Is the term data protection anachronistic?

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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.

Relaunched Security Benchmark highlights emerging security trends

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TBR’s Security Benchmark makes its return to the data center portfolio this week, covering many of the current trends impacting the enterprise security market. With a new look and feel, the Security Benchmark now covers insights into emerging security trends, in addition to the traditional eight TBR segments of the enterprise security market. For example, in the upcoming report TBR explore the implications of the post-quantum world on RSA encryption and some IoT-centric security trends. Analysis and data on 25 strategic enterprise security vendors can be found in this report as well. See analysts Stephanie Long and Eric Costa for details.

Additional assessment publishing this week from our analyst teams

“As Accenture closes on another successful fiscal year, we are looking into how the newly appointed CEO, Julie Sweet, will make her mark on the company and its performance. In the meantime, we expect Accenture to continue diversifying its portfolio and global footprint to prepare itself for navigating the IT service market in the post-digital era. Investments in quantum and blockchain will accelerate as the company increases its use of automation to drive sustainable, nonlinear growth. While continuing to grow at a double-digit rate, Accenture’s cloud business is entering a phase of maturation, especially as the company seeks to solidify its relationships with key technology partners and buyers. Supporting multicloud environments through automated, fit-for-purpose IP and certified staff will help advance Accenture’s evolving relationship with IT.” — Boz Hristov, Senior Analyst

Also this week, join Ezra Gottheil for a webinar on IoT: “IoT, a technique for applying technology to generate new outcomes, has been a focal point for a wide set of IT and operational technology vendors interested in being involved in the wave of digital transformation and driving new business. In 2019 vendors are starting to solidify unique go-to-market strategies and the construction of new ecosystems and channels is taking place.”

Acquisitions and internal changes strengthen Capgemini in consulting

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Every spring and fall, TBR releases a Management Consulting Benchmark with details on 13 leading vendors, including strategies, performance, positioning, and expectations for the next few years. For most of those consultancies, TBR also publishes individual profiles, providing additional details and analysis. The first of those profiles, on Capgemini, will be released this week, with the following assessment from  Senior Analyst Elitsa Bakalova: “Capgemini will continue to grow management consulting revenue in the next two years. A string of acquisitions in the digital segment enables Capgemini to expand into the digital design and consulting space, create a global network of design studios, and gain industry consulting expertise such as through KONEXUS Consulting in the energy and utilities sector. The announced acquisition of Altran will improve Capgemini’s ability to address clients’ IT and operational technology (OT) needs and pull through management consulting opportunities. Capgemini will position as an intelligent industry vendor that can provide solutions around Engineering 4.0 and Industry 4.0. Changes Capgemini made during the past several quarters to its portfolio, organizational structure and sales model enable the company to address demand from clients’ business side, not just in terms of their technology, and strengthen relationships with clients to expand wallet share.”

Additional assessment publishing this week from our analyst teams

Dell Technologies continues to navigate complex market dynamics. In TBR’s 2Q19 Dell Technologies report, TBR explores some of the vendor’s recent strategies to mitigate revenue declines in Infrastructure Solutions Group, including closer ties with VMware to promote a cloud-centric go-to-market message. On the PC side, performance was favorable and investments in ProManage, a new solution announced at VMworld, will be more deeply analyzed. — Stephanie Long, Analyst

Also this week, TBR’s Cloud and Software team will offer insights and analysis during the Cloud pairs well with partners webinar on Wednesday at 1 p.m. EDT.  

BPO 2.0 is alive at TELUS International in Bulgaria

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On a recent trip to my native Bulgaria, my colleague Elitsa Bakalova and I visited one of TELUS International’s local sites. Country Managing Director Kristina Ivanova and Director of Operations Gergana Ralchovska hosted us in the recently opened TELUS Tower in downtown Sofia. With over 3,000 staff members in Bulgaria split between three offices, TELUS International has grown roots in the community not only to expand its recruitment reach but also to build local trust one event at a time, which is reflected in its extensive corporate social responsibility program.

During the tour of the facility, featuring staff who speak a total of 40 languages to serve many global, regional and local clients, the common themes of innovation, inclusion and collaboration were well displayed. As a vendor that faces the ever-evolving dynamics of the BPO industry, mainly impacted by the advent of chatbots and automation, TELUS International is well prepared for potential headwinds. From offering non-traditional BPO services, including content moderation and content management, to reskilling staff and employee engagement programs, TELUS International in Bulgaria is able to maintain an attrition rate in the teens, well below the industry average of approximately 30%.

