With Cerner, Oracle buys into an industry that is actively embracing cloud and outpacing total GDP growth

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A deal would indicate revenue potential, but the evolving competitive and technology landscapes raise questions

On Dec. 20, 2021, Oracle (NYSE: ORCL) announced plans to acquire Cerner (Nasdaq: CERN), a front-runner in the healthcare IT (HCIT) industry, for $28.3 billion. The announcement comes as COVID-19 continues to strain global healthcare systems, driving up demand for digitized workflows and processes that can help improve efficiency, enhance service quality and reduce costs. The announcement also comes as Oracle faces a turning point: After six consecutive quarters of corporate year-to-year revenue gains, net-new buyers, not just those inside the Oracle ecosystem, are showing interest in the company’s feature-rich suite of back-office applications and second-generation cloud infrastructure.

As such, by drawing on some of the successes of its previous acquisitions, including Peoplesoft and NetSuite, Oracle hopes to use Cerner, whose business has similarly been on an upward trajectory, to enter a new phase of growth that is more on par with the 30%-plus growth rates recorded by competitors Amazon Web Services (AWS) (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), and Google Cloud (Nasdaq: GOOGL). Should the deal close, this growth could stem from multiple areas, including onboarding electronic medical record (EMR) and electronic health record (EHR) workloads to Oracle Cloud Infrastructure (OCI), and using AI services like Oracle Assistant to kickstart conversations with the clinical, operational and financial branches of healthcare in a land-and-expand approach.

Despite the growth potential, investors appear skeptical, with Oracle’s stock price falling 5% on the day of the announcement, largely due to concerns around the company’s cash standing and ability to position Cerner as a more notable alternative to Epic and other competing HCIT firms. In some ways, this skepticism stems from Oracle’s lack of comparative experience in the industry cloud space and, perhaps to a larger extent, investors see the acquisition as another one of Oracle’s attempts to buy revenue, similar to the company’s failed TikTok deal and subsequent fallout.

Regardless, Oracle’s biggest challenges stem from the evolving technology landscape that is actively favoring not only the cloud but also open, hybrid multicloud delivery methods. Oracle plans to use Cerner to bolster its cloud position, but given the company’s later-to-market standing and perception for locking customers in, it is unclear the extent to which Cerner will actively support Oracle’s cloud vision. Furthermore, competitors, including those with deeper pockets and arguably more open partner ecosystems, only add to this skepticism.

Cerner would be the largest buyout in Oracle history, but valuation is reasonable

After the announcement, sticker shock was inevitable, as the deal came at a price tag in line with some of the largest acquisitions in software history, including Microsoft’s purchase of LinkedIn and IBM’s purchase of Red Hat. However, based on Cerner’s 2020 and projected 2021 financial results, Oracle valued the deal at roughly 5x Cerner’s annual revenue, a level that is typical in industry acquisitions, especially those that include firms with more transactional business models. COVID-19’s halt on upfront spending impacted Cerner’s license business and overall revenue growth in 2020, but the company has quickly bounced back in 2021 and is expected to meet its annual revenue guidance of 5% year-to-year growth.

A key part of Cerner’s strategy has been accelerating organic top-line growth through platform modernization and emphasizing SaaS-like delivery methods. This approach aligns with Oracle’s strategy, which similarly emphasizes revenue growth through annuity-based cloud services. Another priority for Oracle is gaining share through OCI, which will be a difficult feat given the highly saturated nature of the IaaS market. Oracle will help Cerner overcome challenges entering global markets, especially in an unpredictable industry like healthcare, to meet its growth objectives.

Although Cerner management boasts leading market share in many markets outside the U.S., in the U.S. EHR space, the company currently sits at about 25% market share and is losing out to Epic, which is nearing an estimated 30% market share. As such, Cerner’s, and Oracle’s, biggest opportunities could come internationally. Oracle will play a key role in helping Cerner, which currently derives 89% of its revenue from domestic customers, expand its international presence.

HCLT’s groundbreaking apprenticeship initiative: Long-term vision, near-term effects

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In the battle for talent, prepare for the long war

Recruit, retain and train. Every IT services vendor over the past couple of years has been pulling every lever to find, manage and reward talent in a chaotic market in which new competitors and newly empowered professionals have spiked attrition across the board and strained HR staffs as never seen before. The pandemic brought about a new appreciation for employee well-being while proving virtual engagements and delivery could work for IT services vendors. As 2022 starts, filling talent gaps in the near term will continue to challenge every vendor. Notably, HCL Technologies (HCLT) has begun investing in the long term with a program that is perhaps unique among IT services vendors and certainly, in TBR’s view, timely, a little risky and genuinely good for society. 

