Microsoft beats out Amazon after contentious competition for DOD’s JEDI award

Last Friday’s announcement of the massive U.S. federal government cloud contract led Senior Analyst John Caucis to publish a special report explaining how Microsoft won, why Amazon lost, and what it all means for the IT services vendors in the U.S. public sector space. “Regardless of why the DOD [Department of Defense] chose to announce the winner of the biggest single cloud contract to date in federal IT (and one of the biggest IT contracts in federal IT history) when it did, Microsoft is now poised to capture potentially billions in revenue as the DOD’s leading cloud vendor on JEDI [Joint Enterprise Defense Infrastructure], an award with a $10 billion ceiling and a potential 10-year life span if all options are exercised. Vendor selection for JEDI has been ongoing for over a year, plagued by multiple protests, internal investigations, and conflict-of-interest allegations by and between the initial four contestants, Amazon, IBM, Microsoft and Oracle. The acrimony kept the DOD from awarding JEDI by its original target date of April 2019, though the agency eliminated IBM and Oracle in April in the first ‘down-select’ of the vendor review process.”

Additional assessments publishing this week from our analyst teams

“Restructuring and automation efforts help Fujitsu reposition for profitable growth in its services business. However, the company may need to look outside its traditional client base to see tangible results throughout 2020.” — Kelly Lesiczka, Analyst

“From a cloud perspective, Fujitsu will align its strategy to its competitors’ strategies, which consist of encouraging customer migrations to hybrid and multicloud environments. However, TBR believes Fujitsu’s expertise in IT outsourcing will serve as a differentiator as Fujitsu looks to explore operational services within multicloud environments more heavily compared to industry peers. Fujitsu announced plans to invest ¥500 billion in its DX business over the next five years and to launch an independently operated consulting business, expected in January 2020, to meet its technology goals.” — Nicki Catchpole, Senior Analyst

“While Cognizant faced challenges within its mature industry segments in 2Q19, we expect the company improved its ability to scale digital solutions through additional acquisitions, such as Zenith Technologies, to offset pressure in 3Q19.” — Lesiczka

Tata Consultancy Services’ (TCS) Business 4.0 strategy focuses on expanding the company’s solution suite around next-generation offerings such as AI, analytics, big data, blockchain, cloud, IoT and security. Integrating this strategy across service delivery and got-to-market teams enables TCS to sustain its global brand awareness and creates opportunities to upsell existing clients and attract new logos seeking increasingly comprehensive digital transformations, which generates opportunities for longer-term and often larger-dollar outsourcing engagements.” — Kevin Collupy, Analyst

“TBR’s Global Delivery Benchmark shows that agile-based service delivery is speeding up vendors’ ability to deliver at scale, which is forcing vendors to hire more talent with specific skills to keep pace in this delivery model. As vendors continue to adjust business models to operate in an automation-enabled services environment, their inability to systematically and consistently monetize IP will further pressure profits.” — Boz Hristov, Senior Analyst

“In the latest Digital Transformation Insights report on Digital Marketing Services, TBR notes that as the most mature digital transformation process, customer experience process has compelled buyers to embark on omnichannel projects to unify insights and processes across the customer life cycle and deliver more personalized experiences to end consumers. While macroeconomic headwinds will taper revenue growth, AI-enabled user experience solutions will continue to create entry points for customer acquisitions compelling vendors to recalibrate investment strategies.” — Hristov

Leidos’ 3Q19 revenue is expected to rise between 4% and 6% year-to-year to between $2.68 billion and $2.73 billion as the company’s backlog continues to reach new highs, owing to a strong, sustained pace of net-new contract bookings across defense, civilian and particularly, healthcare areas. Leidos also successfully defended its position on a handful of large projects during 3Q19, including the $2.9 billion, 10-year NASA End-User Services & Technologies (NEST) program and the $927 million IT and logistics support contract with the Transportation Security Agency (TSA).” — Caucis

