Hyperscalers’ cloud-based modern network architecture provides strategic advantage over legacy network technologies

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2H21 Hyperscaler Digital Ecosystem Market Landscape infographic

Hyperscaler-built networks will look very different from traditional networks

Hyperscalers are building end-to-end networks that embody all the attributes and characteristics coveted by communication service providers (CSPs) as part of their digital transformations. The most significant differences are in the software stack and the access layer, where new technologies enable hyperscalers to build dense mesh networks in unlicensed and/or shared spectrum bands and build out low Earth orbit (LEO) satellite overlays for access and backhaul. Mesh networks will likely be used to provide low-cost, wireless-fiber-like connectivity in urban and suburban environments, while satellites will primarily be leveraged to provide connectivity to rural and remote environments.

Hyperscalers are starting from scratch, completely reimagining how networks should be built and operated. Their clouds, numerous network-related experiments over the past decade, plus the raft of new network-related technologies on the road map will enable hyperscalers to build asset-light, automated networks at a fraction of the cost of traditional networks.

Hyperscaler networks will cost a fraction of traditional networks

TBR estimates hyperscaler networks cost 50% to 80% less to build than traditional networks (excludes the cost of spectrum, which would make the cost differential even more pronounced because hyperscalers will primarily leverage unlicensed and shared spectrum, which is free to use). Most of the cost savings stems from innovations, such as mesh networking, carrier aggregation, LEO satellites and integrated access-backhaul, that enable significantly less wired infrastructure to be deployed in the access layer for backhaul and last-mile connection purposes.

For example, Meta’s Terragraph mesh access point can autonomously hop signals through multiple other access points before sending the data through the nearest available backhaul conduit. In the traditional architecture, some form of backhaul would need to connect to each access point to backhaul the traffic. Mesh signals could also be backhauled through LEO satellites, further limiting the need to deploy wired infrastructure in the access layer, which is one of the most significant costs of traditional networks.

Another key area of cost savings stems from cutting out certain aspects of the traditional value chain. By open-sourcing some innovations, such as hardware designs, hyperscalers can foster a vibrant ecosystem of ODMs to manufacture white boxes to compose the physical network. The white-boxing of ICT hardware can lead to cost savings of up to 50% compared to proprietary, purpose-built appliances.

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Amid a sea of portfolio offerings, Accenture’s TS&A practice helps the company translate tech into business outcomes

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Accenture’s TS&A practice provides path into re-architecting clients’ DT programs 

Accenture’s value proposition continues to revolve around the company’s ability to deliver services through integrated scale, addressing clients’ pain points across the various stages of the advise-build-run life cycle. In mid-December TBR had a chance to hear from the leaders of Accenture’s Technology Strategy and Advisory (TS&A) practice, which, in TBR’s view, has been one of the industry’s best-kept secrets as it provides a bridge between the various parts of Accenture’s organization. Launched following the company’s pivot to the Next-Gen Growth model in March 2020, the TS&A practice is part of Accenture’s Strategy & Consulting business, which is focused on architecting and translating the value of technology to both tech and business clients.

 

TBR estimates Accenture’s IT consulting revenue, which we believe largely maps to the TS&A practice portfolio, grew 30% year-to-year to $4.7 billion in 2021. Backed by over 4,000 dedicated practitioners across seven capability groups — Cloud Acceleration and Innovation, Data-led Transformation, Enterprise Agility, Future Tech, Technology Value Realization, Trust and Security, and Tech Mergers and Acquisitions. Accenture Cloud First is a significant contributor in the TS&A’s performance.  

 

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With tools such myNav, myDiagnostic and Transformation Office at its disposal, TS&A, in TBR’s view, has an opportunity to further accelerate its performance, provided the practice’s account management does not overlap with that of other parts of Accenture’s business, especially as the unit also targets Accenture’s traditional buyer personas, including the CIO and chief technology officer (CTO). Accenture sees CIOs and CTOs as the “new corporate rock stars,” which is a logical position considering Accenture’s established enterprise footprint and decades-long relationships with these personas.

