automation, business process outsourcing, and data and AI solutions. Both platforms are underpinned by IBM’s ecosystem of partners, enabling IBM Consulting to deliver business transformation and solve clients’ complex challenges.

IBM Consulting is also increasing its already strong industry expertise by tapping into IBM’s industry capabilities to drive specialization in segments such as telco, banking, consumer packaged goods, energy and resources, and the public sector. As security has become a key priority for and enabler of digital transformation, moving IBM’s security services capabilities from IBM’s products business into IBM Consulting improves IBM Consulting’s value proposition. IBM Consulting will be better able to expand sales of security offerings to its clients, use its operational services capabilities to improve clients’ security performance, and tap into IBM’s partner ecosystem to increase security solution variety beyond IBM technology.

IBM Consulting is positioned for growth and is investing in attracting talent and developing resource skills such as by increasing certifications in ecosystem partners’ platforms to address client demand and drive revenue growth, which ranged between 16% and 18% year-to-year in constant currency during the past four quarters. Changing the way IBM thinks about partnerships and establishing an alliances organization within IBM Consulting to better identify joint opportunities for solution development and expansion also positively impacts IBM Consulting’s revenue growth. Expanding IBM Consulting’s capabilities through tuck-in acquisitions enables the company to strengthen its digital transformation capabilities.

In September IBM announced the acquisition of Dialexa, a digital product engineering services company based in the U.S., which will expand IBM Consulting’s product engineering expertise and improve its ability to deliver digital transformations. Dialexa is IBM’s sixth acquisition in 2022 and third in the professional services segment following the additions of Sentaca around telecom consulting and systems integration and Neudesic around cloud consulting to IBM Consulting. Emphasizing the IBM brand and clearly identifying IBM Consulting’s capabilities will enable IBM Consulting to better attract talent and capture client engagements, positively impacting the company’s growth.

IBM Consulting increases its competitive position by tapping into IBM’s global footprint, balance sheet and technology skills, including Red Hat capabilities being used by 4,000 Fortune 500 clients moving to hybrid cloud with support from IBM Consulting. IBM’s strong incumbency with multiple clients, such as around managing their application estates, improves IBM Consulting’s ability to establish deep client relationships and drive business outcomes through industry expertise. Supporting collaborative innovation with clients through the IBM Garage approach, which is used in 70% of IBM Consulting’s deals, improves the company’s ability to drive cross-functional collaboration between business and IT functions and deliver business outcomes through short sprints while prioritizing value.

Strategic partnerships enable IBM Consulting to deliver solutions that meet clients’ needs

While it has taken some time for IBM Consulting to augment its ecosystem and bring multiple partners together on engagements, the company currently has 12 strategic partners including Microsoft (Nasdaq: MSFT), SAP (NYSE: SAP), Kyndryl, KPMG, Workday (Nasdaq: WDAY), Oracle (NYSE: ORCL), Celonis, AWS (Nasdaq: AMZN), Salesforce (NYSE: CRM), ServiceNow (NYSE: NOW), Adobe (Nasdaq: ADBE) and IBM. IBM Consulting is augmenting partner-related revenue and changing its relationship with partners to successfully deliver transformations. For example, 18 months ago 42% of IBM Consulting’s revenue in EMEA was generated jointly with partners. The revenue share increased to 60% in November, and the target is to expand partner share to more than 70% in 2023.

On the partner relationship side, 18 months ago IBM Consulting in EMEA had 1:1 relationships with partners as partnership deals were historically sequential; however, the relationships evolved in 2022 to 1:many and partnerships are now multidimensional with several vendors included in engagements as transformational solutions require technology from different providers. IBM Consulting’s goal for 2023 in EMEA is to have a partner orchestrator role that coordinates offerings from multiple partners to deliver seamless solutions to clients. While IBM is one of IBM Consulting’s strategic partners for technology solutions, it is important to note that IBM Consulting follows a client-first mindset when selecting partners for joint solution delivery and is open to working with other technology partners if IBM solutions are not the right choice for the client.

As Granger said, “We are the trusted advisor and intimately embedded in client [relationships] but with our point of view, bringing some of IBM’s technology and going where the client wants to go.” IBM also highlighted its relationship with Kyndryl around on-premises managed infrastructure services, which were moved to Kyndryl after the spinoff. While Kyndryl is a key part of IBM’s managed services provider ecosystem and supports IBM in delivering mainframe modernization and moving joint customers to the cloud, IBM has expanded the infrastructure services partners beyond Kyndryl to provide customers with options.

