Red Hat aspires to be the technology glue for the digital enterprise

Red Hat rose to prominence simplifying technology stacks, with a mission to break the chokehold proprietary operating systems had on the enterprise via Enterprise Open Source, then extending that out to the various cloud developer platforms through its products. For this product strategy, Red Hat developed simple monetization strategies that have been replicated throughout the industry in what are now commonly called “as a Service” business models.

Red Hat recognizes it needs to do more to solidify its position as the glue, or virtual mortar, for digital business. The march to edge, driven by ubiquitous, economical compute, means that Red Hat has to expand beyond its horizontal strategy, which caters to the IT developer community, to also incorporate a more nuanced strategy that provides the requisite workflow and industry wrappers to simplify developer remits even further.

Red Hat quite correctly cites its dominance in the enterprise, with over 90% of the Fortune 500 using Red Hat products and solutions. This share dominance positions the company well for legacy application modernizations for an inside-out expansion strategy. Legacy vendors increasingly expose internal data through a series of different use cases and business constructs, whether it be to deploy internal data for marketing initiatives or to modernize the transfer of permissioned information among other business entities in a multi-enterprise business network.

But outside-in data utilization from customer-facing applications, often built cloud natively, is a different story. Many of the technology startups targeting those business use cases have become enamored with hyperscaler marketplaces as a key attribute when settling upon their development strategy. While developers may still be king, customer parliaments have greater and greater influence over the way the business policies are determined. Simple add-to-cart trials can trump the developer efficiencies associated with writing once in OpenShift to deploy anywhere.

Red Hat has moved to fill that gap by stating it will meet customers where they want to buy. IT procurement, Red Hat rightfully argues, is being consolidated on hyperscaler marketplaces, and Red Hat is developing — across much of its portfolio — more co-selling situations with Microsoft Azure (Nasdaq: MSFT), Amazon Web Services (AWS; Nasdaq: AMZN) and Google (Nasdaq: GOOGL) around OpenShift, SQL and SAP technologies.

Red Hat makes the last-mile connection to the workflow seamless

Red Hat can mask the technological complexities of the hybrid multicloud world. Through Ansible OpenShfit and the Red Hat portfolio, the company can also streamline the DevSecOps processes to allow software development to focus on the business value, while Red Hat addresses the infrastructure deployment layer that will become increasingly important as edge deployments proliferate.

Presently, Red Hat has honed its offers for telco, financial services and what is broadly defined as Industry 4.0. Red Hat’s telecommunications and financial services market share has been a solid underpinning of the company’s install base for decades. Similarly, these two verticals are also pushing hard for edge build-outs to bring compute and networking functionality as close to their end customers as possible.

Through Red Hat’s automation and open-source curation competencies, the company is able to create what it calls validated patterns for the edge. The validated patterns will consist of publicly available reference architectures Red Hat certifies for its various version releases. Validated patterns, in essence, shorten the development time for the broader Red Hat community by addressing the underlying infrastructure connections and interactions necessary to work in the hybrid multicloud world.

At Red Hat’s virtual Analyst Day event, held on Nov. 18, company representatives delivered a rapid-fire presentation on Red Hat’s three-year vision and the company’s efforts to pivot its initiatives to a more vertically focused set of go-to-market motions. The presentation was led by a succession of Red Hat senior vice presidents, including Mike Ferris, Corporate Development and Strategy; Ashesh Badani, Products; Stefanie Chiras, Partner Ecosystems; and Marco Bill-Peter, Customer Success, in addition to Global Partners and Alliances leads Terri Hall and Maryam Zand and Global Industries Chief Strategist Ian Hood. Rounding out the event was a customer testimonial from Deloitte Senior Manager Ashley D’Souza on the ways Red Hat technology enabled Deloitte’s healthcare solutions for the state of Washington.

Hyperscalers are poised to disrupt the private cellular networks market through their ecosystems, platforms and marketplaces

Hyperscalers (especially Amazon, Google and Microsoft) intend to standardize, modularize and verticalize private cellular networks (PCN)-related solutions inside their ecosystems, platforms and marketplaces, especially as it pertains to 5G and edge computing. Hyperscalers are focused on hiding the complexity of private networks and edge computing, enabling end users to more easily procure and consume these resources and unlock the value of data.

Enterprise and government consumption of networking resources will ultimately come to resemble how IT resources are consumed via the cloud, and solutions will be outcome-based. Early manifestations of this trend can be seen with Microsoft’s packaging of its 5G core with Azure Private Multi-Access Edge Compute (MEC) to enable and drive enterprise digital transformation with on-premises private 5G MEC. Microsoft is also building a range of vertical-specific use case solutions spanning smart factory, defense, retail transformation, and healthcare. Amazon and Google are following Microsoft’s lead in this domain.

Ultimately, TBR believes a large portion of activity in the private cellular networks and edge computing markets will be conducted inside hyperscalers’ ecosystems. CSPs and vendors will increasingly have to play inside hyperscalers’ ecosystems in some way to stay relevant in the market as it evolves.

TBR’s Private Cellular Networks Market Landscape deep dives into the market for private cellular networks. This global report covers enterprises that are investing in private cellular networks as well as all of the major vendors and some nascent players that supply infrastructure in this space. The research includes key findings, key market developments, market sizing and forecast, regional trends, technology trends, vertical trends, use cases, and key customer deals that are occurring in the market. TBR’s Private Cellular Networks Market Forecast, which is global in scope, details private cellular network spending trends among enterprises and governments, particularly as it pertains to 5G. This research includes current-year market sizing and a five-year forecast of several private cellular networks market segments and geographies.