 

TS&A strives to elevate the value of Accenture’s portfolio around its ability to include innovation while also supporting CIOs and CTOs in, as Accenture calls them, the “5Rs”: Resilience, Restructuring, Reinvention, Reskilling and Reduction. We see Accenture bringing innovation into these discussions in two ways: by embedding and relying on its network of luminaries, who can infuse cross-industry use cases to support engagements; and by utilizing its global network of innovation hubs.

 

With Accenture again investing in physical centers, including the recent openings of a smart-city-centric hub in Singapore; Innovation Center for Cloud in Indonesia; Advanced Technology Center in Thailand; Innovation Showcase at Expo 2020 in Dubai, United Arab Emirates; and Interactive Studio in Munich, Germany, we believe TS&A has a new set of opportunities to increase awareness of the practice across the company’s broader portfolio, especially as the practice seems to have been withstanding the industry trend of increased employee turnover, with flat attrition over the past year. (See TBR’s Innovation and Transformation Centers Market Landscape for additional details.)  

 

TBR views Deloitte Digital as the most direct competitor to TS&A; however, Deloitte’s member firm structure often challenges Deloitte Digital to execute on a cohesive strategy, creating an opening for TS&A. [Tweet this!] Relying on industry- and function-specific playbooks, which Accenture updates as often as every six months, also helps the company stay abreast of new trends and support clients through their transformation agendas. Additionally, the exclusive alignment of TS&A’s portfolio capabilities with partner offerings enhances the practice’s value proposition.

 

For example, TS&A aligns with Amazon Web Services, Google Cloud and Microsoft Azure for industry solutions; with Atlassian for enterprise agility; with Celonis, ServiceNow and Splunk for data-driven transformation (since we spoke with TS&A’s leadership, Accenture has expanded its relationships with Celonis and Splunk and recently launched the Accenture Splunk Business Group); and Apptio for technology value. This strategy could disrupt Accenture’s partner model if it scales up, especially as the company continues to tout vendor agnosticism. In the long term, though, we believe as services vendors retune their partner messaging and go-to-market efforts to meet enterprise buyers’ expectations, pivoting from being vendor agnostic to capability aligned will help separate winning vendors from laggards. Accenture is in its typical market-making position, and the TS&A practice could signal the company’s plans to make a market-leading change once again. ​ 

 

 

 

Will the quantum computing investment summer of 2021 continue?

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

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

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

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

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

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

Business ecosystems must invest in massive supply chain pivots

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COVID-19 supply chain impact

COVID-19 laid bare the underinvestment in contingency capabilities during the decades-long pursuit of cost optimization. In short, business leaders assumed a certain status quo in business continuity and did not leave sufficient capital tied up in unfinished inventory to provide necessary buffers in supply chain efficiency. Firms had over-rotated on optimization and perhaps assumed their trading partners were on par with them in terms of the technology “twinning” of their activities. COVID-19 exposed the need for agility, and when scale advantage only enabled top-tier firms to have the automated tool sets, working with the vital Tier 3 and Tier 4 suppliers resulted in the cascading pileups now in the news.

Future supply chains have to be embrace open contributions

Uneven technology enablement with supply chain participants certainly has created a network effect, but not the positive force multiplier discussed in third-wave economics papers. Supply chains, by definition, are a collection of ecosystem participants. For there to be a positive network effect, there has to be democratized access to technology innovations. Tier 3 and Tier 4 suppliers lack the funds and the skills to build digitally transformed supply chains on their own. In this sense all enterprises have to learn a lesson from the technology industry in terms of IP contributions to the ecosystem.

Ecosystems have to provide a common platform of nondifferentiable value-add to all participants —value-add in terms of stripping labor and labor mistakes from process flows, and nondifferentiable as it impacts neither ideation nor sales engagement. Open source is how technology has wrung cost of compute out of the model. This is how platform businesses achieve the network effect, as positively espoused in third-wave economics. 

Supply chain has the attention of the boardroom

The value of the interconnected supply chain ecosystems has been gaining boardroom attention and, as EY notes, COVID-19 only accelerates the need. The pandemic was a blindside disruptor and, as enterprises get back up from the blindside hit, the focus shifts from the diminishing return of investing in supply chain for cost optimization and turns back to the double-digit revenue hits enterprises took due to pandemic-fueled disruptions. The board focus is now on gaming out what other events could have a similar impact on business resiliency that the pandemic has had.