CACI’s revenue is projected to increase between 15% and 20% year-to-year to between $1.34 billion and $1.4 billion in 3Q19. A revenue result for CACI anywhere in the projected range would represent another record level for the company, reflecting the tight alignment of its differentiated solutions with high-priority spending areas in the defense and intelligence markets. CACI is beating out incumbents on large-scale program recompetes and effectively defending its incumbency on its own legacy engagements, while the strength of its fiscal performance points to a high-value solutions mix highly relevant to its core customer set. $1 billion in acquisitions made in 1Q19 are also bolstering CACI’s top-line, though concurrently generating margin pressures.” — Caucis

Booz Allen Hamilton’s (BAH) revenue is expected to increase between 9% and 11% year-to-year to between $1.76 billion and $1.79 billion in 3Q19, consistent with the company’s plan to aggressively execute on its FY2020 growth objectives during the first half of the fiscal year (calendar 2Q19 and 3Q19).  BAH is realizing balanced growth across its government-focused business lines, while growth in its Global Commercial business has been more variable. Irrespective, BAH continues to book a strong volume of IT modernization, advisory and security-focused engagements.” — Caucis

“To further reduce churn and increase revenue, T-Mobile is building a more robust customer ecosystem by launching new value-added services, expanding its IoT portfolio, and entering new markets such as video and residential broadband.” — Steve Vachon, Analyst

AT&T’s network investments in areas including 5G, NFV, SDN and IoT are providing the foundation for businesses to support digital transformation initiatives to enhance efficiency and customer experience. AT&T is preparing to support next-generation digital solutions by fostering network innovations at its six global AT&T Foundry centers as well as working with multiple leading technology providers including Dell Technologies, IBM, Microsoft, Samsung and Hewlett Packard Enterprise.” — Vachon

IBM and the Raptors: Building an NBA champion and looking for a repeat

While watching the NBA’s defending champion Toronto Raptors begin their season, I thought back to a trip to IBM’s Toronto office in late summer 2018, where we got to play with the technology IBM built for the Raptors’ draft and trade war room. We created teams, selecting college players, current NBA players and even European league all-stars based on stats and contracts, influenced a bit by our own biases (toward the Celtics). And when we visited IBM Toronto again in 2019, when the Raptors were on the march to the playoffs and a championship, we understood that IBM’s technology had made a huge difference in pulling together an underappreciated, under-the-radar team. IBM’s combination of massive amounts of data, AI and a near-flawless user interface allowed the Raptors’ management team to put the right pieces in place to unseat the Warriors. Will the Raptors repeat? Unlikely, but they’re still partnering with IBM.

Later this month, we’re going to publish a special report on IBM’s role with the Raptors in the context of other consultancies and IT services vendors that have invested in analytics and sports, building on the following assessment from our Digital Transformation Insights Report: Cross Vendor, published in March.

“In 2016 IBM partnered with the NBA’s Toronto Raptors to create a ‘war room’ for the NBA draft, pulling together an exhaustive and diverse set of performance, personality and biological data on basketball players in the league, in college, and around the world.

Leveraging a user-centric design approach, IBM worked with the Raptors’ front office to develop an end-to-end platform that revolutionizes the operations experience and provides them with comprehensive and actionable data about players to support front-office decision-making processes.

IBM worked with the Raptors to gather player performance statistics and contract details, allowing the Raptors to get an instant view of all aspects of player performance and the ability to search and filter players, compare players, simulate trade scenarios, and collaborate with decision makers throughout the player recruitment and acquisition processes — how did a player do and what would it cost to have him play in Toronto.

The IBM Sports Insights Central solution was built over six months using a collaborative and agile model. The platform includes a state-of-the-art digital war room located at the Raptors’ facility as well as a mobile application and a web-based service to enable remote collaboration.

The IBM team synthesized and visualized all aspects of player data through an intuitive and highly functional user experience to make this a transformative engagement for IBM and the Raptors. Since the solution deployed, IBM has assisted the Raptors by further enhancing the functionality of the platform with scouting management, players’ social media profiles, and analytics provided by the IBM Watson AI engine via a native mobile app.”

(The Raptors started their title defense with a 130-122 win over the Pelicans.)

