In our June 2023 Digital Transformation: Cloud Ecosystems Market Landscape, we wrote that “the nascency of GenAI will require vendors to clearly articulate potential use cases to drive adoption. While content generation presents an easy-to-understand use case, deeper, specialized workflow automation will be more difficult to prove ROI on, as it will require greater time and money to tailor such automations to the enterprise.
 
TBR believes this work, paired with challenges such as data protection, will represent a significant consulting opportunity for the IT services community. Specifically, IT services firms possess not only the trust of buyers but also the knowledge of buyers’ businesses to educate clients and then help tailor GenAI tools to their business needs. Service vendors, though, must account for the implications on their business models as GenAI matures.” Not all IT services vendors have been taking the same approach, so let’s look at the strategies and activities of three key players: Accenture, IBM Consulting and Dell Technologies.
 

Forging Different Ecosystem Paths on GenAI: Accenture, IBM Consulting and Dell Technologies

Drawing on the Success of Accenture Cloud First, Accenture Has an Obligation to Stay Abreast of GenAI-enabled Opportunities to Sustain Trust

As the race for generative AI (GenAI) supremacy heats up, Accenture has accelerated its investments to ensure it can secure a position among buyers going from exploring the technology to adopting it through the experimentation, implementation and management phases. Just as when the company earmarked $3 billion for Accenture Cloud First in the fall of 2020, Accenture recently announced an investment of $3 billion to enhance and expand its GenAI capabilities.
 
Notable investments as part of the announcement include adding industry solutions and prebuilt models to Accenture’s Data and AI practice; launching AI Navigator for Enterprise, a platform that will arm Accenture’s consultants with access to a library of use cases, thus accelerating time to market; and doubling in-house AI talent to 80,000. Additionally, Accenture deepened its relationships with Amazon Web Services (AWS), Microsoft and Google Cloud to further its collaboration on codeveloping GenAI-centric solutions and services across industry verticals and functional technology areas including supply chain, customer experience and healthcare.

Of course, Accenture is not alone in making such announcements as vendors across the professional and IT services spectrum are racing to stake a claim in the space, making it challenging to stand out during the hype cycle. Just as with any other technology, developing business use cases will be key to elevating the value of the technology, with improving productivity serving as the low-hanging fruit. Accenture’s short-term advantage is that the company can rely on the trust it currently has among IT buyers, who for decades have depended on Accenture to fulfill their IT and business process needs.
 
Striking the right balance between developing GenAI sales campaigns and demonstrating value during times when enterprise buyers are becoming increasingly price-sensitive around their cloud spend will be key. During the company’s FY3Q23 earnings call, Accenture’s CEO stated that the company has won deals worth $100 million in GenAI-related revenue from 100 clients in the past four months. Accenture’s install base of over 6,000 clients provides a strong conduit for net-new revenue, especially on the front-end consulting side. The bigger opportunity will come from using GenAI models in large transformation programs.
 
In the short term to midterm, though, the opportunity will revolve around Accenture helping clients establish data strategy and governance policies to ensure they can take full advantage of the technology.

Developing GenAI Capabilities and Utilizing a Client-first Approach Improve IBM Consulting’s Business Transformation Expertise

In June IBM announced plans to expand its partnership with Adobe to provide content supply chain solutions based on Adobe’s GenAI solutions, Adobe Sensei GenAI services and Adobe Firefly. IBM Consulting is launching a new portfolio of Adobe consulting services intended to help clients address complexities in the GenAI landscape and improve customer interactions. The partners will utilize IBM Consulting’s services and Adobe’s AI-enabled Content Supply Chain solution to build integrated content supply chain ecosystems. The development is a follow-up to an announcement in March when IBM Consulting, through its interactive experience unit IBM iX, created new content supply chain services that integrate Adobe’s creative and experience technologies with the goal of driving visibility across creative and marketing projects and improving content across campaigns.

GenAI, which IBM sees as a solution that augments but does not replace human intelligence, provides IBM Consulting with opportunities such as helping clients transform business models, improve productivity, create new experiences and connect service delivery; however, these efforts must be aligned internally to drive change. IBM Consulting can support clients by taking a client-first approach in consulting and driving collaborative transformations, including utilizing the IBM Garage for GenAI methods that involve use case ideation as well as open, domain-specific and multimodel approaches to architecture selection and training. In addition to utilizing the IBM watsonx solution, IBM partners with Adobe, AWS, Microsoft, Salesforce and SAP to transform businesses across industries through GenAI solutions.

Dell Technologies Builds Out Its Ecosystem and Approach to GenAI

During Dell Technologies’ 2Q23 earnings presentation, Jeffrey Clarke, COO and vice chairman, stated that Dell Technologies “can help customers size, characterize and build the GenAI solutions that meet their performance, cost and security requirements.” The company recently announced Project Helix, a partnership with NVIDIA to create a repeatable solution for GenAI deployments. The solution utilizes PowerEdge servers optimized for generative AI training and inferencing, NVIDIA Tensor Core GPUs, NVIDIA networking, and options to pair with Dell storage appliances.
 
