Quick Quantum Quips: Vendors roll out software applications to increase customer connections through partnerships and internal innovation

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Welcome to TBR’s monthly newsletter on the quantum computing market: Quick Quantum Quips (Q3). This market changes rapidly, and the hype can often distract from the realities of the actual technological developments. This newsletter will keep the community up to date on recent announcements while stripping away the hype around developments.

For more details, reach out to Stephanie Long or Geoff Woollacott to set up a time to chat.

July 2020 Developments

Tying systems and software together has been a general focus of July quantum computing activity. These ties increase quantum computing vendors’ ability to more adequately address and meet the emerging needs of their customers. The finance and banking industry remains a key customer base for quantum as more financial customers partner to develop industry-specific applications for the technology.

  1. Cambridge Quantum Computing (CQC) and IBM partnered to make CQC the first startup-based hub in IBM’s Q Network. This move grants CQC cloud-based access to IBM’s army of 20 commercially available quantum computers. Leveraging this cloud-based access and Qiskit, CQC along with members of its hub will work on advancing quantum capabilities for specialized use in areas such as chemistry, finance and machine learning.
  2. D-Wave has expanded its Leap quantum cloud service into India and Australia, increasing the global footprint of its quantum technology. D-Wave’s quantum cloud service is now available in 37 countries. In addition to the Leap Quantum Cloud Service, customers in India and Australia will now also have access to D-Wave’s Hybrid Solver Service, Integrated Developer Environment and Problem Inspector solutions as well as access to flexible increments of computing time in a hybrid computing model. D-Wave offers this flexible access in free and paid plans.
  3. Atos unveiled its Quantum Annealing Simulator, which is compatible with Atos’ Quantum Learning Machine and enables the company to provide customers with access to quantum capabilities via a simulator as well as gate quantum computing through its existing portfolio. TBR believes this approach is strategically advantageous for Atos, as quantum annealing gives customers access to a quantum-like solution that achieves a lower error rate faster than a traditional system, enabling Atos customers to become familiar with the technology while the system developments continue to reduce error rates and expand capabilities.
  4. Atos also unveiled an open innovation accelerator program — called Scaler, the Atos Accelerator — which is geared toward vertical-centric experts and startups. As part of this program, 15 startups and vertical-specific experts will be selected annually to participate in developing quantum-specific projects fueled by customer interest. The research will further support the development and enrichment of Atos’ existing quantum computing offerings and also reinforce, in TBR’s view, Atos’ ability to provide quantum services. TBR notes that this approach to innovation is similar to that of other services firms involved in quantum computing, where innovation is largely customer driven to address specific demands.
  5. Standard Chartered Ventures unveiled its commitment to researching potential uses for quantum computing in the finance and banking industry through its academic partnership with Universities Space Research Association (USRA). USRA is a U.S.-based nonprofit with 49 university members. Standard Chartered Ventures noted that some use cases being explored through quantum computing include simulating portfolios and significantly increasing the speed of market data generation.

If you would like more detailed information around the quantum computing market, please inquire about TBR’s Quantum Computing Market Landscape, a semiannual deep dive into the quantum computing market. Our most recent version was released in June.

Mipsology’s Zebra looks like a winner

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Mipsology is a 5-year-old company, based in France and California, with a differentiated product that solves a real problem for some customers. The company’s product, Zebra, is a deep learning compute engine for neural network inference. While these engines are not uncommon, Zebra unlocks a potentially important platform for inference using the field programmable gate array (FPGA). There are two parts to this story, which is one of the challenges Mipsology faces.

Inference — the phase where deep learning goes to work

Deep learning has two phases: training and inference. In training, the engine learns to do the task for which it is designed. In inference, the operational half of deep learning, the engine performs the task, such as identifying a picture or detecting a computer threat or fraudulent transaction. The training phase can be expensive, but once the engine is trained it performs the inference operation many times, so optimizing inference is critical for containing costs in using deep learning. Inference can be performed in the cloud, in data centers or at the edge. The edge, however, is where there is the greatest growth because the edge is where data is gathered, and the sooner that data can be analyzed and acted upon, the lower the cost in data transmission and storage.