Mixed results expected in the U.S. federal sector for IT services vendors

Earnings season for federally focused IT vendors begins the week of Oct. 21. Senior Analyst John Caucis has been tracking Northrop Grumman Technology Services (TS), General Dynamics Information Technology (GDIT) and Raytheon Intelligence, Information and Services (IIS) ahead of their 3Q19 fiscal earnings release. 

Raytheon IIS is expected to be the top performer among the first group of companies to tender their financial performance, owing to new contract signings in the lucrative cyber and space sectors and expanding project volumes on existing programs in these segments. Growth is likely to moderate in 3Q19, though this is expected with the ramp down of the Warfighter Field Operations Customer Support (FOCUS) program. Some of the lost Warfighter FOCUS revenue will be offset by a recent rise in domestic bookings that is converting to revenue on IIS’ top line while IIS continues expanding its overseas footprint.

Northrop Grumman TS’ recent sales slide is expected to continue in 3Q19, though we also expect the pace of TS’ contraction to continue moderating as the impact of large engagement losses wanes and bookings with sustainment, logistics and modernization programs strengthen.

The CSRA acquisition is no longer inorganically lifting GDIT’s revenue, and recent business divestitures (GDIT’s call center and 911 businesses) are expected to further erode GDIT’s revenue base. The expiration of a handful of large engagements in 3Q19, combined with the expiration of those in early 2019, will exacerbate the impact of the aforementioned issues on GDIT’s performance. Cross-sales with the Aerospace and Mission Systems segments of General Dynamics are helping offset these headwinds, as are the large-scale awards GDIT is increasingly booking, but a complete return to top-line growth is not expected until 2020.

Additional assessments publishing this week from our analyst teams

Driving innovation across its North America client base via a senior leadership team strengthened by its new Digital Transformation Office and establishing an Application and Technology Services practice will enable Atos to ramp up activities with clients around improving business operations and results through next-generation solutions. The next step for Atos is to successfully cross-sell its solutions by explaining the company’s capabilities to internal sales and delivery teams and to existing clients, as well as to effectively deliver services to grow revenues and improve profitability in North America. Elitsa Bakalova, Senior Analyst

With Atos’ 3Q19 earnings release TBR expects cloud will remain a vibrant segment for Atos, and revenue growth in the segment will continue to outpace the company’s total revenue growth. Atos’ cloud business will be positively affected by increased activities with clients, such as around transforming legacy applications and infrastructures to cloud, orchestrating hybrid cloud, ensuring cloud security through services and IP-based solutions, and providing cloud-enabled IoT solutions. Collaborating with clients’ IT and business stakeholders during cloud transformations and adding industry expertise will improve Atos’ ability to drive business outcomes for clients through cloud. — Bakalova

TBR expects six consecutive quarters of bookings growth and cross-selling opportunities to clients that came from recent acquisitions such as Leidos Cyber will sustain Capgemini’s growth momentum in 3Q19. Enhancing client relationships and industry expertise, such as through the acquisition of KONEXUS Consulting and the proposed acquisition of Altran, and approaching clients’ CxOs will improve Capgemini’s ability to access budget stakeholders and sustain revenue growth. — Bakalova

With a robust legacy client base and deep relationships with key technology partners, Accenture’s cloud business will continue to flourish. Accenture is doubling down on Google Cloud, adding another node to its multicloud management strategy. Additionally, Accenture Security continues to provide the trust needed to win new buyers and fuel cloud opportunities. Boz Hristov, Senior Analyst

Though Verizon will continue to trail T-Mobile in postpaid phone net additions for the foreseeable future, Verizon remains able to capitalize on its reputation as a premium wireless service provider to attract customers willing to pay a higher price point for the operator’s network coverage and premium unlimited data plans. Additionally, aggressive cost-cutting and digital transformation initiatives are helping improve profitability. Steve Vachon, Analyst

HCL Technologies’ (HCLT) acquisition activity and efforts to strengthen in-demand portfolio offerings generated double-digit growth in 2Q19. We expect HCLT will leverage its partner network to gain access to an expanded client base and lead with its expertise in Engineering and R&D Services to support its ability to differentiate and compete against peers as well as maintain growth momentum in 3Q19. Kelly Lesiczka, Analyst