On Dec. 9, TBR spoke with Ramachandran Sundararajan, HCLT’s EVP of Human Resources at HCL America, and Rohan Varghese, HCLT’s VP and global head of Analyst Relations and Customer Advisory Board, both of whom provided details on the new apprenticeship program. The following reflects that discussion and TBR’s ongoing analysis of HCLT.

Flexibility, STEM and a 5-year apprentice journey  

With the company’s new apprenticeship program, announced in November, HCLT has crafted an expansive, flexible, multiyear journey for students intent on joining the IT services and science, technology, engineering and math (STEM) ecosystem. The core program begins with a year spent at HCLT as a salaried employee, including a three-month “boot camp” that introduces apprentices to various aspects of HCLT’s IT services, consulting and technology businesses. The second phase focuses on practice-based learning. Sundararajan emphasized the “practice” part, noting that apprentices would have exposure to and gain experience working across many of HCLT’s core areas, such as SaaS, cloud, security and networking services. Over the final three months of the first year, apprentices join a live project environment, supporting and providing help at an appropriate proficiency level and putting to use skills learned from working in sandbox environments.

When apprentices graduate from this last phase, they become eligible for an HCLT-funded college program and can fully appreciate the flexibility that HCLT offers. Graduated apprentices can enroll in a four-year STEM program at any university, with HCLT picking up the tuition and fees and keeping the student on the company’s payroll. Apprentices can also choose an associate degree track to move more quickly to full-time employment. Or apprentices can opt for industry-recognized certifications, moving even more rapidly into the full-time workforce. In all three journeys, HCLT pays the academic costs, allowing the apprentices to earn a degree without any student debt.

Looking beyond the usual boundaries while staying aligned to HCLT’s core

Notably, HCLT has designed the apprenticeship program to seek candidates both geographically and economically diverse from the standard STEM talent pool. HCLT wants to attract students with fewer financial advantages than the average college student and will be recruiting most heavily in cities away from the technology hubs of Silicon Valley; Austin, Texas; and Boston. Sundararajan said HCLT will work with community groups in Cary, N.C.; Hartford, Conn.; and Sacramento, Calif., among other cities, although HCLT would welcome apprentices from any part of the U.S. In addition to throwing the net wide in terms of who and from where, Sundararajan said the goals of the program centered on building skills for the future, recognizing that the technical skills, who has them, and where they live will have lasting effects across their communities.

Top 3 Predictions for Devices in 2022

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Devices demand to decelerate in 2022

Devices market will see growth return to pre-pandemic levels throughout 2022

Many thought the initial surge in devices demand would quickly fade after the start of the COVID-19 pandemic, but that has not been the case. Revenue growth across the ecosystem, especially in PCs and tablets, has been much higher in recent quarters than traditional single-digit growth. However, this current elevation is unsustainable.

Over the past two years, the devices market has seen a major industry shift in supply and demand that has reshaped the ecosystem and has led to strong and consistent growth from most device vendors. It began with factory closures that hurt early 2020 supply chains and revenue growth, followed by a major spike in demand for devices used to entertain, work and learn from home during the pandemic. A shortage of components has led to this demand being unmet as of the end of 2021, leaving TBR to question whether vendors will be able to maintain revenue growth, unit sales and average unit revenues in the long term.

TBR expects a drop in demand and revenue growth by the end of 2022 due to these unsustainable conditions; however, other factors will emerge to help stabilize the devices market at pre-pandemic levels. These trends include continued revenue growth, albeit at a decelerated, low-single-digit pace rather than the 20%-plus year-to-year growth seen since mid-2020, as well as vendors’ releases of Windows 11 PCs and additional 5G device enhancements to drive refreshes in the coming year.