Does the boardroom see value in ecosystems yet?

Boards generally are populated by mature executives well versed in the current ways of working. Ecosystem business models are not a legacy best practice with which TBR would expect many board members to be familiar. They are too new. The idea of taking huge sunk investment costs and donating them to a buyer/supplier consortium will likely be anathema to many boards, but, as technology has proven time and again, open-source communities accelerate innovation. Linux/Red Hat represents just one illustration of that value creation in technology.

Advisory firms have permission to play to educate boards on ecosystem business model best practices

TBR hears a constant refrain in its discussions with services firms that people and process are the constraints and not the technology itself. This rings true with large enterprises but not necessarily with the small businesses comprising many of the Tier 3 and Tier 4 suppliers in enterprise supply chains. Outlining the value of a resilient supply chain will be an easy boardroom sell based on the current pandemic-related constraints being felt throughout the global economy. Convincing the board to contribute sunk IP investments to a consortium will be a harder sell. If any services entities can convince the boards of this efficacy, it will be the tax and audit advisory partners who have been providing business guidance to enterprises for centuries.

TBR’s recently published November 2021 Digital Transformation: Voice of the Customer Research bears out these notions. Based on survey data, respondents allocate 13% of their digital transformation services budget to business advisory services, another 16% to IT advisory services and an impressive 43% for managed services. TBR believes these managed services will more frequently flow from the advisory-led firms rather than the technology-led firms given the advisory firms’ advantage in knowing the business rules and business risks to digitization more than how to get the technology plumbing to work seamlessly.

Figure 1

From a straight technology perspective, firms invest in cloud computing, cybersecurity, IoT and analytics for digital transformation. Cloud localizes the activity where the firm wants it, cyber mitigates risk, IoT allows for more workflow automation, and analytics tells the business leaders what is important from the frictionless business flows. Cloud similarly was brought to the fore during the pandemic given the need to accommodate remote workers and reduce the amount of on-premises IT equipment requiring on-site staff.

Figure 2

Of course, all of these statements hinge on having IT platform plumbing built correctly and then transforming the business workflows that sit atop the IT platform. Figure 3 highlights the need for this gradual rollout strategy. Right now, improving IT operations management dominates the list of respondents’ digital transformation objectives. In two years, however, there will be a string of different business workflows on the customer docket. Workflows are automating business processes that often engage with other corporate entities and customers. This is where the deep knowledge of business rules and business risks come into play, and where tax and audit firms have clear market distinction.

Figure 3

Technology-led firms, hyperscale cloud companies and equipment manufacturers will certainly all play roles in moving industries further along the path of digitization. But just as business is turning to ecosystems, so too must the technology-based firms move to ecosystem offers where advisory-led firms will increasingly take the leadership role to advise boards in formulating business risk and resiliency policies that drag the tech stack participants along as the derived decision from the C-Suite aspirations.

Supply chain is the current example where tech innovations, business rules and employee training will give businesses competitive advantage providedthose ecosystems extend the IP value to the Tier 3 and Tier 4 suppliers. Like a chain only being as strong as the weakest link, ecosystem networks are only as strong as the weakest participant.

The statement stands for all business ecosystems. Other aspects of the business value chain come to the fore as different events trigger different reactions and technological choke points in need of modernization and remediation.

Informatica returns to the public market with an emphasis on data democratization and hyperscale partnerships

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Informatica’s fall 2021 launch, which consisted of a new cloud-native marketplace, automated data quality features and new data scanners, comes alongside the company’s return to the market in an $840 million IPO. The announces offerings, from new services to partner integrations, largely complement the Intelligent Data Management Cloud (IDMC) platform — the key announcement at Informatica World 2021 in April — and align with what is now Informatica’s cloud-first approach to data governance and management. After six years under private ownership and a significant business model shift to subscription-based revenue, which now contributes over 90% of total revenue, Informatica returns to the public eye ready to convince investors it is fully embracing cloud as the operating model required for a successful, data-led business strategy.

Fall 2021 release targets data consumers

Informatica’s new offerings hit the market at a time when distributed workforces continue to be the norm in light of the COVID-19 pandemic and businesses are requiring more and more data to make critical decisions. In addition, a persistent lack of technical skills is weighing on business leaders and pushing them to look to third-party sources, such as marketplaces, to improve data literacy. Informatica hopes to support an underserved audience of citizen analysts and lines of business (LOBs) while staying true to its technical roots by offering developers a new set of automated tools and features.