Growing traditional revenues in IT services remains a challenge

TBR’s quarterly IT Services Vendor Benchmark published last week, with the following comment from lead Senior Analyst Elitsa Bakalova: “Vendors are scaling transformational portfolios; however, lingering growth challenges in traditional service areas challenge revenue performance. Trailing 12-month IT services revenue growth, at 1.9% year-to-year in U.S. dollars, was down 140 basis points sequentially in 2Q19 and 670 basis points against the year-ago compare. While vendors are not making major downward revisions in revenue growth targets for 2019, revenue growth for the benchmarked vendors has been decelerating due to growth challenges in commoditized traditional service areas; increasing competitive pressures, especially around advisory, implementation and management of next-generation solutions, such as transformational engagements around digital and cloud; and potential macroeconomic uncertainty.”

Additional commentary

“This week TBR publishes its 3Q19 IBM Initial Response, focused on IBM’s corporate and Systems Hardware performance. As the first formal report since the announcement of IBM’s z15 in September, this report will dive into some of the implications of this new launch across the broader portfolio while continuing to provide analysis on IBM’s quantum computing investments and developments. Implications of the Red Hat buy will be highlighted in this report as well, but deeper analysis on this topic can be found in TBR’s IBM Cloud Initial Response. Be on the lookout for TBR’s 3Q19 IBM full report, which publishes on Nov. 6, for a more in-depth look at these topics.” — Stephanie Long, Analyst

“IBM is using its advisory, digital design and technology expertise to win and execute holistic transformational projects and drive management consulting revenue growth in 2019. Value-led and IBM-asset-powered solutions; collaborative innovation, such as in the IBM Garage facilities; and specialized consulting expertise and talent, such as in Global Business Services’ Digital Strategy & iX, Cognitive Process Transformation and Cloud Application Innovation segments, enable IBM Services to position as a digital reinvention partner for clients’ cognitive enterprise journeys.” — Bakalova

“As Julie Sweet takes over the helm, Accenture will continue to capitalize on its momentum, targeting Diamond clients by deploying industrialized, AI-enabled solutions. In FY20 we expect investment in ‘the new’ to help the company expand wallet share within existing businesses as well as position for new logo opportunities, inching total sales from ‘the new’ closer to 100%.” — Boz Hristov, Senior Analyst

Additionally, join TBR’s Professional Services team Oct. 16 for a webinar and Q&A on India-centric vendors, including how they compare to leading IT services vendors and which IT services vendors have the most to lose due to sustained success among those that are India-centric.

Interested in learning more about IT services, cloud, data center and IoT?  Contact TBR today!

Returning to a co-CEO structure completes the executive refresh to support SAP in the ongoing cloud war

Bill McDermott chose not to renew his contract as SAP CEO, making room for SAP to return to its co-CEO structure with Jennifer Morgan and Christian Klein. This changing of the guard is the capstone on SAP’s management realignment, and the announcement comes with some glaring similarities to key ERP challenger Oracle’s announcement a month earlier.

Morgan and Klein take over the refreshed SAP executive suite

SAP has made numerous management changes in 2019, but all changes had been made with CEO Bill McDermott leading the company — and the newly appointed leaders — through each step. That reassuring constant ended abruptly on Oct. 10, when McDermott announced he will step down from his CEO role instead of renewing his contract. McDermott will stay with the company in an advisory capacity through the end of the calendar year to smooth the transition to the newly appointed co-CEOs Morgan and Klein.

While the personnel is changing, the co-CEO structure is a familiar one for SAP. SAP operated under a dual CEO structure for quite some time, with McDermott himself sharing the CEO responsibilities with Jim Hagemann Snabe before taking over in an individual capacity. The new co-CEOs are well paired from geographical and functional standpoints, as Morgan is U.S.-based and focused on sales, while Klein is Germany-based and more focused on products and innovation. In furthering the consistency, founder Hasso Plattner, himself a former co-CEO of SAP, remains chairman of the board and very involved in the overall strategy.