2022 devices predictions

  • PC market growth unsustainable, will return to single digits in 2022
  • Tablet market revenue growth set to decelerate in 2022
  • DaaS will lead all PC services in revenue growth through 2022

Learn more in our webinar 2022 Predictions: Devices

Download a free copy of TBR’s Top 3 Predictions for Devices in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Humans at the center: EY’s People Advisory Services in the post-pandemic workplace

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Transforming the employee experience for EY and its clients

In late October 2021, TBR met with senior partners from EY’s People Advisory Services, including Kim Billeter, principal, Americas People Advisory Services leader; Jonathan Sears, principal, Americas Organization and People leader; Gerard Osei-Bonsu, EMEIA Integrated Mobility leader; and Agi Donnithorne, associate director of Global Analyst Relations, to discuss their firm’s ambition, investments, people and place within the broader people advisory market. The following reflects that discussion and TBR’s overall research and analysis of the current human management consulting market.

Throughout the entire discussion with TBR, EY’s People Advisory Services leaders emphasized that their whole practice revolved around placing “humans at the center,” an approach that has been embedded natively into every EY service line, including Consulting, Tax, Strategy & Transactions, and Assurance, reflecting EY’s firmwide and global approach to talent issues. EY’s leaders also emphasized deploying and testing solutions internally before introducing them to clients and continually working to “simplify complexity” across every element of the hire-to-retire people advisory spectrum.

Notably, the EY leaders said their main clients have expanded beyond the chief human resources officer to now include chief operating officers, chief financial officers, and line-of-business leaders more attuned — possibly due to the pandemic — to the vast array of human capital management challenges, including office space, productivity tools, immigration, and risk management. While human capital management consulting includes, potentially, an impossibly diverse and almost unmanageable set of capabilities, offerings and consulting services, Billeter and the rest of the EY team kept the discussion focused on two key components: prioritizing a “humans at the center” approach and transforming the employee experience, starting with a reimagining of EY’s and its clients’ workforce agendas.

In TBR’s view, every company has faced human capital management challenges during the pandemic and some lessons have spread quickly (for better or worse). As spiking attrition, return-to-workplace issues and the war for talent all heat up across professional services and the broader workforce, EY’s decision to ground humans at the center while thinking about how long-term transformation should resonate with clients while helping the firm maintain its own employee morale and culture.

EY Skills Foundry designed to meet upskilling and reskilling demands for digital transformation

In briefing TBR on the full scope of EY’s People Advisory Services Practice, the EY leaders described transformation solutions; capabilities including talent management, workforce planning, HR transactions, and digital assets such as the Learning Experience Platform and EY Mobility Pathway; and strategic alliances with IBM, Microsoft, SAP and ServiceNow. Turning to the EY Skills Foundry, the EY team reiterated that the seemingly relentless need for digital transformation (DT) among all enterprises drives upskilling and reskilling talent among professional services and technology firms. Clients’ workforces must change as well, and clients, according to EY, are not prepared and lack skills, capabilities and scale.

The EY Skills Foundry, which the firm initially deployed and refined internally, includes three components: a live heat map of skills across an organization, showing both supply and demand and allowing for more rapid decision-making around reskilling investments; a content aggregator EY described as “learning intelligence” designed to add speed and scale to training; and “a validated, secure digital record of employees’ skills and experiences,” which can help clients more rapidly deploy the right person to the right opportunity. The EY team stressed that the firm tested the foundry platform over the last couple of years, applying automation when possible and seeking input and refinements from clients.

While still nascent, with fewer than 10 live clients, TBR believes the EY Skills Foundry has two key attributes likely to separate EY’s offering from that of its competitors in the crowded human capital consulting field. First, the firm can prove the business case and almost ensure success by pointing to EY’s own internal results across a global firm with nearly 300,000 professionals. This “customer zero” use case resonates with clients, particularly for offerings blending technology and change management. Second, EY has prepared itself to sell, deploy and support the EY Skills Foundry through multiple business models, including traditional consulting engagements, SaaS and managed services.

Expanding how EY engages with clients extends the firm’s reach within clients and enlarges the potential market EY can serve. TBR’s November 2021 Digital Transformation: Voice of the Customer Research includes the following analysis: “Improving HR operations and employee efficiency slid to the bottom of the objective list in 2021 — down from No. 3 about 18 months ago, just after the pandemic began — confirming that the emphasis on employee experience was short-lived and buyers quickly reshuffled priorities to ensure shareholders’ expectations are met.