In a rapidly evolving market such as Bulgaria, where the IT services sector presents the vast majority of career opportunities for young people, TELUS International’s approach to developing soft skills – a key attribute for working in the BPO industry – differentiates it from its direct and indirect competition. For example, TELUS International offers pre-recruitment assessments, on-site psychologists and ongoing empathy training for employees. Both Ivanova and Ralchovska indicated that the profile of current recruits has changed significantly from five years ago, when speaking one or more foreign languages was enough to get a job offer. Today, both TELUS International’s and recruits’ expectations have evolved to reflect a preference to work for a purpose-driven and customer-focused organization.

Automation means new KPIs

As culture evolves, so do KPIs. With the advent of automation, adopting new KPIs that reflect the shift from human-supported tasks to human-chatbot higher-value services is one way for many organizations including TELUS International to measure utilization and performance. TELUS International’s examples of digitization of client accounts include one client for which 1 million requests were automatically handled by a bot, saving 20,500 productive hours over 90 days, which were later billed to the client for other add-on work.

In TBR’s special report In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter published in March, we wrote, “Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and re-tune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities.”

As TELUS International in Bulgaria serves as one center of the company’s evolving framework, moving from BPO to application services exclusively is highly unlikely, but striking the right balance by blending elements of SaaS and BPaaS will certainly be at the forefront of Ivanova’s, Ralchovska’s and the global leadership team’s agenda in the next three to five years, especially as there is a heightened customer expectations for services vendors to deliver human-centric brand promises.

Technology products enable Atos to get closer to IT buyers

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Atos takes a pragmatic approach to executing digital transformation initiatives through the BullSequana Edge server

Consumerization of business applications, demand for data quality and governance, and the adoption of connected technologies compel vendors such as Atos to explore opportunities around managing customer data and to invest in solutions that can help clients protect their competitive advantage. In May Atos launched BullSequana Edge, a server that manages data at the edge and can be used securely for IoT environments that require fast response times and real-time analysis of data at the edge, such as in manufacturing 4.0, autonomous vehicles, healthcare, retail and airport security. BullSequana Edge helps Atos address challenges of exponential data volumes and heterogeneous data complexities due to the advent of AI and machine learning (ML), which are both necessary blocks supporting the data economy foundation. With optimized security capabilities, including intrusion detection, disc encryption and secure boot, the BullSequana Edge server enables Atos to alleviate common pain points of IT and operational technology (OT), especially as the company builds and offers vertical-centric solutions with the hardware.

Although offering a hardware appliance separates Atos from pure systems integrators, which typically manage asset-light portfolios, such as its closest France-based peer Capgemini, the offering brings Atos closer to key IT buyers, which remain the primary decision makers of final IT purchases, even in discussions that include the C-Suite. Along with the edge server, Atos offers services that take clients through the plan, build and run phase of edge and IoT adoption, thus enabling clients to drive business outcomes through next-generation technologies.

See TBR’s latest special report Atos at the edge of technology and look for our full report on the company’s 3Q19 earnings that will publish in early November.

Acquiring to expand in IoT: Capgemini, Altran and Engineering/Industry 4.0

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The Altran acquisition will develop Capgemini’s OT capabilities and improve its ability to compete in segments such as IoT and edge computing

The acquisition of Altran, announced on June 24, will expand Capgemini’s engineering and R&D services capabilities and complement the company’s established consulting and IT capabilities. Capgemini is positioning as an “intelligent industry” vendor that can provide solutions around Engineering 4.0 and Industry 4.0. and expand in smart technology-driven segments such as IoT, AI, 5G, cloud, edge, data and cybersecurity. While Capgemini has well-established IT expertise and digital transformation (DT), design and innovation consulting capabilities, as evidenced in Capgemini Invent, the company will gain Altran’s operational technology (OT) capabilities, which are a key component in IoT models (see TBR’s special report IoT is trending toward smaller, easy-to-replicate projects that will generate increased data over time).

TBR notes that Capgemini is catching up to some of its peers in IoT. For example, Capgemini’s direct competitor Atos already has a history in OT due to its acquisition of Siemens’ IT Solutions and Services business and global strategic alliance with Siemens AG, giving it a head start in IoT. Atos increased its investment in ongoing joint efforts with Siemens in IoT, and in May Atos launched the BullSequana Edge server, which manages data at the edge and can be used securely for IoT environments. But in February Capgemini partnered with AR solutions provider Idemia to develop an IoT device management platform that strengthens the security and connectivity of devices and data. The platform will be based on Capgemini’s IoT device management platform X-IoT, which securely connects and manages cloud gateways and protocols, and on Idemia’s M-Trust solution.

The acquisition of Altran, which is expected to close at the end of 2019, will add 47,000 employees and provide Capgemini with access to key decision makers and technology budget holders around intelligent industry solutions. While Capgemini already has reach with IT and business leaders, Altran will grant access to leaders in manufacturing, supply chain and engineering R&D.