Morgan was in her role as president of the Cloud Business Group for a mere six months between Robert Enslin’s April departure to Google Cloud and her promotion into the role of co-CEO. Before his appointment to co-CEO, Klein became a member of the executive board in 2018 and served as SAP’s chief operating officer and chief controlling officer. We believe Morgan’s focus on sales and customer relationships as well as Klein’s strength in operations will be required to achieve SAP’s dual overarching goals: to grow revenue through sales and improve margins through operating efficiencies.

Notably, Morgan and Klein are stepping into the driver’s seat as other SAP executives are just finding their footing in new roles:

  • One of the biggest shifts SAP made in the first half of 2019 was changing aspects of its partner programs, capped by the promotion of Karl Fahrbach from chief operating officer of the partner organization, to SAP’s first chief partner officer in March, after Rodolpho Cardenuto left his role as president of the partner organization in December 2018.
  • Without much fanfare, Juergen Mueller was promoted from chief innovation officer to chief technology officer in January 2019, and appointed to SAP’s executive board.
  • Elliot Management disclosed its investment in SAP in April 2019, and immediately directed SAP to further improve margins while chasing revenue growth.

While these changes have all come in different areas of the company, they are aligned with SAP’s goals as it transitions from a traditional software vendor to a cloud solutions provider. With its cloud portfolio largely in place (though innovation, replatforming and acquisitions persist), SAP is at the point in its transformation that requires it to invest in partner enablement to sell its cloud solutions and ongoing competitive innovation within its defined solution areas, and to do so with a focus on operating efficiencies. In this same spirit, McDermott aggregated a portfolio, and Morgan and Klein are well aligned to take that portfolio forward to achieve the goals, with the help of an invigorated C-Suite behind them. Arguably, SAP would have been well served by McDermott’s persistence as CEO to complete the technology transition to the HANA platform before departing, but Mueller and Plattner will likely both lend their technical leadership to ensure the smooth transition alongside the other business leaders.

Releasing earnings alongside the CEO announcement proves SAP’s ERP capabilities against Oracle’s speedy September release

SAP’s announcement was not allowed to pass without parallels being drawn to its most boisterous competitor: Oracle. The most discussed similarity is that SAP’s CEO change came almost exactly a month after one of Oracle’s CEOs, Mark Hurd, took an immediate leave of absence for medical reasons. Outside of the timing, the CEO announcements are, however, vastly different in motivation and succession.

The other similarity, which TBR believe is more noteworthy, comes from both companies’ ahead-of-schedule releases of quarterly earnings data in conjunction with their CEO announcements. When Oracle released its earnings Sept. 11, one day ahead of its scheduled release and 11 days after the quarter ended, CEO Safra Catz underscored the speed with which Oracle was able to prepare its financial statements by running on its own Fusion ERP Cloud suite. Nearly a month later, SAP was able to close and prerelease its results in a 10-day window using its ERP solutions. TBR expects this move to prove critical for SAP, as SAP quickly rebutted what could have been used as a competitive proof point of the capabilities of Oracle’s ERP solutions.

Tear down those paywalls: A better solution is possible

Paywalls are going up all over the internet, hurting both publishers and readers. A better solution is possible, but no one is offering it. TBR can describe the solution but cannot explain why the market is not working to produce it.

The internet is smothering publishing

Online reading is harming both print and online newspapers and magazines, reducing the number of journalists and the available volume of news and analysis. Online advertising revenue is increasing, but most of the increase is going to a small number of social media companies. The remainder is going to content-creation companies, that is to say publishers, but to a decreasing number of them, all large successful sites such as The New York Times, The Wall Street Journal and The Washington Post.

This leaves smaller publishers — whether local, regional or specialized — in an increasingly difficult position. For years, small publishers have been reducing costs by cutting back on writers, but this makes their content less desirable, consequently reducing readership and thereby revenue. To compensate, these publishers have allowed an ever-expanding volume of increasingly obtrusive advertisements to be placed on their pages, reducing usability and consumption. This is a vicious cycle. Publishers have tried to attract new readers by allowing their content to be used on social media sites, but most readers simply consume the content on the social sites and do not follow the articles back to their sources.