Specialized AI chips are hot, but the mature FPGA is a player too

For both training and inference, specialized processors are emerging that reduce the cost of using deep learning. The most popular deep learning processor is the graphics processing unit (GPU), principally Nvidia’s GPUs. GPUs rose to prominence because Nvidia, seeing the computational potential of its video cards, created a software platform, CUDA, that made it easy for developers and data scientists to use the company’s GPUs in deep learning applications. The GPU is better suited to training than inference, but Nvidia has been enhancing its GPUs’ inference capabilities. Other specialized processors for deep learning inference include Google’s Tensor Processing Unit (TPU) and FPGAs.

FPGAs have been around since the 1980s. They are chips that can be programmed so the desired tasks are implemented in electronic logic, allowing very efficient repetitive execution, which is ideal for some deep learning inference tasks. Mipsology lists several advantages of FPGAs over GPUs for inference, including a lower cost of implementation, a lower cost of ownership and greater durability. While FPGAs have been used in some implementations, including on Microsoft’s Azure platform, these chips have not received the attention that GPUs have.    

Zebra is where inference meets FPGAs

Mipsology’s Zebra compute engine makes it easy for deep learning developers to use FPGAs for inference. Zebra is a software package that provides the interface between the deep learning application and the FPGA, so that specialized FPGA developers do not to have to be brought in to exploit the benefits of the processors. Zebra is analogous to nVidia’s CUDA software; it removes a barrier to implementation.

Bringing together the puzzle pieces

FPGAs are mature and powerful potential solutions that lower the cost of inference, a key to expanding the role of deep learning. However, the programming of FPGAs is often a barrier to their adoption. Zebra is an enabling technology that lowers that barrier. In the world of specialized solutions based on broadly applicable technologies such as deep learning, there are opportunities for products and services to make it easier to assemble the pieces and lower the cost of development. Zebra is exploiting one of these opportunities.

Informatica acquires Compact Solutions to improve metadata management across the enterprise

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Enterprises are developing hybrid IT environments at an increasing rate, leveraging cloud-based technologies to achieve flexibility and scalability while keeping workloads on premises that contain sensitive information or require low latency. This creates complex IT environments that need to be integrated, governed and made compliant with local regulations.

Informatica has positioned itself as a leading provider of data integration tools and metadata management offerings, the latter of which provide higher-level information about data, such as where it lives, how it moves and what the data set contains. This better enables IT departments to discover, inventory and organize their data sets across the IT landscape, and allows them to better serve their business stakeholders that need easy access to relevant data. Informatica’s Enterprise Data Catalog (EDC) has already been able to connect metadata from sources like on-premises and cloud-based applications, databases, data lakes, data warehouses and cloud platforms. However, while EDC has been able to incorporate the majority of data sources, it was not an all-ecompassing solution. The vendor recently filled EDC’s portfolio gaps with its acquisition of Compact Solutions, which brings the acquired company’s MetaDex technology into EDC. TBR spoke with Informatica’s Senior Director of Product Marketing Dharma Kuthanur, who noted that the acquisition will help Informatica “extract metadata and lineage from the most complex data sources across the enterprise as well as legacy sources (e.g., mainframes). Other sources include code include code and stored procedures that you would find inside databases and data warehouses like Teradata or IBM Db2 warehouse or Oracle warehouse — so really being able to parse static and dynamic code that’s inside the databases that transform the data — and often this used to be a black box, limiting full understanding of data across the enterprise.”

In particular, the integration of MetaDex capabilities into EDC further enhances the ability of customers to catalog and govern their data from a broader range of sources, including mainframes; multivendor extract, transform, load (ETL) tools; code; and statistical and business intelligence tools such as SAS. Adding these capabilities makes Informatica a one-stop shop for metadata connectivity and data lineage across the entire data landscape spanning hybrid IT environments. Providing customers with visibility and control over all of their data better positions Informatica as the foundation of customers’ AI, machine learning and analytics-related initiatives. In addition, this increases the value proposition of the company’s broader suite of data management products and solutions like Axon Data Governance.

MetaDex rounds out EDC’s capabilities, enabling end-to-end metadata connectivity and data lineage

Large vendors such as IBM, Oracle and SAP have competing metadata tools such as Watson Knowledge Catalog, Oracle Metadata Management and SAP Data Hub, respectively, which are mostly used by the vendors’ existing customer bases. These offerings do have some overlap with Informatica’s portfolio, but Kuthanur noted that “for pure stand-alone opportunities we don’t really [compete with] them because we have a much stronger set of capabilities.”