Announcing Cloud Data Marketplace

One of the key announcements in Informatica’s fall 2021 launch was Cloud Data Marketplace, a one-stop data shop helping to meet the vast demand for a simpler data delivery process. Available as a service within IDMC, Cloud Data Marketplace allows data owners to publish assets from various on-premises and cloud data catalogs and offer analytics, AI and machine learning (ML) models to end users. The one-stop-shop experience is targeted to data consumers, which may include LOB leaders and their key stakeholders looking for packages (AI models and data sets) to support a number of data-driven use cases from price optimization to improved operational efficiency. When marketplace users ask for a data set that best fits their particular need, program administrators have the ability to approve the request and ask for patterns and data usage.

By bridging the gaps between technical specialists and business leaders, Informatica strives to make data more readily accessible across the enterprise. Cloud Data Marketplace will support this strategy by complementing Informatica’s expertise in the early phases of the data pipeline — from data discovery to manipulation — and will place the company’s metadata catalog in front of business leaders.

Ensuring data quality in the cloud

Informatica remains committed to data and analytics governance, leveraging its embedded AI engine CLAIRE to help automate tasks throughout the data process and provide clients with better control over their data. In the fall 2021 launch, Informatica brought many features previously available within legacy Informatica Data Platform (IDP) to IDMC. For instance, Informatica is offering its existing Data Quality tool to enable customers to profile, transform and manage data in the cloud the same way they could with on-premises data. Customers can also leverage natural-language processing (NLP) capabilities in the back end to create rules, such as setting up their own Data Quality and Business Users. Lastly, Informatica is infusing more automation in the platform, eliminating the need to manually create Data Quality tasks, such as applying health checks.  

Informatica reaffirms commitment to cloud partners

To protect its position as a neutral vendor supporting customers regardless of underlying infrastructure or deployment method, Informatica closely aligns itself with leading hyperscalers, offering native integrations with cloud providers’ well-known platform and infrastructure offerings. Expanding on its strategic, multiyear relationship with Amazon Web Services (AWS), Informatica announced it is supporting AWS Graviton, the company’s own processors based on the Arm architecture. This will help Informatica position as a viable integration option for customers looking to run general-purpose workloads as well as compute-intensive applications, such as high-performance computing (HPC), AI and ML. AWS has been emphasizing its Graviton processors for some time, especially as it looks to push out more modern Elastic Compute Cloud (EC2) instance types to customers and capture more critical workloads.

TBR notes Informatica is early to market as many of AWS’ other data partners and Informatica competitors have yet to offer support for Graviton instances. Further, Informatica introduced application ingestion capabilities, a module under Cloud Mass Ingestion (CMI), to allow customers to ingest and synchronize data from SaaS and on-premises application sources into Cloud Data Warehouses. These capabilities support Informatica’s partner strategy, specifically with vendors like Microsoft, which continues to work with Informatica to move clients’ data warehouses to the cloud. Additional partner announcements in the fall launch included the ability to scan data from Amazon Redshift, Azure Data Factory for cloud ETL (Extract, Transform, Load), and SAP Business Object Data Services into Informatica’s AI-powered data catalog offering.

Big Blue and big government: Enhancing security and co-innovation operations improves IBM’s chances in the U.S. public sector

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IBM is strengthening public sector resources in the U.S. to capture modernization opportunities

While the public sector accounts for less than 10% of IBM’s revenue, in TBR’s estimates, IBM is expanding resources in the U.S. to ramp up activities. IBM developed its delivery capabilities for the U.S. federal sector by establishing the IBM Center for Government Cybersecurity in June. The center, part of IBM’s offices in downtown Washington, D.C., will have a secure laboratory space for government clients to jointly develop solutions around advanced security threats leveraging IBM technologies and services. The center will provide access to IBM experts and external advisers, such as former government officials, as well as host workshops around topics such as zero-trust frameworks and cloud security. Clients will also have access to the IBM Research labs to collaborate on encryption solutions. ​