Publishers are building walls

Increasingly, especially in 2019, content-creation sites have erected paywalls, requiring paid subscriptions to consume their content. This works well for large, popular sites, bringing in additional revenue and creating a relationship with readers. However, paywalls are a forbidding barrier to entry for smaller, more specialized publishers, as occasional readers often choose to skip reading the content that would otherwise have brought them to the site.

Some publishers allow readers to view a limited amount of their content through a free subscription, enabling them to connect with readers while still controlling their access. This also imposes a barrier to potential readers, albeit a much lower one, as many readers choose not to create another new account, manage another new password, and deal with more promotional email.

TBR believes paywalls will hurt most publishing sites and their potential readers. The vicious cycle will spin faster.

A solution is possible

What can be done? A solution, or at least a partial solution, is available. It would benefit publishers, readers and, most important, the business that creates the solution. TBR can find no evidence that anyone is pursuing the solution, and the reason for this failure of the market is not apparent.

The solution could be described as pay-per-view option for published content. Readers would each have a single paid account across all member publishers, with a balance to which they could contribute, and publishers would offer content for which users could choose to pay, on a per-item or per-issue basis, with the cost debited to their account. Dave Winer, a software and internet giant, likened such a system to E-ZPass, where drivers can pay tolls across the interstate system from a single account.

In addition to enabling payment for content, such a system would allow publishers to get to know their readers and offer attractive packages that would increase both readership and consumption, including subscriptions. The business running the pay-per-view system would collect a fee for each view or subscription and would manage the entire process. TBR believes consumers are already experiencing subscription fatigue from online publications and over-the-top (OTT) video services. A single point of contact for at least a subset of their content providers would lower this barrier to increased consumption.

It is not clear why such a service has not emerged. Content bundling is common in video OTT services, but the patchwork of offered content is frustrating to users. Apple acquired a text content consolidation service, Texture, last year, and is now offering it as News Plus. This is similar to video OTT services in that the bundle is not comprehensive and that the revenue to the individual publishers is necessarily small, as the total monthly fee is only $9.99. In addition, the content is isolated from internet links and searches and is not available on Windows.

The pay-per-view content system would not be a bundle; it would not provide unlimited access to a collection of publications, but available content would be constrained to the member publishers. For publishers, however, there would be no visible downside. They would set the prices, so the system would not cannibalize subscriptions. It would not be exclusive, so that publishers’ content could be distributed through other consolidators and, at their discretion, through social media. There would also be little downside for subscribers to the service. It is likely that the service would use a “freemium” method to attract users, and increments to user accounts could be used for a variety of online incentive programs.

There would be a cost to starting up the service, and any system involving financial transactions and user accounts requires strong security. User privacy is also a concern. These problems are well understood at this point in the evolution of the internet. The service would have to create a critical mass of both content providers and users before it started generating revenue and profit, but much higher startup costs are typical in the current business climate. Once a service is established, potential competitors would be challenged to sign up already satisfied readers and publishers.

A pay-per-view system could be set up by an independent startup, but it could also be established as part of an existing business. Companies with many individual publications, like Condé Nast, could begin by offering their own publications and expand the offering to others. Bundling companies like Apple that already have relationships with many publishers could add the pay-per-view system to their offerings. Large publishers like The New York Times could also create such a system, demonstrating that they do not fear it would cannibalize their thriving subscription business. Lastly, large online retailers like Amazon could leverage their large user bases with pay-per-view content offerings.

Similar solutions have been tried and failed

When the internet first became available to the general public, several companies attempted to address the issue of pay-per-view content through what was known as micro-payments. IBM created IBM Micro Payments in 1999, but it was never made generally available. iPIN was a 1998 startup that intended to add charges to user’ ISP bills; it never made it to market. Millicent (a pun: milli-cent) was a Digital Equipment Corporation project that also did not reach the market. NetBill was a project at Carnegie Mellon University that had user accounts like the solution proposed here. It eventually became part of PayPal’s portfolio, and PayPal does support relatively small payments, but not as small as is necessary for content distribution.