Supply chain disruption: For EY, just another day in the office and another problem to solve

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Know thyself and thy supply chain … or go to the board for more funding  

In early November 2021, and in reaction to the deluge of news and analysis around supply chain disruptions worldwide, TBR met with key members of EY’s supply chain to discuss their firm’s overall response to the current crisis as well as EY’s capabilities and offerings around supply chain management. Al Mendoza, Americas and US-Central Supply Chain leader, and his Europe-based and Shanghai-based counterparts, Matthew Burton and Rodrigo Cambiaghi, respectively, shared their insights on the now, next and beyond for supply chains, including a look at long-range, tectonic changes coming for global enterprises.  

Nothing about the current global supply chain disruption, which has paralyzed ports, slowed manufacturing lines and contributed to growing inflation, surprised EY. The firm’s supply chain professionals saw the deeper and more broadly felt repercussions from COVID-19 as a tsunami that woke up many enterprises to the third- and fourth-level risks they were running in their highly networked and global supply chains.

For EY, which has been working for years with clients on supply chain transformations, the supply chains that have suffered the most during the pandemic — from the peak until now — are those that, according to Mendoza, “don’t understand themselves.” These overwhelmed enterprises did not have the talent, technology or processes in place to manage a massive disruption like the pandemic, even if their suppliers did. EY expects the supply chain ecosystem to shift substantially in the near term, as enterprises learn from the chaos caused by COVID-19 and implement the people, process and technology changes demanded by corporate boards, suppliers and clients.  

In reviewing the current state of the supply chain management market, Burton described traditional supply chains as “woefully inadequate” and said too many enterprises maintain a “linear mindset” and are comfortable with two-week timelines to adequately report on and assess existing supply chains. These enterprises, stuck with an old technology batch mentality, must invest in technology to decrease risk and derive value from their supply chains. Luckily for supply chain officers, the entire supply chain discussion has moved to the board level. In Burton’s assessment, a supply chain officer can “say ‘supply chain’ and you get funding,” as enterprises increasingly expect supply chain management to move from a cost center to differentiation across the value chain. Burton added that boards “were cost-driven and are now resilience-driven.”

TBR has repeatedly heard supply chain issues have reached board levels, but Burton’s explicit connection between disruptions and funding brought clarity and underscores one of the challenges consultancies such as EY face in working with large-scale clients: Every transformational challenge is a boardroom issue and demands funding, even as funding streams remain finite. In TBR’s view, EY’s close relationships with C-Suites and boards likely provide the firm with openings to anticipate, understand and benefit from shifting budgetary priorities around supply chain and other transformational issues.  

Now: Not enough talent and inadequate technology — an age-old story 

For EY’s clients, taking that boardroom directive and investing in technology, people and process improvements cannot happen quickly enough, in part because some enterprises continue managing their supply chains with what Cambiaghi described as “primitive technology.” Notably, primitive technologies have been made more inefficient by a lack of skilled supply chain management practitioners, inadequate training and insufficient change management. Mendoza expanded on the talent challenge, explaining that EY has three advantages over both competitors and clients, which also compete for supply chain talent.

First, as Mendoza said, EY has made a “huge investment” in training recent years, echoing comments TBR has heard from other EY leaders and professionals. Second, the firm assimilates new talent quickly and has been a net importer of talent because of the firm’s growth and culture, sentiments also echoed by other EY leaders. And third, Mendoza said EY’s supply chain practice is led by experts in supply chain, not consulting professionals with other skills brought in to manage supply chain as an offering. Mendoza, Burton and Cambiaghi made clear their passion for supply chain reflected a sense of mission, not simply another EY capability. In TBR’s Management Consulting Benchmark, EY has the second largest Supply Chain Management revenue, when compared to its Big Four peers, behind only PwC.  

Top 3 Predictions for Cloud Infrastructure & Platforms in 2022

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As vendors embrace open, hybrid architectures, PaaS emerges as the source of differentation

Vendors adjust strategies as clients ask for open and flexible IT

Customer demand for more open, cross-cloud services will shape vendor investments through 2022. Vendors traditionally known for locking customers in to their technology, including IaaS incumbent Amazon Web Services (AWS), will likely re-evaluate their portfolios and go-to-market messaging in the coming year. This could have lasting impacts on peers such as IBM and Google Cloud, which use openness as a competitive differentiator. For example, this past year AWS took a big leap forward with the general availability of EKS (Elastic Kubernetes Service) Anywhere, which allows customers to create and manage Kubernetes clusters inside their data centers.