In October IBM opened a new IBM Garage location in Huntsville, Ala., a location designed specifically to support the federal government’s digital transformation and modernization. IBM is enhancing its value proposition by offering government-grade cloud environments, cleared local resources trained on IBM Garage principles and methodology, and thought leaders that will provide services in a hybrid model. In a similar move, Accenture Federal Services opened an innovation space at the University of Alabama in Huntsville’s Invention to Innovation Center in June. Such activities indicate a potential war for talent, especially for industry and technology experts skilled at working with public sector clients.​

A partnership with Raytheon, formed in October, expands IBM’s reach in the aerospace, defense and intelligence, and federal government sectors. IBM and Raytheon will jointly develop AI, cryptographic and quantum solutions. Raytheon is one of several federal aerospace and defense (A&D) contractors teaming with IBM Services to launch MARQTS (Marketplace for Advanced, Rapid, Quantifiably-assured, Trusted Semiconductors), a hybrid cloud-based and blockchain-enabled forum to support the secure development of microelectronics for the commercial industry and the DOD. IBM joins A&D and commercial IT companies Boeing, Cadence, Colvin Run Networks, Intrinsix, Lockheed Martin, Marvell Government Solutions, Nimbis Services Inc., Northrop Grumman and PDF Solutions. MARQTS will be available to the U.S. defense sector by 2023. IBM will use a proprietary cloud platform developed to enable secure collaboration for the group, while the platform will reside on an IBM blockchain to enhance security. IBM expects to roll out MARQTS across the DOD by 2023.

According to TBR’s 2Q21 Public Sector IT Services Benchmark, “The appetite for digital modernization by agencies of the U.S. federal government remains strong, as evidenced not only by record revenue and backlog levels reported by many federal technology contractors in 2Q21 but also by the robust level and velocity of proposal submissions tendered by federal IT vendors. Commercial technology adoption is red hot in federal IT, particularly around cloud computing, where TBR observed a significant uptick in efforts by multiple contractors during 2Q21 to shore up collaborations with the leading commercial cloud leaders.”

Senior Analyst John Caucis, who leads TBR’s Public Sector IT Services research, notes, “The federal civilian sector has recovered vigorously from the COVID-19 trough a year ago, thanks to civilian agencies’ ongoing drive to digitize their IT infrastructures. Cyber budgets are also growing, reflecting federal agencies’ strong will to secure their data and IT systems from the ever-growing barrage of cyber threats. AI is increasingly permeating security, intelligence gathering and analysis, the burgeoning space sector, and citizen services, cementing AI as a critical technology to drive mission success and driving AI leaders like Booz Allen Hamilton to accelerate the time to market of new AI technologies.”

The content above draws heavily from TBR’s most recent quarterly analysis of IBM’s services business. Contact the author at [email protected] for additional insight and information. 

Lenovo Turnkey Solutions: How Lenovo’s art of the practical enables clients to practice the art of the possible

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New offerings built on a smart long-term strategy

In advance of Lenovo’s Oct. 18 announcement of Lenovo Turnkey Solutions, executives with the company’s Industry Solutions group briefed TBR on elements of the new offering. In building the turnkey solutions, executives emphasized Lenovo’s continued focus in three critical areas: simplicity, core competencies and smart partnering. Keeping in mind Lenovo’s role in the ecosystem — particularly from the perspective of IT services vendors and consultancies — TBR sees Lenovo’s approach as essential to its promise to deliver the art of the practical while enabling clients and partners to practice the art of the possible.

So, what are those three critical areas?  

  • Lenovo’s focus on keeping things simple by “removing complexity of configuring solutions” is beneficial for consultancies and IT services vendors trying to help their clients accelerate adoption, innovation and transformation. By decreasing the configuration to a few key variables, partner enablement and scale through the channel become more manageable. Lenovo’s executives repeatedly emphasized the company brings technology from many vendors to an engagement and “makes the technology practical” to enable a seamless client experience. In TBR’s view, a technology partner that wants to leave complexity to a consultant is exactly the kind of tech partner consultants love.
  • That very division of labor connects to the second point: Lenovo focuses on doing what it does well and leaving its clients’ and partners’ market differentiation up to them. As Lenovo executives noted, their clients do not do IT or hardware; their clients do everything else and can leave IT and hardware to Lenovo, while Lenovo leaves everything else to its clients (and partners). TBR has repeatedly observed that vendors that remain focused on what they do well consistently outperform competitors with more diverse and multifaceted strategies.
  • Lastly, Lenovo’s willingness to develop and provide both niche and broad solutions indicates the company is taking strategic cues from clients and ecosystem partners, rather than trying to tell the market what it wants. Lenovo is serving clients’ and partners’ needs, not focusing on selling Lenovo solutions — of course, they do that too, very much, but it is a matter of focus and strategy.

