December 2023 - Page 2 of 2

GenAI: A Growth Catalyst for Cloud Evolution in 2024 and Beyond

12.04.23/in Special Reports /by Allan Krans, Practice Manager and Principal Analyst

New: Download your free copy of TBR’s 2025 Predictions for Digital Transformation

2024 Predictions is a series of special reports examining market trends and business changes TBR’s analysts expect in the coming year. In the cloud edition, our team looks at expectations for the strategies that will determine growth leaders in cloud in 2024.

Top 3 Predictions for Cloud in 2024

Simply providing cloud services at scale is no longer enough for vendors to gain cloud market share
IaaS will become more tailored to workload and regulation
SaaS vendors promote multiproduct sales with generative AI

Request Your Free Copy of 2024 Cloud Predictions

GenAI’s Rise Amid Cloud Challenges: Navigating 2024’s Landscape and Shaping the Future

For all the challenges that cloud vendors faced in 2023, there was a promising sprout of opportunity that developed quite rapidly with generative AI (GenAI) technologies. The pace with which GenAI gained not only awareness but also real investment and usage in the market was notable, and we expect end customers’ real investments in the solutions to continue to grow and develop in 2024.

However, GenAI solutions on their own will not overcome the headwinds that worked against the market throughout 2023. Many of the forces that caused revenue growth rates to slow precipitously for nearly every major cloud vendor remain in place heading into 2024.

The general macroeconomic conditions remain uncertain, wars continue to threaten global stability, IT buyers remain cautious about spending, and cloud has reached a saturation point in many IT organizations. So, while we do not expect GenAI technology to return the market and leading vendors to their pre-2023 pace of revenue expansion, it will serve as a small yet rapidly growing segment in 2024 and should become a significant market in 2025 and beyond.

We also expect the intensity of AI-focused strategies during 2024 to reflect the importance of the technology to long-term growth. AI could reset the cloud leaderboard for the next decade, so incumbents like Amazon Web Services (AWS) and Salesforce will be keen to protect their large customer bases against mounting AI competition from the likes of Google, Microsoft and SAP.

To read the entire 2024 Cloud Predictions special report, request your free copy today!

IT Services and Consulting in 2024: Traversing GenAI Pressures, Talent Challenges, and Regulatory Waves

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

New: Download your free copy of TBR’s 2025 Predictions for Digital Transformation

2024 Predictions is a series of special reports examining market trends and business changes TBR’s analysts expect in the coming year. In the professional services edition, our team looks at expectations for the predictable uncertainties of 2024, including the impacts of GenAI hype and outcomes-based strategies for IT services vendors and consultancies.

Top 3 Predictions for Professional Services in 2024

The 2023 focus on reskilling and training will pay off in accelerated revenues in 2024
Generative AI will create a pivot to outcomes-based pricing
Regulations will become a major pain point for all

Request Your Free Copy of 2024 Professional Services Predictions

Embracing Change, GenAI Hype and the Imperative of Outcome-Based Strategies for IT Services and Consultancies

As they say, nothing in life is certain except for death and taxes. And change. And data overload. And hype about technology and disruption. Predictions provide a perfect platform for big leaps and wild guesses, but at TBR, we are seeing more of the same for 2024, including taxes, data overload, and technology (read: generative AI [GenAI]) hype.

IT services and consulting stubbornly remain a people-centric business, despite advances in automation, analytics and AI, and vendors most adept at attracting and retaining good people continue to outperform peers. Keeping good people when the hype around GenAI suggests that many task-oriented jobs will disappear requires vendors offer training in new skills and develop new career paths.

Concurrent with these pressures on talent, GenAI will pressure contracts — with greater transparency comes greater opportunity to pay for exactly what you got. IT services vendors and consultancies that embrace outcome-based pricing models will increasingly find their clients, particularly those enamored with GenAI (although, who isn’t?) open to creative pricing and reluctant to continue business as usual once GenAI has pushed the client’s procurement office out the door.

Additionally, governments continue to lean into regulation to mitigate societal risks and to tame or unleash (depending on your political views) commercial activities. After the last three years of dealing with the pandemic, war, and the emergence of robot overlords (read: again, GenAI), we can reasonably expect governments will increasingly seek the security blanket of tighter regulations.

Add a splintering of global approaches to trade, finance and geopolitics, and companies face not just more regulations but also overlapping and potentially conflicting compliance obligations, varying wildly by jurisdiction. Death and taxes, indeed.

For IT services vendors and consultancies, 2024 looks a little boring. Reskill and train your people so you’ve got the right folks ready to deploy at scale to address your clients’ toughest problems. Let someone else handle the easy problems until they get replaced by GenAI. Start baking outcomes-based pricing into every engagement, underpinned by AI and analytics that demonstrate unquestionably what value you are bringing your clients. And lean hard into governance, risk and compliance (GRC), unless you do not have those skills already, in which case, find a partner.

To read the entire 2024 Professional Services Predictions special report, request your free copy today!

Telecom Industry Retrenches in Response to Macroeconomic Pressures

12.04.23/in Special Reports /by Chris Antlitz, Principal Analyst

New: Download your free copy of TBR’s 2025 Predictions for Digital Transformation

2024 Predictions is a series of special reports examining market trends and business changes TBR’s analysts expect in the coming year. In the telecom edition, our team looks at expectations for communication service providers and their vendor partners as the macroeconomic and telecom industry-specific challenges of 2023 continue in 2024.

Top 3 Predictions for Telecom in 2024

New round of M&A and bolder combinations are likely to be allowed by regulators
Cash flow management becomes priority due to increase in cost of capital and other headwinds
Open RAN will not be ready for mainstream adoption in 2024

Request Your Free Copy of 2024 Telecom Predictions

CSPs and Telecom-centric Vendors Will Have to Adjust to Headwinds in Their Industry and the Wider Economy

Macroeconomic and telecom industry-specific challenges that manifested in 2023 — for example, rising interest rates, inflation, lack of 5G ROI, technological complexity, and the end of key stimulus programs and various other economic support mechanisms instituted by governments during the COVID-19 pandemic — are expected to persist through 2024, prompting a response from communication service providers (CSPs) and their vendor partners.

The most impactful and pervasive issue confronting the telecom industry is the rising cost of capital, which has been increasing due to central bankers’ shift from quantitative easing (QE) to quantitative tightening (QT) in an attempt to tamp down inflation. The result thus far is companies are now paying on average two to three (or more) times the interest rates they had grown accustomed to since the Great Recession, when central banks began holding interest rates at close to zero. This relatively abrupt change in monetary and fiscal policy has created a concerning situation for entities that are heavily levered with debt, which encompasses nearly all CSPs and many telecom vendors.

CSPs with the weakest financial positions began changing their behavior in 2023, primarily in response to the rising cost of capital, evidenced by fiber build targets being scaled back, assets being revalued and written down, and overall capex budgets being reduced. Some CSPs have also had to layer on more onerous covenants, such as pledging assets as collateral, to secure new debt issuances and partially offset the rise in interest rates.

TBR expects many CSPs with relatively stronger financial positions to also change their behavior in 2024. Changed behavior typically occurs after a reassessment of capital structure and capital allocation, which can lead to a variety of outcomes ranging from dividend cuts to capex reduction to M&A events. Said differently, CSP CFOs worldwide will be under an unusual amount of pressure to meet their objectives in 2024 and they are highly likely to place greater emphasis on cost optimization and cash flow management.

TBR maintains its belief that the telecom industry will look very different by the end of this decade as current events and entrenched challenges push the industry through an evolution.

To read the entire 2024 Telecom Predictions special report, request your free copy today!