Along with Outposts, AWS markets EKS Anywhere as part of its hybrid portfolio, which is typically just an extension of AWS cloud services to on-premises environments. However, for many competing vendors like IBM and Google Cloud, hybrid cloud has come to mean supporting customers’ workloads not only on premises but also across competitors’ clouds. AWS could similarly go down this route to better compete and may surprise the market in 2022 by offering EKS on other public clouds. Oracle is another example of a vendor known for confining customers to its cloud stack; yet, as Oracle looks to position itself as the No. 4 cloud leader in 2022, it could slowly embrace deployment methods outside Oracle Cloud Infrastructure (OCI). This trend is reflected in Oracle’s newer open-source application development and management platform, which is somewhat comparable to Red Hat OpenShift, and is expected to be deployable to third-party clouds.

2022 cloud infrastructure & platforms predictions

  • Hybrid remains the new norm
  • Bringing cloud to the customer: Distrubuted cloud moves from experiment to niche delivery method
  • IaaS is about scale; PaaS is about differentiation

Learn more in our webinar 2022 Predictions: Cloud

Download a free copy of TBR’s Top 3 Predictions for Cloud Infrastructure & Platforms in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Top 3 Predictions for Cloud Applications in 2022

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SaaS will see new vendors, bigger workloads and more customization

Consistent growth masks considerable change in SaaS during 2022

The expectations for what cloud can offer customers have shifted, and in no market is that more clear than with cloud applications and SaaS. The financial benefits of cloud, both the lower overall cost and the shift to an operating expense pricing model, were the early attractions as customers moved low-risk applications to the cloud. Now that more mission-critical enterprise applications are being moved, cost is still a consideration for major SaaS purchases, but it is no longer the sole driving factor influencing adoption decisions. The constant stream of innovation, more frequent updates, and ability to align cloud to changing business requirements have taken over as the most attractive elements of SaaS solutions.

That high-level value proposition will persist into 2022, making SaaS the largest cloud market in terms of revenue and one that will continue to grow in the double digits year-to-year. It may sound like the same old story, but a shifting set of trends will drive this growth. First, while large providers like SAP, Oracle and Microsoft remain the mainstays of the market, born-in-the-cloud providers have matured greatly over the past few years, best highlighted by Salesforce whose front-office SaaS portfolio aligned well with the adoption patterns of the enterprise, setting the vendor on a course to eclipse SAP as the largest enterprise application provider in terms of revenue by the end of 2021.

The success of Salesforce and other cloud pure plays like Workday has been recognized by a growing ecosystem of nontraditional ISVs that are entering the market to capitalize on the opportunity. Systems integrators, small managed services partners, and cloud platform providers will all package solutions that are sold as SaaS to end customers. Second, the larger, mission-critical services in the ERP category of workloads will see increased adoption. That shift carries significant dollar investments not only in the SaaS offerings being purchased but also in the associated services and technologies that support those environments. Third, the need for customization based on the business process, existing technology, and vertical industry increases the value of broad ecosystems that extend the core SaaS offerings.

This dynamic is supported by TBR’s 1H21 Cloud Applications Customer Research, which found that the value of ISV ecosystems was not just in filling gaps in vendors’ portfolios but also, more critically, in increasing the stickiness of vendors’ offerings within clients’ environments. This dynamic will result in PaaS capabilities becoming a key differentiator for vendors in the overall public cloud market. So while growth will continue in SaaS, it will mask big changes occurring in the market during the coming year.

2022 Cloud Applications Predictions

  • The SaaS opportunity attracts all kinds of new participants
  • Cloud delivery for mission-critical applications inches closer to mainstream
  • Customization becomes the standard for cloud applications

Learn more in our webinar 2022 Predictions: Cloud

Download a free copy of TBR’s Top 3 Predictions for Cloud Applications in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Proven capabilities in the U.S. enable Infosys to become a trusted partner one client at a time

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North America client scale and longevity provides Infosys with a robust foundation for enabling trusted delivery transformation

North America is Infosys’ (Nasdaq: INFY) largest region, composing 61.9% of total revenue and growing 23.1% year-to-year in 3Q21. Accelerated growth momentum in the region — regional sales have rebounded from -0.5% on an annual basis in the peak of the pandemic in 2Q20 — is largely due to the company’s ability to balance innovation with securing foundational revenues enabled by cloud, which for Infosys means Infosys Cobalt.