In summary, Lenovo’s integrated turnkey solution strategy revolves around having a finger on the pulse of customer demand to identify solution areas that can inherently be simplified down to a handful of configurable variables to enable scale through the channel while playing their well-defined role in an evolving and complex ecosystem. Lenovo removes the complexity of multipartner involvement, while staying close to clients and their needs — a smart long-term strategy with plenty of room for sustained execution.

Additional contributor: Jacob Fong, Research Analyst

Opportunities for IT services abounding in a resurgent APAC market

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In the most recent edition of the quarterly IT Services Vendor Benchmark, which published Oct. 7, TBR analysts took a deep dive into services vendors’ performance in APAC over the last few quarters, noting trends and anticipating how the market would react to easing pandemic restrictions and new investments in people and capabilities. The following comes from that deep dive; the full content is available from TBR.

IT services vendors see accelerating revenues as pandemic pressures slow and local investments grow

While pandemic-related pressures slowed APAC revenue growth for the vendors in TBR’s IT Services Vendor Benchmark during 2Q20, 3Q20, 4Q20 and 1Q21, regional revenue growth accelerated during 2Q21, supported by the gradual lifting of restrictions due to vaccine rollouts across the region. TBR believes the recent ramp-up of hiring of local market resources, leadership appointments, and acquisitions and partnerships will improve vendors’ ability to serve clients that are based in APAC and global clients that have operations in the region, and diversify global revenues during 2022.

APAC revenue leaders aim to better compete globally through investments outside core Japan market

The two benchmarked leaders in revenue size in APAC — Fujitsu and NTT DATA — remain deeply rooted in the APAC market, even as these vendors continue to invest in new resources and capabilities outside their core market of Japan to better attract and support clients abroad. Attempting to penetrate new geographies can be a double-edged sword for the two vendors, as it can help Fujitsu and NTT DATA compete abroad against more established peers in markets such as the U.S. and Europe, but also opens the door for peers to capture market share in Japan. The two companies have thus far taken somewhat divergent paths, with NTT DATA centering its efforts on augmenting U.S. operations through acquisitions, which is helping it gain traction in the market, while Fujitsu focuses on more internal transformations to grow its services resources and portfolio in new markets to earn client mindshare. 

NTT DATA closed the acquisitions of Acorio in 4Q20, Hashmap in 1Q21 and Nexient in 2Q21. The three U.S.-headquartered companies will add capabilities in digital, cloud and consulting, respectively, and, in the case of Acorio, horizontal technical capabilities around ServiceNow. We fully anticipate North America-focused NTT DATA Services will maintain an active acquisition pace over the next year, as synergies begin to increase and compound, boosting top-line revenue growth into 2022. 

Pursuing APAC expansion through innovation-led engagements around customer experiences

Quickly growing revenue leaders are eyeing opportunities to further penetrate the APAC market by leveraging digital design and creative capabilities to drive high-value opportunities across regions such as Japan and India. Consumer and enterprise preferences toward digital experiences and cloud-based “as a Service” solutions increasingly influences clients’ digital transformation agendas, providing growth opportunities for well-positioned vendors.

Accenture, No. 5 in revenue size in 2Q21, announced the opening of an office in Japan to host Accenture Interactive’s Droga5 team, along with plans to open similar facilities in the next 12 months in Brazil and China. Adding Droga5 capabilities in the country will augment Accenture’s innovation-led discussions to expand the company’s addressable market in areas such as marketing operations, including design, content development and content moderation, among others.