Vendors respond to customers’ accelerated IT transformations​

Hardware vendors will race to further entrench themselves in customers’ ecosystems

While storage, hyperconverged infrastructure (HCI) and servers are the main products being sold by data center vendors, they are hardly noticeable in the go-to-market messaging that is being pushed out to customers. These vendors are more focused than ever on selling the outcome over the hardware itself,  whether that outcome is building a hybrid cloud environment to serve remote workers or deploying an edge solution on a factory floor. Data center vendors are looking to capture more of their customers’ environment, from managed services to hybrid cloud enablement, to diversify their revenue beyond hardware and create more reliable revenue streams.​

Building ecosystems is at the forefront of data center vendors’ go-to-market strategies to add value and create stickier offerings. This ranges from building management consoles and expanding software capabilities to refining “as a Service” offerings rolled out over the past 18 months. For leading vendors, this is done with an eye toward helping customers reap the same benefits they seek in public cloud alternatives — agility and simplicity — while also providing flexibility and cost control. ​

The road to a more diversified revenue stream is not without hurdles. Customers have already developed preferences for management tools and development platforms from cloud providers and ISVs. Markets like edge compute are complex with customization and industry nuance. Selling subscription models requires sales and delivery transformation for not only vendors but also partners, and a sales strategy that delivers on values that resonate with customers. In 2022 TBR expects to see further proliferation of the journey vendors embarked on in 2021, building out solution portfolios one use case at a time by identifying areas ripe for transformation that also benefit from on-premises hardware.

2022 data center predictions

• Infrastructure vendors’ “as a Service” offerings will gain traction as the offerings are refined for specific use cases
• Hardware vendors embrace the ecosystem
• Vendors will carve out niche specialties under the broad banner of edge compute

Download a free copy of TBR’s Top 3 Predictions for Data Center 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.

Where the money flows, IT services follow

Federal spending priorities shifting to favor civilian agencies

In three areas, the Biden administration’s pivot from defense spending to shoring up civilian agencies will have immediate effects on the federally focused IT services vendors. First, accelerated cloud adoption and new spending bringing cloud to civilian agencies will create partnerships and acquisition opportunities, as well as additional revenue streams. Second, IT services vendors well positioned for that pivot will increase their market share. Third, increased AI, analytics and cybersecurity deployments, supported by new federal dollars flowing to civilian agencies, will further separate federally focused IT services vendors that have built capabilities and talent during the last several years.

Civilian sector IT spending has recovered vigorously from the COVID-19 trough in 2020, thanks to civilian agencies’ ongoing drive to digitize their IT infrastructures, and the shifting budget objectives of the Biden administration will further accelerate civilian IT outlays. Health IT is emerging as a major growth driver on the civilian side, owing to ongoing COVID-19 response initiatives, electronic health record modernization, and IT projects to enhance the interoperability of health IT environments in the federal, state and local government sectors. Even amid the expected deceleration in defense spending, the Pentagon will leverage cloud infrastructures to connect IT platforms for combat operations across service branches, while cloud computing will become essential to transmitting, sorting and analyzing mission data.

Federal systems integrators also have an eye on the transformative technologies and methodologies that are becoming commonplace in the digital modernization of federal IT infrastructures. For example, federal IT services vendors will increasingly utilize low code as they execute cloud implementations, enabling the rapid development and scale-up of cloud-based software tools. Federal IT contractors are also pondering the effects of 5G and quantum on cybersecurity, while upgrading existing mobile and IT communications systems into more open and interoperable networks embedded with AI and analytics technologies.

2022 federal IT services predictions

• Increased U.S. federal cloud spending upends the IT services market
• Vendors prepared for flattening defense budgets and accelerated civilian spend will see early gains
• Investment in advanced digital technologies will accelerate across all federal sectors

Download a free copy of TBR’s Top 3 Predictions in Federal IT Services 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.

A strategy to replace Vision 2020 and underline everything with trust  

In October TBR met with PwC’s JC Lapierre, chief strategy and communications leader; Shannon Schuyler, chief purpose and inclusion officer leader; and Joe Atkinson, vice chair and chief products and technology officer. In a wide-ranging discussion that built on previous briefings and TBR’s continued analysis of PwC, TBR questioned the three specifically on The New Equation, PwC’s long-term global strategy announced earlier this year. Among the highlights:

• PwC hopes that after it has fully executed against The New Equation people will consider the firm to be the most significant conveners of those who can lead and are leading to change.
• The internal organizational changes for the U.S. firm that are necessary to implement The New Equation started years ago and will continue to be refined, but The New Equation does not merely equal organizational change.
• The newly launched PwC Trust Leadership Institute may prove to be a significant differentiator at a time when the Big Four firms appear to be increasingly alike.
• PwC’s approach to technology, even with the advent of PwC Products and tighter alliances with technology giants like Microsoft (Nasdaq: MSFT) and Google (Nasdaq: GOOGL), remains rooted in people and business challenges; technology alone cannot transform companies and drive sustainable outcomes.
• Everything circles back to trust, the most raw and simple value driving PwC’s relationships and underpinning the firm’s purpose.

Chapters, playbooks and constructs: Physical images for The New Equation

Using a five-chapter book as a metaphor, PwC’s leaders said the firm’s new global strategy included choices around trust and sustained outcomes, investments to help the firm better serve clients, a rewiring of the organization and how PwC works to better serve its clients, enhancements to the firm’s people experience, and extensions into the larger community — essentially an explicit understanding of the obligations and responsibilities PwC takes on across its entire ecosystem.

Of these five “chapters,” PwC’s leaders explained that the third and fourth — how PwC works and the employee experience — shifted the most from pre-pandemic plans and idea to their current form in The New Equation strategy. In both areas, the realization that “taking care of people” had to be a fundamental aspect of the firm’s larger purpose became clearer when the pandemic focused attention on employee safety, health and well-being.