TBR believes these systems failed because they were too ambitious. They aspired to support very small payments, or they were intended to be open to buyers and sellers without establishing accounts. For most of them, the point of failure was the connection to existing payment systems, where individual transaction costs were too high for very small transactions. The pay-per-view system described here suffers none of these handicaps.

Summing up

The diminishment and consolidation of publishing is a problem, and a solution is available that would at least reduce the size of the problem. TBR hopes the market acts to deliver the solution soon.

Digital Transformation Insights: What do we mean by ‘cross vendor’?

As part of our Digital Transformation Insights portfolio, twice this year we’ve published cross vendor reports, narrowing our analysis down to a few select vendors while staying within the context of digital transformation. In the first report, we put Accenture and IBM side by side — looking at the two companies’ past, present and future — and walked through every way TBR examines these companies, including from a management consulting, cloud, and telecom perspective. Last month, we looked at two categories of digital transformation vendors: the India-centric firms and the management consultancies. Below is the opening of the report.

“Because technology is composable and easy to consume, businesses can remake core processes to redefine business models, modernize customer engagement, evolve asset management strategies, increase employee productivity or make management decisions. For most management consultancies and India-centric vendors, many of these areas are brownfield opportunities, but with the advent of next-generation technologies, some clients are ready to completely revamp their core businesses to sustain their very existence. Such greenfield opportunities can sometimes catch vendors by surprise, especially if they believe they can do it all on their own. In the long term, partnerships will also evolve, as in their current form, the technology diminishes differentiation among all parties. This evolution could create siloed, federated-like model enterprises, which bring a different set of challenges. However, with the expectations coming from the advent of open data standards amplified through blockchain, such hurdles will supposedly be easy to address.

“Differentiating in such a crowded market will be hard, unless vendors begin to offer outcome-based services contracts where they absorb most of the risk. Vendors’ greatest value will come from technologically combining multiple initiatives and helping clients improve performance against chosen KPIs.

“To understand the current state of digital transformation services and anticipate where the market will head over the next few years, TBR has analyzed these two leading groups of vendors side by side to understand their past strategic decisions and investments, current performance, and near-term expectations. This cross-vendor report utilizes the full range of TBR’s data and understanding of the digital transformation landscape.”

For more from the Digital Transformation Insights portfolio, contact TBR Senior Analyst Bozhidar Hristov or Sales Vice President Dan Demers.

Top growing consultancies lean into emerging technologies

Twice a year TBR publishes its Management Consulting Benchmark, which provides key service line, regional, vertical and operational data and analysis for 13 leading management consulting vendors. The benchmark also includes deep dives into 11 of the 13 vendors. This week, TBR will publish insights into two of those vendors: IBM and EY.

IBM is using its advisory, digital design and technology expertise to win and execute holistic transformational projects and drive management consulting revenue growth in 2019. Value-led and IBM-asset-powered solutions; collaborative innovation, such as in the IBM Garage facilities; and management consulting expertise and talent, such as in Global Business Services’ Digital Strategy & iX, Cognitive Process Transformation and Cloud Application Innovation segments enable IBM Services to position as a digital reinvention partner for clients’ cognitive enterprise journeys.”
Elitsa Bakalova, Senior Analyst

EY positions for growth using client touchpoints and technology partners, supporting portfolio evolution. Additionally, use of wavespaces and centers throughout Europe creates the opportunity for EY to increase adoption among existing clients, of its blockchain and AI technology, and grows market awareness among nonclients of the breadth of EY’s technology capabilities.” — Kelly Lesiczka, Analyst

Additionally, join TBR’s Professional Services team Oct. 16 for a webinar and Q&A on India-centric vendors, including how they compare to leading IT services vendors and which IT services vendors have the most to lose due to sustained success among those that are India-centric.

Interested in learning more about the Management Consulting Benchmark and accompanying vendor profiles? Contact TBR today!