TBR believes Informatica’s strategy around enterprise data management separates it from the larger incumbent vendors like IBM, Oracle and SAP, due to the vendor-agnostic nature of Informatica’s portfolio. According to Kuthanur, “We position our catalog as a ‘catalog of catalogs’ because we can scan all types of data sources across the enterprise, across multiple clouds, including from some of these third-party catalogs like AWS Glue, and then combine that metadata from metadata across the rest of the enterprise.” There are smaller vendors with vendor-agnostic portfolios for enterprise data management such as Collibra and Alation, but these competitors have smaller global footprints and limited metadata connectivity and lineage capabilities compared to Informatica. Informatica’s acquisition of Compact Solutions also puts the vendor roughly 12 to 18 months ahead of Collibra and Alation in regard to portfolio innovation.

Logicalis’ local scale and investments in services transformation offerings position it well to withstand the COVID-19 headwinds in LATAM

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Following one of the last in-person analyst events held in in Sao Paolo, Brazil, just before COVID-19 took over our personal and business lives, TBR had a chance to reconnect virtually with Logicalis LATAM CEO Rodrigo Parreira and Logicalis LATAM Director of Strategy Eduardo Harada. Expanding on our discussion at the analyst event in February, Parreira confirmed many of the regional market trends are still in place, although some initiatives have been paused, with COVID-19 forcing buyers to reorient their budget priorities toward run-the-business awards.

A spike in demand around supporting remote work, implementation and management of collaboration tools, and security plays to the strengths of Logicalis’ value proposition, particularly within the infrastructure services domain. Parreira is even more optimistic about a resurgence of opportunities in 2021 as regional buyers begin to solicit services in areas such as automation and AI, creating increased opportunities around IoT and connected devices. As Parreira positioned it, “The crisis accelerated automation.” He also highlighted that more than 50% of Logicalis new bookings have been geared toward services, accelerating the company’s efforts to become an IT services leader.

TBR is not surprised to hear there is an uptick in demand for automation considering the technology’s potential to lower the total cost of ownership, which is of particular importance to highly price-sensitive buyers in the LATAM market. We believe vendors that have experience adopting and scaling automation tools to drive down their own costs, improve remote delivery and retain savings will see immediate rewards. However, Logicalis may face an uphill battle educating regional customers on the value of AI beyond cost optimization, as many continue to see AI as a threat to their jobs. The company, however, is well positioned to capitalize on the trust it has built over the past six decades of operating in the region.

TBR previously wrote, “While the company’s business consulting unit spearheads outcome-based pricing initiatives, we believe Logicalis could further accelerate its value proposition transformation if it approaches every opportunity with scale in mind from the beginning. To execute on such a strategy, the company would need to further build out its consulting and application services capabilities, with acquisitions in these domains highly likely.” COVID-19 will likely fuel market consolidation, including in the LATAM market. Both Parreira and Harada believe consolidation in the LATAM market will be even greater as the challenging macroeconomic conditions will drive many smaller vendors out of business. Acquiring for capabilities, not for scale, would deepen Logicalis’ value proposition in both existing and emerging domains, including AI and SaaS. Larger global peers, though, including the Big Four and multinational corporations, are also scouting for price-competitive targets, possibly pushing Logicalis to take more aggressive action sooner.

TCS poised for strategic purchases in 2020 as peers’ M&A activity slows

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Despite COVID-19 pressures, Tata Consultancy Services (TCS) has not shied away from enacting bold initiatives, evidenced by the announcement of Vision 25×25 during the company’s CY1Q20 earnings call. Even in the face of decelerating revenue growth in the first quarter, executives remained optimistic, suggesting that — unlike the broader trend in the IT services industry — TCS is not ruling out investing in M&A if the price is right. For TCS, key characteristics of its business model enable the company to kick the tires in the M&A market and take advantage of favorable valuations brought about by a dwindling number of interested buyers.