IoT is not a technology or a market, but it certainly drives revenue

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TBR estimates the contribution of commercial IoT to the overall IT market will increase from $456.1 billion in 2019 to $1.7 trillion in 2025, a CAGR of 24.9%. IoT is not a technology or a market, but a technique for applying IT components, made more relevant by the increased ease of connecting sensors and collecting and processing data. It serves as a tool in the larger toolbox of traditional IT solutioning. As vendors and customers move beyond the stigma that IoT is exotic, untested and expensive and begin to understand that IoT is just an iteration of everyday IT solutioning, IoT is being implemented at an increasing rate, albeit slowly and steadily. While these projects are generally smaller, as customers leverage IoT to solve targeted problems and prove ROI, they are set to grow over time and expand into parallel projects, contributing long-tail revenue to vendors that are amenable to projects that are smaller in scope.—Dan Callahan, Analyst (See his special report here.)

Additional assessments publishing this week from our analyst teams

TBR’s 2Q19 Hewlett Packard Enterprise (HPE) initial report dives into the recent infrastructure-centric developments within HPE. This particular report will discuss in detail HPE CEO and President Antonio Neri’s pledge to offer everything “as a Service” by 2022 and the ongoing cloud-centric developments the organization has been making to better address the needs of digital transformation. Edge computing is another focus of the vendor, which TBR will touch upon in the initial response and examine more deeply    in the full report. — Stephanie Long, Analyst

Leveraging acquisitions to strengthen vertical expertise and product offerings improves HCL Technologies’ (HCLT) competitive position relative to peers. HCLT benefits from the addition of market expertise as well as headcount to support its transformation initiatives. Through inclusive training programs, HCLT equips its existing employees to work with digital technologies in the vertical areas.
— Kelly Lesiczka, Analyst

Partnering with technology-led vendors enhances growth segments and will help T-Systems generate revenue growth. However, as the company is slow to reorganize and adopts IFRS 16, profitability continues to struggle. — Lesiczka

DXC Technology reinvests savings from automation and facility rationalization to help fund the costs related to attracting and retaining higher-value resources skilled in industry, consulting and/or emerging technology areas. We expect substantial inorganic revenue boosts beginning in 3Q19; however, margins will be pressured in the short term as integration costs mount from the Luxoft acquisition. — Kevin Collupy, Analyst

HCLT sets strategy; makes smart move to software

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HCLT’s recent acquisitions will develop software services and consulting capabilities, enabling the firm to evolve its strategy to better compete in the dynamic IT services market

At the end of June, HCLT finalized its acquisition of IBM Software products (analysis and details of which can be found in our most recent full report on the company). We believe HCLT is taking the right approach as it develops a dedicated software business unit, as opposed to transitioning corporate culture, sales models and brand identity from an outsourcer toward a software-centric organization, a strategy pursued by Infosys that resulted in culture clashes and conflicting company visions. There are bright spots in developing software products and offerings with a vertical orientation. For example, Infosys’ Finacle platform and Tata Consultancy Services’ BaNCS solution enable both firms to generate banking processes and system transformation engagements that propel financial services revenue. HCLT’s launch of HCL Software as a small business unit will help the company offer products and enterprise software without shifting the entire organization’s vision but still reaping the benefits of an increase in managed services opportunities tied to license and subscription-based revenues around the new products. HCLT is also better suited to bundle its legacy IT and emerging technology offerings using its product-focused sales staff.

In addition, the acquisition of Strong-Bridge Envision will help HCLT strengthen its advisory services. However, TBR believes the company may want to further develop its ability to guide digital transformation projects, pursuing a partnership with an established consulting brand such as PwC or EY. The additional advisory services improve HCLT’s ability to market its software portfolio while folding in offerings that address client demand for business process transformation offerings.

In a messy, transitioning and highly competitive IT services and software market, we think HCLT has been making smart moves to evolve its strategy. As 2019 winds down, we will continue looking at the company’s progress against peers and within the broader digital transformation landscape. 

Embedding multicloud and software-driven services in portfolios helps vendors execute on strategy, expand addressable markets

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Google Cloud revenue surpassed the $2 billion mark in 2Q19, doubling in size in six quarters. Under the guidance of CEO Thomas Kurian, Google Cloud is improving its enterprise appeal by launching its multicloud management tool set, Anthos; leveraging acquisitions to build out its migration, storage and analytics capabilities; and expanding its global sales and delivery capacity. Similarly, Salesforce complements internal innovation around solutions such as Customer 360 with ongoing acquisition activity and investment in its partner network. TBR estimates the vendor attained $3.95 billion in revenue as sales teams expanded single-product customer engagements, many of which are led by Service Cloud, into multiproduct deals.