Blockchain makes more noise in 2H19: Hearing from services vendors and consultancies

Last month, my colleagues Geoff Woollacott and Boz Hristov published a report on the business of blockchain, and next month, Geoff and I will be attending a KPMG event on the same topic. We are looking forward to learning how that Big Four firm approaches both the technology and the business model impacts, on itself and its clients. Our May 2019 event perspective on EY’s blockchain summit may serve as a way to contrast and compare two of the Big Four; how they differentiate will be key as technology diminishes differentiation across consultancies’ digital transformation activities. And we want to hear more use cases, including what clients have done beyond experimenting and how they are getting to scale.

Earlier this month, we had a chance to get feedback on our blockchain analysis from Atos and from another client that said the following:

  • “TBR believes that blockchain is here to stay and transforming transactions through blockchain allows vendors to accelerate digital transformation.”
  • “The biggest challenge for participants is solving the coopetition paradox, which revolves around establishing common governance and standards across competitive and cross-industry ecosystems — and yet also presents a long-tail opportunity, especially as optimizing financial management functions and improving IT operations management rank as the top two areas where buyers are looking to prioritize spending in the next few years.”
  • “[TBR mentions] the materialization of a network of networks that will scale distributed ledger adoption as the de facto economic commerce platform. However, reaching broad blockchain network interconnectivity will take years, if not decades.”

I think our client summed up the analysis well and left open a few important questions. First, what can serve as accelerants for “broad blockchain network interconnectivity”? If clients clamor for more and faster, which actors taking what steps will speed this up? Second, how will partnerships between consultancies and blockchain technology vendors evolve, in commercial, go-to-market and even intellectual property terms? Third, if and/or when this becomes the de facto economic commerce platform, who will be disrupted and who will capitalize on the shift to this platform?

All this and more will be on our minds next week in New York City — event perspective to follow!

Is the term data protection anachronistic?

The only real constant in the technology industry is change, and that change has been accelerating rapidly and is now poised to explode. During the many transformations that have occurred in the industry, legacy terms well known for one thing lose favor or actually wind up adding confusion rather than clarity to the discussions.

Business intelligence, for example, was a well-known term that seemingly addresses what analytics, cognitive computing and machine learning deliver better today than when the term gained broad adoption 20 years ago.

Distributed computing crystallized the value of minicomputers as a way to move computing out beyond glass walled mainframe estates. Engineering wise, it is what we do at the so-called “edge” today as well as on chipsets deployed in endpoint devices.

And data protection is the new term to wind up sounding anachronistic in our current conversations. Data protection historically meant protection from loss or theft. Today’s data protection has to include exposure of that data in the normal course of business that does not violate privacy as well.

Historically, data protection was generally left to IT administrators to determine. However, data privacy and the attendant impact on brand image have changed that dynamic, leading TBR to say that data protection has changed from a boiler room to a board room decision. This implication was on full display during a PwC Risk Assurance event attended by TBR in April 2018 where the conversation in the buffet lines at lunch centered on Facebook CEO Mark Zuckerberg’s congressional testimony taking place at the same time. No corporate executive wants to have to testify before Congress about topics violating their customer trust.

Furthermore, virtualization makes the concept of a security perimeter for protecting data seem archaic given data sits literally everywhere. Defending the data center has given way to securing the persona, with individuals having multiple personas across multiple work and personal access points.

What, then, should be the all-encompassing term to address the broader context of what it means to protect data?

In custom projects around this topic, TBR spends a great deal of time and attention to parse out definitions at the onset of the research. In TBR’s point of view, historical data protection remains a vital pillar within the overall context of data stewardship. If data is the new oil, then managing, protecting and leveraging that data drive the business.

  • Managing data implies to TBR the establishment of the global business rules and company governance models. Governance extends beyond the traditional requirements of regulatory compliance to incorporate the corporate risk appetite for exposing data for different use cases. Integral to this is the permissioned access to data users and the permissioned exposure of the different data suppliers, most notably customers.
  • Protecting data addresses all the traditional elements associated with the legacy term data protection.
  • Leveraging data is the delicate balance of the business management team. On the one hand is the revenue lift that can come from infusing a business action with data mapped back against the risk to the business of exposing that data in that particular use case. Here is where the board room leadership makes the business judgment calls in the data economy, and hence why TBR states that data protection as we knew it has shifted from a boiler room to a board room decision.