Massive scale and healthy balance sheet support M&A consideration

A strong financial model provides the foundation for TCS’ capital allocation strategy and gives the company more flexibility compared to its peers around strategic investments. For example, TCS’ operating margin was 25.1% in 1Q20, far exceeding TBR’s benchmark average of 9.6% and surpassing all of TCS’ India-based peers by over 400 basis points (Infosys’ operating margin trailed closest behind at 21.1% in 1Q20). Additionally, TCS is backed by massive conglomerate Tata Group and has limited long-term debt, putting it in a comparatively lower-risk position even during a time of global macroeconomic uncertainty, provided the company can mitigate impacts to its top line in the coming quarters.

In CEO’s words: “The best time to execute is when nobody else is buying”

Although TCS made two acquisitions in 2018, ending a four-year lull in the company’s M&A activity, competitors with more mature acquisition proficiencies such as Accenture, Cognizant and IBM usually tend to crowd the market and challenge TCS’ ability to gain market share in key areas. For example, Accenture remains committed to carrying out its $1.6 billion acquisition budget in FY20, evidenced by the five AI-centric purchases the company made in CY2Q20. Driving the optimistic viewpoint of TCS CEO Rajesh Gopinathan, however, are opportunities to pick up acquisitions at attractive price points as typically active buyers have lost purchasing power and/or voluntarily corralled investment strategies.

DXC Technology, for instance, remains weighed down by elevated integration costs and restructuring plans following six acquisitions in 2019, including the $2 billion buyout of Switzerland-based engineering firm Luxoft. India-based peer HCL Technologies (HCLT) is in a similar situation, as executives expressed a cautionary mindset while the company looks to complete remaining payments on the $1.8 billion purchase of several IBM software products such as Unica, Portal and Connections in late 2018. As HCLT CFO Prateek Aggarwal explained, “As you can imagine, these are turbulent times, and we don’t want to sort of fritter away the cash at this point in time.”

Previous investments display an audacious mindset amid macroeconomic turmoil

TCS’ acquisition strategy has historically been very selective, with the company opting to build its talent, IP and technology capabilities in-house and normally waiting several years before kick-starting new activity. During its most recent spending pickup, the company has stuck to low-risk and nonintensive purchases such as BridgePoint and W12 Studios in 2018, both consultancies with fewer than 50 employees and with estimated annual revenues of less than $5 million. In mid-2019 TCS also increased its stake in TCS Japan, a 2014 joint venture with Mitsubishi Corp., from 51% to 66%, in what was already a safe bet as the unit achieved double-digit constant currency growth in the two years prior.  

TCS’ last large-scale acquisition came during a risky time for most companies — the peak of the 2007-2008 financial crisis. In the fourth quarter of 2008, TCS completed its acquisition of Citigroup Global Services Limited for $512 million cash and brought on 12,000 India-based employees to provide BPO services in the banking, financial services and insurance sectors. While TBR anticipates the company will likely stay true to its existing strategy around more tactical tuck-in plays versus making a bold large-scale merger, a reflection on the past reminds us that the option — and willingness — exists.

IP will remain at the forefront of TCS’ acquisitions strategy

TCS already touts scale and well-trained talent, leading TBR to believe that the company will focus on obtaining IP, filling portfolio gaps and expanding its addressable market when considering M&A candidates. Because of its selective M&A stance, TCS is often left playing catch-up in the M&A market, reflected in its 2018 purchases of BridgePoint and W12 Studios, which mimicked Accenture’s push around digital design capabilities, and TBR believes this trend will continue.

According to TBR’s 1Q20 IT Services Vendor Benchmark, “The acquisition pace slowed in 1Q20; the nature of acquisitions remained similar to that in 2019 as vendors look to build out emerging technology portfolios, including security and deepened software practices around Salesforce and Workday.” This sets the stage for TCS to follow in the footsteps of its India-centric peers Infosys and Cognizant, which recently completed the acquisitions of Salesforce consultancy Simplus, as well as Salesforce Platinum Partner and digital consulting firm Lev. In TBR’s view, the central component of TCS’ acquisitions strategy will be targeting M&A candidates that can quickly and cost-efficiently add to its IP portfolio, similar to HCLT’s purchase of several IBM software assets in 2018, as TCS has built lucrative services offerings around the success of its homegrown products and platforms, such as BaNCS and Ignio.