Infosys’ ongoing expansion efforts in talent and capabilities in areas such as Adobe, Salesforce and product design continue to serve as a catalyst for transformation. Efforts are enabling the company to drive conversations in new areas as well as attract talent with multidisciplinary skills, evidenced by its network of innovation and design hubs in the U.S. Additionally, ongoing recruitment efforts provide a glimpse into Infosys’ culture of learning and development; hiring began in late 2020 with the goal of 25,000 additions over five years, and Infosys aims to hire 12,000 U.S.-based employees and 3,000 U.S.-based college graduates by 2022. Despite the ongoing war for talent, we expect Infosys to meet and likely exceed these targets. In 2017 the company announced its goal to hire 10,000 U.S.-based employees by 2019, then exceeded this goal by 3,000.

Retaining talent will be equally as important, especially as attrition continues to climb. Infosys reported voluntary attrition in the last 12 months for IT services was 20.1% in 3Q21 up from 13.9% a year ago. Examples of Infosys’ investments in expanding its addressable market and building trust with a new generation of workers include: a recently announced training facility in Indianapolis; virtual training platform Infosys Wingspan; recruitment outreach for nontraditional talent including high school and community college graduates and midcareer transition professionals; a dozen partnerships with U.S.-based universities; a Reskill and Restart program; and Infosys Foundation that supports K-12 teachers. Infosys is already seeing some of these investments pay off. For example, the attrition of its Community College Pathway program is about one-third lower than overall turnover. Creating personal connections with such recruits while providing a clear upward career progression sustains Infosys’ growth.

Financial Services acts as the cornerstone of Infosys’ U.S. go-to-market strategy

While Infosys’ North America client footprint is diversified, the financial services (FS) industry presents the largest opportunity. Global FS revenue was $1.3 billion growing at 21.8% year-to-year in 3Q21, and Infosys’ North America FS revenue was $802 million, increasing at 30.8% on an annual basis in 3Q21.

We attribute the impressive FS North America growth to two factors. First, Infosys is ramping up cash inflows from its mega deal with Vanguard, signed in 2020. Second, Infosys capitalizes on its established footprint and trust with nine of the 10 top U.S. banks and its ability to grow its regional banks’ roster.

Following Infosys Leadership Forum in Europe, the company hosted over 120 clients and two dozen analysts and partners for in-person and virtual sessions for the one-day Infosys Americas Leadership Forum, held at Madison Square Garden and culminating with the New York Knicks versus Orlando Magic game. While many of the themes and messages of the Americas event were consistent with the London event held in October, nuances, particularly around client stickiness and trust, stood out as the fundamental pillars of Infosys’ regional success and pivot toward becoming a platform-enabled solutions broker known for its strong execution capabilities.

PwC Procurement on Demand Services: Making procurement less painful

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A proven strategy: Start, test, build, evolve internally

In early November, TBR spoke with PwC’s Procurement on Demand Services team, including Scott Boruff, Becky Mackin, Michael Giguere and John Fafian, to better understand how their offering has evolved and what challenges they are facing as 2022 approaches. According to Boruff, PwC’s internal procurement professionals implemented a version of the firm’s procurement solution over five years ago, then continually refined it before rolling the solution out to clients over the last 18 months. In TBR’s view, numerous PwC peers have successfully deployed this customer zero approach, particularly as consultancies and IT services vendors have drifted into the software space.

When pressed if implementing a solution internally resonates with clients, Boruff, Giguere and Fafian confirmed that PwC’s clients appreciate this approach and that the firm included former PwC procurement professionals in the Procurement on Demand Services team. Fafian noted that the range of spend categories within PwC’s procurement team — for example professional services, facilities management, software and hardware — reassured clients PwC’s solution could withstand massively scaled deployments.

In explaining why PwC launched Procurement on Demand Services, Boruff noted that the COVID-19 pandemic highlighted long-standing tensions between procurement officers seeking the best quality and conditions and internal customers, who often bring different priorities to a procurement process. Solving the people problem — the dissatisfaction with each other and with the process — requires developing, cementing and sustaining trust across an entire enterprise, a theme that resonates with PwC’s overall strategic shift.