Additional assessments publishing this week from our analyst teams

Capgemini continues to gain momentum in cloud services, with cloud revenue driven by offerings in the Capgemini Cloud Platform portfolio, which supports clients when building, migrating and managing applications and infrastructures in cloud environments. By delivering a cloud-first option, Capgemini enables enterprise and public sector clients to become agile through offerings related to data center modernization, cloud-native solutions, application modernization, intelligent applications, and emerging technologies such as IoT, blockchain and AI. Offering each client its entire portfolio enables Capgemini to provide holistic transformational solutions and effectively compete with peers. — Elitsa Bakalova, Senior Analyst

TBR’s Public Sector IT Services Research practice will publish its 2Q19 ManTech report this week.  With top-line revenue expanding 9.4% year-to-year to $537 million, ManTech should be one of the top-performing vendors in 2Q19 in terms of sales growth. ManTech’s top-line expansion owes largely to accelerating spend among classified customers in the Department of Defense (DOD) and Intelligence Community that are increasingly engaging ManTech to enhance warfighting capabilities across all domains, but particularly in space and cyber. ManTech’s addressable market is set to expand and diversify into the civilian sector as the integration of Kforce Government Solutions (KGS) continues. KGS will add 500 employees with large-scale IT infrastructure modernization and transformation expertise, primarily with the Department of Veterans Affairs, to ManTech, while contributing roughly $100 million in revenue (based on revenue of $98 million reported by KGS in 2018). Inorganic sales will largely accrue in ManTech’s Mission Solutions and Services segment, where the core customer focus is the DOD, the Department of Homeland Security and federal health agencies. Look for TBR’s 2Q19 Perspecta report next week, as we examine how the company is leveraging its R&D-led approach to maintain its growth momentum as it begins its second full year as an independent, federal IT competitor. — John Caucis, Senior Analyst

Weakness in Cognizant’s core industry segments overshadowed increased growth in digital in 2Q19. The company’s ability to rapidly scale its digital revenue will be key to offsetting this weakness, specifically in Financial Services and Healthcare. In the near term, Cognizant must emphasize cross-sales of acquired assets, such as Zenith Technologies, within its existing and acquired install bases. — Kelly Lesiczka, Analyst

Why license when you can buy? Salesforce to acquire ClickSoftware

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After 3-plus years of licensing, Salesforce intends to acquire ClickSoftware to augment Field Service Lightning

One week after Salesforce completed its acquisition of Tableau, the vendor announced its intent to acquire ClickSoftware, a field service management solutions provider, for $1.35 billion. ClickSoftware is a practical acquisition target for Salesforce; the vendors have been partners since 2016 and Salesforce licensed ClickSoftware’s field service scheduling and optimization technology to build Salesforce Field Service Lighting. Once the acquisition closes, Salesforce would integrate the remaining capabilities from ClickSoftware’s flagship product, Click Field Service Edge, such as demand forecasting and contractor management, into Field Service Lightning. These additional capabilities would better enable Salesforce to fulfill customers’ field service needs, particularly those of enterprises to manage the scheduling and dispatching of large field service employee bases.

Field Service Lightning is part of Salesforce’s Service Cloud, which exceeded $1 billion in revenue for the first time in 1Q19. TBR expects Service Cloud will surpass Sales Cloud as Salesforce’s largest revenue driver this year. Based on the inflated value of technology companies, ClickSoftware’s revenue contribution to Service Cloud would likely be marginal. Rather than acting as a catalyst for Service Cloud’s revenue growth, ClickSoftware would fill capability gaps in Salesforce’s soon-to-be flagship offering. Why would Salesforce make this acquisition after a four-year-long successful partnership in licensing ClickSoftware’s technology? Well, that licensed technology would become part of the foundation for Field Service Lightning. If a competitor was looking to purchase ClickSoftware’s technology, it could leave an unexpected gap in Salesforce’s portfolio following a fast breakup between the two vendors. So, why not get hitched and make sure no one else takes ClickSoftware off the market?

Salesforce’s front-office portfolio will help the vendor fend off competitors in the field service space

Augmenting Field Service Lightning with the remainder of ClickSoftware’s technology will better enable Salesforce to compete with vendors such as Microsoft, SAP and most notably Oracle. In 2016, when Salesforce first launched Field Service Lightning and partnered with ClickSoftware, Microsoft, SAP and Oracle were acquiring around field service. Since then, each vendor has developed a field services value proposition. For Microsoft, field service is a module within its Dynamics 365, where the vendor also offers AR apps and HoloLens devices that can be utilized by field service workers. Oracle and SAP are leaders in the ERP market but are complementing their field service applications with growing front-office and service-related SaaS offerings. However, a broader and more deeply integrated front-office portfolio would help Salesforce fend off competition, particularly if it integrates a field service leader into its arsenal.