Quick Quantum Quips: Vendors lay the groundwork for regional and technological differentiation as commercialization of quantum computers looms

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Welcome to TBR’s monthly newsletter on the quantum computing market: Quick Quantum Quips (Q3). This market changes rapidly, and the hype can often distract from the realities of the actual technological developments. This newsletter will keep the community up to date on recent announcements, while stripping away the hype around developments.

For more details, reach out to Stephanie Long or Geoff Woollacott to set up a time to chat.

June 2020 Developments

Various developments and investments in quantum computing highlight the vastness of the opportunities that exist in this field for vendors willing to endure the long haul between research and development and commercialization. While major players continue to make strides, quantum computing startups still stand strong in the market, receiving additional funding and forming strategic partnerships to push forward with their individual goals. Globally, skills shortages remain a challenge and a threat to rapid commercialization once the technology is available. As such, courses at the high school level are being developed so students are familiar enough with the technology to know if they would be interested in pursuing a related degree at the higher-education level. This is essential as in some ways, introducing students to the quantum field after they have entered college may be too late as many of these students may have already decided on their specialization.

  1. D-Wave and NEC partnered on quantum computing sales and marketing opportunities in addition to product development to bolster the prevalence of the technology globally. This partnership in particular increases D-Wave’s presence in Japan and provides NEC with assets to compete against Fujitsu in their respective local markets. The product development portion of the partnership combines NEC’s supercomputing technologies with D-Wave’s quantum expertise to bring hybrid compute solutions to market. Early activity in the quantum space suggests a hybrid compute model is the most likely way early quantum computers will be leveraged commercially.
  2. Honeywell claims to have the world’s highest-performing quantum computer as of June, leveraging IBM’s measuring tool for quantum computing, called Quantum Volume, to back up its claim. The system has a quantum volume of 64, and marks the delivery of promises Honeywell made regarding quantum computing performance in March. TBR notes that a key customer example Honeywell leveraged in the March announcement was JPMorgan Chase, which is also a strategic quantum customer for IBM and highlights the highly fluid nature of the quantum systems space, which will see systems vendors leapfrogging each other’s performance claims for the foreseeable future.
  3. Fermilab designed an introductory quantum computing course for high school and lay people interested in gaining a grasp on the subject without prior quantum mechanics familiarity. TBR believes this is a win for both the quantum space and the education space in the U.S. Public education increasingly emphasizes STEM and this course falls squarely in this area, reinforcing some public education goals while also working to improve knowledge of quantum computing at the high school level, which in turn will encourage students leaving high school and entering college to pursue degrees related to the subject. As the skills gap in the quantum field remains large, which will hinder scaling the technology’s commercial use, promoting quantum-related fields in higher education is paramount to the long-term viability of the technology at the commercial level.
  4. IQM, a Finnish startup that produces quantum hardware, secured another round of funding in June. This news came while the Finnish government announced it would acquire a quantum computer for the VTT Technical Research Centre of Finland. Multiple European countries are making similar investments, with Germany also commissioning at least two quantum computers. With its team in Munich, IQM also has the potential to capitalize on investments in Germany in quantum systems. TBR notes these government-centric quantum system purchases are currently for research purposes. These developments highlight that despite having clear front-runners in the quantum computing space, such as IBM, Google and Honeywell, there is still a well-defined space in the market in which startups can thrive. In some cases, there are regional advantages that major players cannot capitalize on as well as startups. For example, governments outside the U.S. and China have a perceived threat of taking advantage of quantum technologies that are not locally native due to the potential security threat the systems could cause. As such, vendors such as IQM and Atos are able to secure funding in Europe that other players cannot.
  5. QC Ware entered a research partnership with AISIN Group, a major manufacturer of automotive components, to develop ways to leverage quantum optimization and quantum machine learning algorithms for automotive applications. QC Ware has partnerships with Rigetti Computing and D-Wave for quantum computing hardware, and this partnership with AISIN grants it access to their hardware capabilities too. A key advantage of this relationship with AISIN Group for QC Ware is not only increased exposure of its value within the quantum computing industry but also an expanded presence in Asia.

If you would like more detailed information around the quantum computing market, please inquire about TBR’s Quantum Computing Market Landscape, a semiannual deep dive into the quantum computing market. Our most recent version was just released in June.