Dell Technologies views these trends as intersecting and strategically important as they can expand the company’s total addressable market. It is taking an ecosystem approach to building out its overall portfolio as well as its “as a Service” APEX portfolio, which complements the company’s multicloud partnerships with vendors such as VMware, Red Hat, Microsoft, AWS and Databricks. Dell Technologies is expanding its presence in these emerging technology areas by developing validated solution blueprints that bundle a full stack of technology that enterprises can deploy for their particular use cases.
 

All About the Ecosystem

Even as Accenture, IBM, and Dell approach GenAI opportunities with different strategies, they share a reliance on ecosystem partners, reflecting the trend TBR has seen snowball over the last three years. No company is “end to end,” particularly in a nascent technology like GenAI. TBR tracks more than 30 other IT services vendors and consultancies and has published assessments of their GenAI strategies and activities in both quarterly vendor-specific reports and the quarterly IT Services Vendor Benchmark.

In late 2022 TBR published Top 3 Predictions for IT Infrastructure in 2023, which detailed our expectations for user consoles in OEM, managed services and the overall storage market. Click here to download your free copy of this report.

Navigating 2023’s Storage Landscape: Loyalty, Innovation and Shifting Demands

Last fall as we made our predictions for 2023, TBR anticipated that storage vendors would invest in providing the most flexible platforms to stand out in an increasingly competitive market. As we close out the third quarter of the year, this prediction has proved to be true, with vendors rolling out innovations across management, integration, consumption and managed services to defend market share.

There are a number of market factors impacting the competitive landscape. First, data storage has traditionally been a market with strong customer loyalty. Barriers to switch storage providers have been high because of the significant investments companies have made in talent, software and services to align to specific storage systems. However, as evolving market needs such as multicloud integration and increasing use of flash storage proliferate, customers are re-evaluating their storage platforms, thereby creating opportunity for vendors to capture share from peers.

Furthermore, storage hardware vendors are facing difficulty in driving growth, not only because of customer loyalty and intense competition but also because of slowed enterprise demand in 2023. Dell Technologies (Dell), Hewlett Packard Enterprise (HPE), NetApp and Pure Storage all reported double-digit storage hardware revenue declines in the first quarter of 2023. The drop-off in demand adds pressure to win competitive takeover deals to help slow revenue declines and protect profitability.

Finally, disruptive vendors are adding pressure to incumbents with targeted strategies to push into enterprise storage accounts. Although Pure Storage reported revenue declines, the company remains a disruptive force in the storage market. Pure Storage initially made headway by targeting non-mission-critical Tier 2 workloads. Having proved itself among its existing customer base, Pure Storage has expanded to target larger customers and higher-performance workloads with new form factors and aggressive pricing.

In 2Q23 Pure Storage announced that its all-flash portfolio can now address the entirety of customers’ storage use cases. Lenovo, another disruptive vendor, has significantly grown its storage business in recent quarters, while others have reported declines.

Although Lenovo has a notably smaller storage business — TBR estimated Lenovo’s storage revenue at $400 million in 1Q23 compared to market leader Dell’s $3.6 billion in the same quarter — Lenovo’s ability to drive growth is not going unnoticed by peers. Lenovo is establishing itself in the entry-level storage price points and intends to work its way up into more premium segments as it builds recognition in the space.
 

Hybrid Cloud Strategies Are at the Forefront of Storage Innovation

One of the key ways storage vendors are responding to the hypercompetitive market conditions is by improving the interoperability of storage systems and enabling hybrid or multicloud capabilities. This trend is largely customer driven, as buyers seek to escape siloed architectures in favor of greater interoperability, which vendors have embraced to varying levels by expanding partner ecosystems and product strategies.

Vendors can no longer rely on keeping customers locked into their own tech stacks; instead, they must embrace neutrality and build connections for customers to move their data across various locations, whether it be on premises, colocated or on public cloud.

For example, NetApp continues to add features to BlueXP, the multicloud storage management platform it launched in late 2022 that aims to help customers manage their on-premises and cloud data. NetApp also deepened its partnership with Google Cloud, which now provides a fully managed Cloud Volumes Service based on the NetApp ONTAP operating system.

Dell has taken a similar approach as NetApp by putting its storage OS on Microsoft Azure and Amazon Web Services (AWS) public clouds in an effort to keep customers entrenched in its storage technologies while also enabling hybrid cloud experiences.

Lastly, HPE has also fully embraced hybrid cloud strategies through its GreenLake portfolio, with expanded AWS services and new private cloud offerings for enterprises and smaller businesses.