During the keynote presentation on the second day of the event, IBM had representatives from SAP, AWS and KPMG on stage to showcase its collaboration with different types of partners and the nuances of each relationship. IBM recently celebrated the 50-year anniversary of its partnership with SAP, a vendor with which IBM delivers services, solutions and technology. IBM Consulting is enhancing its portfolio with accelerators to speed up SAP implementations. AWS is a more recent partner for IBM, partnering since 2016, but is one of the fast-growing relationships in terms of resources and revenue generation.

Key success factors of the relationship include the cultural alignment between IBM and AWS, especially around customer-centricity and relationship development. IBM also combines the IBM Garage approach with AWS’ innovation mechanisms when working with clients around defining technology-agnostic models and prototyping joint solutions. IBM also recently partnered with KPMG to address clients’ needs around financial processes improvement utilizing IBM Consulting’s consulting, applications services and business process services expertise; IBM’s research and technology capabilities; and KPMG’s expertise in audit, tax and consulting. Through its partner ecosystem, IBM is seeking new ways to deliver solutions to clients that have compelling value propositions and attractive pricing.

IBM Consulting utilizes its data, AI, hybrid cloud, transformational consulting, and design and experience capabilities to capture growth opportunities

IBM is infusing data and technology across IBM Consulting’s offerings to enable clients’ business transformation

IBM Consulting leads with data and AI offerings to scale AI in organizations and uses technology to improve processes and help clients gain access to data. The company works closely with its industry sector leaders and its partner ecosystem to enable clients’ business transformations through data and technology, such as improving customer experience and driving customer intimacy across sales and services cycles. For example, IBM Consulting is enabling the U.K. healthcare industry, which according to Client Partner and UKI Data & Technology Transformation Leader Clare Mortimer is a “data-rich, but information-poor industry,” to better understand the value of data and adopt data-driven decision making.

IBM worked with the U.K. Health Security Agency, which had five data platforms and was challenged by massive data duplication and high costs to run the solutions, to help it understand the value of data. IBM and AWS established a single platform for enterprise data analytics to address protection and surveillance needs in the U.K.’s public healthcare sector. To implement the solution and stand teams quickly, IBM Consulting utilized a core team in the U.K. and its global delivery capabilities, including in Spain, India and Brazil.

Transparent and trustworthy AI solutions support talent transformation activities

IBM Consulting is also utilizing data and AI to enable clients to transform talent, gain skills and build an adaptable workforce. The company is integrating AI in process workflows to facilitate clients’ search for skills and improve accuracy of decisions such as around hiring skills, building skills, retaining skills, paying for skills and planning for skills. As Senior Partner and UKI Talent Transformation Leader Andi Britt stated during a breakout session on talent transformation, IBM Consulting utilizes AI solutions to provide recommendations for different levels of employees, including experts, managers and practitioners, who use their recommendations to make decisions.

AI solutions have to be transparent and trustworthy, so IBM Consulting emphasizes providing ethical AI that analyzes vast amounts of data and makes the best recommendation around ethical values such as individual rights, privacy, nondiscrimination and nonmanipulation. For example, IBM Consulting worked on a skills inference engagement with a multinational medical, pharmaceutical and consumer packaged goods corporation. IBM Consulting provided AI solutions to scan and analyze the client’s internal data using AI and build a competency framework that gives a sense of skills supply within the organization.

Regulations drive clients’ sustainability initiatives

According to IBM’s 25th edition of The CEO Study, which published in May 2022 and covers 3,000 surveyed CEOs across more than 40 countries and 28 industries, 81% of organizations have a sustainability strategy in place and 53% of the CEOs rated sustainability as a top priority; however, only 35% of the polled organizations have started executing sustainability initiatives. Approximately 63% of the surveyed CEOs expect digital capabilities and AI to help close the sustainability gap. IBM Consulting is well positioned to capture growth opportunities in sustainability. The company is leveraging its Sustainability Services portfolio and industry expertise; tapping into IBM’s broad capabilities in software and systems as well as Red Hat and IBM Research; and utilizing its partnership ecosystem to help clients become sustainable enterprises.