Even with slower growth, management consultancies should come through 2020 positioned to help clients weather disrupted digital transformations

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Management consulting market summary

Outlook

Regardless of whether the pandemic lingers, re-emerges in the second half of 2020 or significantly subsides, TBR expects consultancies will benefit from opportunities created by the chaos of COVID-19, such as uneven responses from government authorities around economic fallout, pandemic protocols and continued uncertainty throughout 2020. Vendors with greater scale, more established technology-centric brands, and deeper partnerships with cloud and software providers will weather the crisis and alleviate pressures on front-end management consulting by price-conscious clients that demand flexible payment terms. TBR expects management consulting revenue growth for the benchmarked vendors to decelerate to 3.5% year-to-year in 2020 but to continue to outperform revenue growth for the benchmarked IT services vendors.

Disruptors

Every part of the global economy, including the IT services and management consulting markets, are experiencing serious disruptions from the global COVID-19 outbreak. Countrywide lockdowns and changes in travel and personal interaction to limit the spread of the virus, have forced changes in human resource management for vendors and their clients, some short term and some likely permanent. Macroeconomic uncertainty due to the pandemic is pushing clients to re-evaluate their spending and shift their priorities from high-touch, large-scale strategic transformational discussions to tactical run-the-business and price-competitive managed services opportunities.

Overview

Benchmarked vendors in the management consulting segment increased revenue 7% year-to-year in 2019, a growth trend that continued to surpass that of benchmarked IT services vendors in TBR’s IT Services Vendor Benchmark, which expanded 1.9% year-to-year in 2019. The Big Four vendor group remained the largest revenue contributor at 55.8% of benchmarked revenue in 2019; however, strategy-led vendors increased their market share by 10 basis points year-to-year to 28%. Big Four and strategy-led firms are expanding their intellectual property assets and managed services capabilities to position as business advisers with holistic service capabilities.

The Management Consulting Benchmark provides key service line, regional, vertical and operational data and analysis for 13 leading management consulting firms. The research program also includes a deep dive into 11 vendors’ business strategies as well as SWOT analysis.

Cloud professional services and hosted private cloud markets will grow over the next 5 years as COVID-19 drives cloud adoption

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COVID-19 has undoubtedly created financial pain for businesses across all verticals. Business operations have been disrupted and revenue streams have declined in many industries across the globe. At the same time, the pandemic has required additional investment to support remote work and adjust business processes to align with public health guidance from the Centers for Disease Control and Prevention, including social distancing. However, even amid these financial challenges, businesses have spent and plan to continue spending more of their IT resources on cloud-delivered services. Cloud’s benefits of agility, innovation and a high degree of automation have been reinforced during the pandemic and have prepared adopters for the next unknown disruption to their business.

Given these circumstances, TBR’s market forecasts for cloud professional services and hosted private cloud have been adjusted to reflect the impact of COVID-19 over the five-year forecast period. In the next two years, we anticipate growth will slow slightly due to the impacts social restrictions are having on supply and demand. Particularly given the uncertain environment, business spending will likely take longer to rebound than in previous economic downturns. This holds true across IT departments, as many businesses that have on-premises IT infrastructures will postpone cloud deployments until after the pandemic abates.

As such, workload activity including legacy SAP, VMware and Oracle migrations to bare metal IaaS and the associated services opportunity will be affected. While these impacts will reduce market growth by a few percentage points through the remainder of 2020 and into early 2021, the flexible nature of cloud-based transactions make the cloud professional services and hosted private cloud markets less susceptible to the virus’s near-term effects than other markets within the IT industry. COVID-19 is testing many companies’ IT preparedness, and as a result, a notable increase in cloud usage will occur once the virus subsidies and IT spending returns to normal, driving accelerated growth from 2022 to 2024.

TBR’s Cloud Professional Services Market Forecast and Hosted Private Cloud Market Forecast provide insights into how market sizes, growth and vendor positions will change over the next five years. Each forecast is broken down into four subsegments and both forecasts cover the Americas, EMEA and APAC.