No. 6 in revenue size, Tata Consultancy Services (TCS) provided consulting and systems integration services for an India-based over-the-top streaming platform, SonyLIV, to help personalize subscriber experiences leveraging AI and machine learning. As a part of the engagement, TCS will also launch an Experience Design Center focused on rapid prototyping and digital innovation. Engagements such as this can provide a pathway into high-value services with TCS Interactive around digital design, branding and marketing. 

India-based talent serve as launching pad for services in APAC, diversifying revenue streams

The story in India is slightly different. India has traditionally offered an abundance of cost-effective global service delivery, but the local market itself only accounts for a small fraction of most vendors’ total revenues. Some companies are now viewing this juxtaposition as an opportunity, and despite a severe second wave of COVID-19 hitting between April and June 2021, vendors increasingly competed for new business with local clients in India in 2Q21. While India is unlikely to become the next frontier for growth in the near term, demand for digital transformation in the region can be an avenue for global revenue diversification, provided vendors can attract and retain skilled talent amid rising demand.

Earlier this year, Infosys signed a contract with the Federal Bank of India to implement the Oracle Customer Experience Cloud solution, helping the bank improve customer experience. Infosys also developed a new SaaS offering designed specifically for Urban Cooperative Banks in India. Infosys is facing fierce competition in recruiting and sales opportunities from both India-native peers and multinational corporations such as Accenture and Capgemini. For example, during the quarter Accenture signed deals with India-headquartered Mankind Pharma and Bharat Petroleum.

Capgemini’s three awards in the inaugural edition of the NASSCOM Engineering and Innovation Excellence Awards 2021 in India indicate the company is well positioned in the segment. Infosys has an opportunity to double down on its partnerships with Amazon Web Services, Google and Microsoft similar to peers like Wipro and Cognizant, which have formed joint business units and have been investing heavily in the country to provide the infrastructure backbone needed for India to pivot from being a frontier to emerging as a more developed market. Managing messaging around these relationships and Infosys’ broad technology agnosticism might prove most challenging for the company.

The IT Services Vendor Benchmark details and compares the initiatives of and track the revenue and performance of the largest global IT services vendors. The report includes information on market leaders, vendor positioning, the IT services market outlook, key deals, acquisitions, alliances, new services and solutions, and personnel developments.

CSP demand for 5G infrastructure is expected to remain robust for at least the next few years

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Key Insights

Traditional RAN will remain the predominant architecture through 2025. Open vRAN will take time to mature and go mainstream.

Mobile broadband (MBB) and fixed wireless access (FWA) will remain primary use cases for 5G; government and enterprise pursuit of digital transformation wil drive other use cases.

APAC will lead the world in 5G investment through the forecast period. The U.S. and parts of Europe will be fast following, while most of rest of world will lag.

CSP demand for 5G infrastructure is expected to remain robust for at least the next few years; the issue is supply

TBR’s 5G Telecom Market Forecast details 5G trends among the most influential market players, including both suppliers and operators. This research includes current-year market sizing and a five-year forecast by multiple 5G market segments and by geographies well as examines growth drivers, top trends and leading market players. TBR’s 5G Telecom Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

TBR projects CSP spend on edge compute infrastructure will grow at a 46.1% CAGR from 2020 to 2025 and reach $100B

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Key Insights

The Big Nine hyperscalers will collectively outspend the combined outlays of telcos and cablecos on edge compute infrastructure before the middle of this decade.  

All Big Nine hyperscalers are investing in the edge in some way. Amazon, Microsoft and Google have global ambitions for edge, though and the hyperscalers intend to partner with and/or compete against telcos and cablecos in the edge space.

Delays in chipset availability — due to the COVID-19 pandemic, geopolitical factors and technological complexity — will slow the pace at which the vendor ecosystem can meet demand for edge compute infrastructure through at least 1H22.

TBR projects CSP spend on edge compute infrastructure will grow at a 46.1% CAGR from 2020 to 2025 and reach $100B

TBR’s Telecom Edge Compute Market Forecast, which is global in scope, details edge compute spending trends among communication service providers, which include telecom operators, cable operators and hyperscalers. This research includes current-year market sizing and a five-year forecast by multiple edge compute market segments and geographies. TBR’s Telecom Edge Compute Market Landscape, also global in scope, deep dives into the edge compute-related initiatives of stakeholders in the telecom market, including telecom operators, cable operators, hyperscalers and vendors that supply the telecom market.