In addition, by leveraging PwC’s products and accelerators for its clients, Boruff said his team has “the people and the technology” to help clients “jump the line” on turning around their procurement processes, improve outcomes and satisfaction, and drive hard value to the bottom line. An enterprise trying to transform its procurement function, in Boruff’s assessment, would need 12 months to find qualified staff and 12 more months to build the technology, before finally realizing the value — an overall timeline Boruff said PwC could reduce to three months. In TBR’s view, the combination of a pandemic-induced appreciation for procurement challenges and a robust, tested solution currently operated globally by PwC made for excellent timing. As we discuss below, execution becomes the new challenge.

Meeting the vast variety of clients’ needs requires PwC flexibility

Detailing the PwC offering, Boruff explained that PwC’s clients look for three kinds of services: 1) curated tech enabled-services in a specific functional area that support upskilling and progression of maturity of the entire procurement function; 2) managed services, with PwC taking full responsibility for category management, analytics and any ongoing procurement issues; and, 3) enhanced staff augmentation, typically around a specific spend category, an acquisition assimilation or a major sourcing event.

Across those three areas, according to Boruff, PwC can bring the right procurement subject matter experts, particularly for specific spend categories, and scale up to meet clients’ demands. In addition, PwC’s flexibility around the consulting business model allows the firm to bring a blend of services, including procurement strategy, project management, contract negotiations, metrics and reporting, risk management, and even a SaaS procurement platform. In TBR’s view, while this offering does not sit within PwC Products, the evolution through internal development and deployment and the approach to bringing this to clients reflect the firm’s commitment to PwC Products and to a full pivot to business models that more fully support their clients’ transformation needs.

While PwC’s Procurement on Demand Services offering currently exists in the “walk” stage across the crawl-walk-run spectrum, the firm has begun exploring what comes next, beyond simply greater scale. Mackin noted the current procurement analytics package within some clients’ deployments allows PwC to anticipate and explore opportunities for additional client savings through enhanced procurement strategies and services. In TBR’s view, as more managed services clients permit PwC to monitor existing deployments and analyze trends, the firm will develop an increasingly robust procurement offering, accelerating the flywheels of value to clients and revenue for PwC. Looking further ahead, Boruff called blockchain “aspirational” in the procurement space, noting that too many client contracts have not been digitized from paper. Boruff also acknowledged the firm may need to complement existing talent and capabilities with acquisitions of both intellectual property and procurement-trained professionals to meet PwC’s internal growth targets over the next few years.

Top 3 Predictions for Management Consulting in 2022

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The who, what and how of management consulting keeps changing and stays the same

Managing talent and restructuring and building decarbonization credentials will drive management consulting in 2022

Management consultancies traditionally stood at the top of the IT services pyramid, delivering advice, road maps and business cases for other vendors to follow, reaping the rewards of high margins and brand prestige. Pre-pandemic, disruption upended every business model across the technology spectrum, while consulting appeared to move along, unchanged since the first corporate board listened to advice from McKinsey & Co. In actuality, management consulting had been shifting from slides to software for years, with the pandemic accelerating those changes. The 2021 drivers and trends pushing change included managing and upskilling talent, restructuring to meet new client demands and bring new capabilities to the market, and jumping on the sustainability bandwagon. 

A note of caution: Even with all the changes in consulting since the spread of digital transformation, TBR believes most management consulting engagements center on traditional deliverables: road maps, business cases and strategic advice. In recent months, TBR has heard from consultancies and their clients about a resurgence in strategy consulting, perhaps stemming from a post-pandemic push to reorient to the future having made the operational and organizational changes necessary to survive 2020 and 2021.

Concurrently, IT services vendors and cloud and software giants have increasingly pushed into the consulting space, sometimes supplanting established management consultancies engaged in implementations and managed services. TBR does not believe this trend will result in significant management consulting market share being earned by the likes of Microsoft or Infosys, but the large-scale implementation and managed services engagements may include a wider mix of ecosystem partners delivering to the end client. In 2022 the management consultancies that navigate the rough and changing partnering landscape will outperform peers.  

2022 management consulting predictions

  • Expanded capabilities require expanded skills, leading consultancies to increasingly invest in education
  • Restructuring throes and woes will continue to constrain some management consultancies’ abilities to execute consistency
  • Sustainability booms for consultancies poised to measure, benchmark and report client’ progress

Download a free copy of TBR’s Top 3 Predictions for Management Consulting in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.