IBM expands hybrid cloud activities by partnering with India-based IT services peers

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Partnering with IT services peers and integrating Global Business Services and Global Technology Services capabilities will help IBM improve client engagement and increase cloud signings

Hybrid cloud remains an area of investment for IBM as the company pursues transformational opportunities with clients. IBM’s recent investments in improving its hybrid cloud capabilities, most notably with IBM Cloud Paks and bringing Red Hat solutions and professional services on board, help strengthen its position in cloud. IBM’s ambition is to deepen its understanding of clients’ journeys to hybrid cloud and AI; in 1Q20 the company announced that it is making hybrid cloud its fourth platform — the others being services, mainframe and middleware.

Partnering with India-centric IT service providers such as HCL Technologies (HCLT), Infosys and Tech Mahindra expands IBM Services’ client reach for hybrid cloud solutions. IBM partnered with HCLT in November to migrate and modernize VMware workloads on the IBM public cloud. IBM is combining its secured, enterprise-grade public cloud with HCLT’s delivery and managed services capabilities to move, manage and modernize complex VMware workloads in the cloud.

In March IBM partnered with Infosys to enable clients’ digital transformations through the IBM public cloud offering. IBM Services’ reach in the financial services, insurance and healthcare sectors will expand as the partners integrate their professional services capabilities to enable clients to transition, modernize and transform enterprise workloads and applications, leveraging security, open innovation and enterprise solutions on the IBM public cloud. The partnership will also increase adoption of IBM’s Red Hat OpenShift platform and generate opportunities for IBM Services around consulting and technology services offerings for Red Hat and multicloud management. In April IBM partnered with Tech Mahindra to migrate core business applications to the IBM public cloud utilizing IBM Cloud Paks. The partners will open innovation centers, with the first one in Bangalore, India, to address business problems using transformational solutions developed with IBM Cloud Paks.

According to TBR’s 4Q19 Cloud Professional Services Benchmark, COVID‐19 has jolted the cloud adoption timeline from a comfortable curve to a forced spike, which opens up myriad cloud professional services opportunities. IBM Services’ well-established security and hybrid cloud capabilities will provide growth opportunities for the rest of 2020 as business disruptions caused by COVID-19 highlight the benefits of cybersecurity and cloud-based solutions. The pandemic will accelerate IBM’s partnership activities as the company pursues opportunities to ramp up adoption of hybrid cloud and AI solutions to enable clients to restore and relaunch post-pandemic and establish new business models in a new normal.

BearingPoint’s bold triple bet on cars

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Can the Europe-centric consultancy lead the race to remake the automotive industry?

In recent years, as nearly every IT services vendor and consultancy has attached itself to an automotive sector client and touted their industry expertise, TBR has followed the routes those vendors have taken and which aspects of the car industry they have focused on. In broad strokes, consultancies and IT services vendors help their automotive clients in one or more of three areas: 1) AI and autonomous vehicles; 2) customization, customer mobility and brand; and/or 3) Manufacturing 4.0. For example, last fall, TBR spoke at length with Accenture about the company’s new efforts in Stuttgart, Germany, which mostly fell into the second category. Cutting across all three areas, trends in car ownership, transportation, ride sharing, car sharing, and privacy and data sharing have sustained opportunities for consulting, with anticipated large-scale implementations and managed services to follow.

In a recent discussion with BearingPoint, TBR learned the automotive sector would be a priority over the next few years, as the firm has recognized changes that affect the industry, such as climate change, air pollution, buyer needs and behaviors, mobility services, parking “as a Service,” and car rental “as a Service,” to name a few, were forcing changes in the business models for every supplier, maker, advertiser and buyer involved. With established relationships with all the major car manufacturers in Europe, as well as a legacy working with manufacturers across the continent, BearingPoint will do what almost no other consultancy or IT services vendor has done: organically build an automotive practice that tackles all three areas — AI and autonomous vehicles, customer experience and brand, and Manufacturing 4.0 — and place that business group among the firm’s highest priorities.

TBR will watch BearingPoint’s progress closely, in part as a component of our ongoing management consulting research, which includes a detailed profile on BearingPoint. Secondly, we want to see if a consultancy or IT services firm can balance serving the three elements of the automotive sector we have outlined. Many vendors have developed strengths in one or two areas, but no one vendor has applied consistent, sustained and leadership-supported investments in all three. It is a tough road. Let’s see if BearingPoint can navigate it.