As IBM Consulting Partner and IBM DACH Sustainability Services Market Leader Elisabeth Goos stated during a breakout session on sustainability, while sustainability transformation is a complex business challenge, legislation is a big driver for sustainability, especially in Europe, which surpasses North America and APAC in sustainability initiatives. Stricter regulations and measures at the European Union and national levels — for example, punitive measures in Germany that amount to 2% of clients’ revenues and negatively affect profits — and customers’ desire to purchase sustainable products and their willingness to often pay a higher price are pushing IBM Consulting’s clients to accelerate sustainability initiatives.

Showing business use cases for the metaverse supports solution adoption

IBM Consulting provided a breakout session on the metaverse led by IBM Consulting Distinguished Engineer Chris Hay and IBM Consulting (in the U.K. & Ireland) iX-Customer Transformation Service Line Leader Suzanne Jones. Hay set the direction of the discussion by defining what is behind the metaverse, which is a rapidly evolving virtual world. According to Hay, the metaverse is not about one or two technologies; it is a promise to build on a new set of values — connections, commerce, consent, collaboration, community and copresence — and collectively drive the idea of a co-reality.

During the presentation, Hay shared multiple use cases for the metaverse across industries and noted that financial services organizations and telcos are showing increased interest in IBM’s metaverse-related solutions. For example, use cases could include metaverse commerce, in which IBM provides a 3D virtual storefront for VR and augmented reality (AR) that is connected to an omnichannel experience through the IBM iX Experience Orchestrator; metaverse workplace, where employees and customers could meet through secure web-, AR- or VR-based 3D virtual spaces; and metaverse branch, which provides optimized virtual spaces for real-time communication and tasks based on public platforms and virtual worlds.

An example of a metaverse branch is IBM Consulting’s work with a hospital in Japan where IBM Consulting created a digital twin of the hospital that is accessible to patients who want to learn what will happen during their stay, such as using simulations to see what the CT scan process looks like.

When asked during the session why clients should choose IBM for this type of work, Hay explained that IBM is a cloud, design and experience company and importantly IBM has an ethical point of view regarding hybrid cloud. For example, financial services companies face challenges when adopting public cloud platforms due to regulations around data protection and security. However, IBM provides broad options for partners and technology and is increasingly more open to working with an ecosystem of partners to address clients’ specific business needs. And notably, all work on the metaverse is done with business value, user value and a sustainable mindset in place, such as using web-powered solutions instead of pixel streaming, which usually is expensive from a cost and sustainability standpoint.

In conclusion

IBM Consulting is well positioned to continue expanding in the IT services and management consulting segments due to its clear focus on providing consulting and business transformation and application services capabilities augmented by industry and technology expertise. The global transition to a partner-friendly approach and a client-first mindset when developing solutions broadens and deepens IBM Consulting’s capabilities and increases its value proposition and attractiveness. IBM Consulting’s scale, global service delivery capabilities, established experience design resources through IBM iX, and ability to collaboratively innovate with clients through the IBM Garage approach enable it to successfully run and deliver transformations across the globe. Its emphasis on nurturing client relationships, along with its proximity to clients and understanding of industry nuances and regulations, enables the company to capture opportunities in the dynamic market environment, such as around sustainability and healthcare in EMEA.

IBM Consulting Analyst Summit: IBM Consulting held its first in-person analyst event in EMEA one year after the spinoff of Kyndryl into a separate managed infrastructure services company. The event took place in IBM’s new location for its Innovation Studio in London’s South Bank region. The goal of the two-day event was to provide an update on IBM Consulting’s strategy, capabilities and future direction; showcase how the company works with strategic partners such as SAP, Amazon Web Services (AWS) and KPMG; and dive deep into multiple IBM Consulting use cases.

Industrial IoT (IIoT) – Challenges in the marketplace

12.07.22/0 Comments/in Blog /by Patrick Heffernan, Practice Manager and Principal Analyst

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.

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

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.

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

12.06.22/0 Comments/in Webinars /by TBR

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

12.06.22/0 Comments/in Webinars /by TBR

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

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

12.06.22/0 Comments/in Webinars /by TBR

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

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

12.06.22/0 Comments/in Webinars /by TBR

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

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

12.06.22/0 Comments/in Webinars /by TBR

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

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

12.06.22/in Special Reports /by Patrick Heffernan, Practice Manager and Principal Analyst

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

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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.