Incumbents are Responding to Increased Competition with Channel Investments

Storage vendors are matching technology innovation with investment in go-to-market strategies, particularly in the channel space. Storage vendors must not only woo their end customers with product innovation but also win favor among channel partners to gain entry into new accounts. Channel partners are critical to reaching a broader customer base whether vendors are expanding geographically or into new customer segments, and as a result vendors are competing to stand out with the most attractive programs.

Recently, Dell announced a new channel plan focused on incentivizing sellers to make storage deals via channel partners, and also relaxed its partner requirements to quadruple the number of eligible partners. NetApp has also refreshed its partner program with a focus on enabling partners to offer services and solutions, which will likely align with partners’ desires to add value on top of transactional sales and expand recurring revenue streams.

Competition Will Continue to Ramp Up as We Move into 2024

Although vendors are optimistic some pressure will be alleviated by enterprises loosening their purse strings in the coming months, competition for winning share will remain and market leaders will jump on the next round of emerging tech trends to evolve storage portfolios. While the themes of building a multicloud-friendly storage environment dominated  2023, the next question will be how vendors can address the influx of demand for AI solutions.

In June 2023 TBR attended an awards ceremony for the EY Open Science Data Challenge, which gave a glimpse into how well the firm mixes data and corporate social responsibility programs to solve society’s biggest problems. EY’s FY23 challenge focused on rice production in Vietnam. It asked participants from around the world to use data sets from NASA satellites and Microsoft’s Planetary Computer to build models that identified areas where rice is cultivated and forecasted yield based on those areas.

Harvesting Data to Help Solve World Hunger

Over 13,000 participants from 110 counties registered for the competition, with the majority of individuals spending more than 100 hours working on building the models. The finalists were split into two categories — EY staff and university students — and each category consisted of two levels. Level 1 participants built models that identified the areas where rice is cultivated, while Level 2 participants focused on the forecasted yield for those areas. EY hosted Level 2 finalists in New York City, where attendees got to hear firsthand how participants approached and solved the challenge.

Although contestants were working toward a common goal, no two model submissions were the same, as one EY executive pointed out, which made tackling food security an even more dynamic and competitive challenge. Model simplicity, efficiency of processing power, and, of course, business presentation skills were among the key attributes used to pick the winners.
 

It’s All About Business Outcomes and Use Cases, Even in an AI-augmented World

EY’s value proposition continues to revolve around business-led, technology-enabled discussions — a message that was amplified in the presentations of the internal finalists. Solving world hunger is not an easy task, and it will take more than a single data model to address the challenge. But EY’s involvement and investment in the challenge provides ecologists, policymakers and nongovernmental organizations with ammunition to fight hunger, as EY makes the winning challenge models freely available for noncommercial purposes.

In EY’s world of possibilities, business use cases set a pace and course of investment. During the ceremony, France-headquartered carbon credit consultancy CarbonFarm presented four use cases in which finalists’ models could be applied to help solve key problems. These use cases included formulating a climate adaptation strategy in Vietnam; informing public policy interventions in Telangana, India; using parametric crop insurance for smallholder farmers; and making agricultural supply chains more transparent and efficient.

EY’s annual Open Science Data Challenge is a natural extension of its efforts to recruit highly skilled talent but also promotes a culture of entrepreneurship; this year’s internal candidates came from across EY’s service lines and many did not have formal AI or machine learning training but took the time to learn how to code in their spare time. EY sees these recruitment opportunities as another node in its already humble approach to building an ecosystem, in which participants play complementary roles rather than constantly competing with each other, further elevating EY’s Human at the Center framework.

Microsoft and Cornell University were also present at the ceremony and have been involved in the competition in prior years. Using the power of the ecosystem will allow EY to remain at the edge of innovation and scale the impact of data and AI to solve societal problems. As generative AI continues to dominate the news cycle, concerns about bad actors and misuse of algorithms can quickly turn the value of and opportunity around the technology into a societal threat.

EY’s role as a solutions broker, along with the firm’s investments in data, AI and talent, places a greater expectation on EY to ensure technology governance guardrails are established from the get-go. We believe EY is aware of its own strengths, as the firm continues to collaborate with partners, including technology and services companies, to ensure it maintains service quality and protects its brand while working to solve broader societal problems.

EY’s 2024 Open Science Data Challenge will focus on using satellite data to manage coastal resilience and climate change.

Offering users an immersive, real-time experience, the industrial metaverse draws on existing cloud-to-edge technologies to simulate, optimize and simplify complex systems across industries, predominantly manufacturing.

Patrick M. Heffernan, Principal Analyst and Practice Manager, has strong opinions on what it takes to conduct useful competitive intelligence research, and in this blog, he dives into three steps for producing research that will support your business goals and help you win in your industry.