In time of pandemic, IT services focuses on leadership, partnerships and automation

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Accelerated automation

Following market leader Accenture (NYSE: ACN), IT services vendors will aggressively adopt automation tools to drive down their own costs, improve remote delivery and retain clients during the global economic downturn. Automation will help ensure standardized delivery, even as engagements, implementation cycles and large-scale integrations change amid more remotely managed IT environments. IT services vendors that have implemented automation at scale internally will most readily serve clients seeking the same.

Splintering acquisition strategies

Global economic conditions will allow some IT services vendors to acquire talent and IP at discounted prices, provided leadership at those vendors maintains control of cash flow and risk assessments. In contrast, those vendors ill-suited for work-from-home and remote delivery or struggling through corporate restructurings will miss the opportunity to soften organic declines with inorganic boosts. While on the surface this might not be significantly different from normal disparities in companies’ acquisition strategies, the current massive disruption will reveal weaknesses around leadership and organizational nimbleness that may see normally aggressive acquirers struggle and typically passive nonbuyers make bold moves. TBR expects M&A moves made within the first half of 2020 will substantially impact which vendors will be best positioned to grow during the expected late 2020/early 2021 recovery.

Every part of the economy, including the IT services market, will suffer serious disruption from the COVID-19 outbreak. While not predicting which of the many possible scenarios will be most likely to play out through 2020, TBR’s Professional Services, IT Services and Digital Transformation team anticipates three overarching themes will dominate, leading to six topics worth watching in detail. In the first theme, leadership at every level will not only reveal which IT services vendors and consultancies were best prepared for a pandemic disruption but also determine which will continue to succeed, relative to peers. Second, alliances between IT services vendors and their technology partners will be stressed by immediate economic pressures, talent constraints, and uncertainty surrounding 2020 and 2021 forecasts. And third, IT services vendors that invested in automation early and at scale will see their ability to standardize delivery and reduce costs become essential to retaining clients and meeting their own financial targets. Automation, already a priority for some, will become a mission-critical capability, and accelerated adoption will separate leaders and laggards.

Predicting the unpredictable: COVID-19 is changing the IT devices business

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The devices business is sensitive to how and where people work, communicate and play

The COVID-19 crisis is changing how and where people work and how they spend their free time, all of which directly affects the PC business, adjacent devices and services businesses, in addition to networks, data centers and cloud businesses. Many of these changes are opportunities for device vendors, but the global recession, and buyers’ conservatism in the face of uncertainty, will negatively impact vendors until a recovery is underway. The novel coronavirus illness and consequent control measures are influencing the supply and delivery chains as well as sales and servicing processes. Even after recovery from both the pandemic and the recession, some of the changes in working patterns are likely to be permanent as institutions and people find benefits in remote work, accelerating and institutionalizing a growing trend. Similarly, the movement toward using technology to improve health and healthcare is being greatly accelerated by the crisis.

The global crisis has many moving parts, all affecting devices and how they are used

There are several different components to the changes brought about by the COVID-19 pandemic.

  • The illness itself is changing the lives of many people and directly affecting the global workforce as people become ill and others are caring for them.
  • The measures taken to slow the spread of the disease are drastically reducing economic activity, and devices sales are closely tied to economic activity.
  • Most importantly for the devices business, many more people are working remotely and many are relying more heavily on home-based communication and entertainment.
  • The implosion of the travel and hospitality businesses, as well as other personal services and retail businesses, is causing a rapid decrease in global economic activity, exacerbated by the downstream consequences of direct impacts to business.
  • It is possible that the virus and its mutations will impose a long-lasting threat, resulting in long-term changes to patterns of living and working.
  • Some of the changes brought about by the pandemic are accelerations of existing trends, such as working remotely, adoption of cloud-based solutions, and telemedicine; as such, these will remain in place after the crisis subsides.
  • The severity and the duration of the current crisis is indeterminate, undoubtedly leading to long-term consequences.
  • It is likely that as some geographic areas recover, other areas, especially rural areas, will experience new pandemic-based limitations on social interaction.

COVID-19 catches manufacturing and retail verticals flat-footed, limiting IT and service investment

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While manufacturing and retail companies are capitalizing on some opportunities during the COVID-19 pandemic, they are also experiencing significant negative short-term impacts. Making matters worse, most companies in these verticals lack the agility and IT infrastructure necessary to adjust in the current environment. The result will be a severe slowdown in these sectors, which will delay or halt many IT projects and service engagements that could have long-term business value.

Service opportunities will take a hit due to the downturn in manufacturing and retail verticals

Early assessments predict the manufacturing and retail industries will be among the hardest hit by the economic fallout of COVID-19, for reasons related to supply chain disruption, government-mandated store closures, and inefficient operations for factories using a mostly remote workforce. TBR’s Management Consulting Benchmark includes industry revenue splits for the 13 covered companies, providing a view into which consultancies could be most exposed to clients’ economic struggles. Consulting, by its nature, loves chaos and uncertainty, but the clients themselves may struggle financially and delay or outright cancel plans to extend or transform their digital and IT environments. We cannot predict whether clients will need more or less from these consultancies, but we can understand their exposure. At the highest end, PwC and BearingPoint earned more than 27% of their management consulting revenues in 2019 from those two industries, with Europe-based BearingPoint the highest in the benchmark at 28%, in TBR estimates. At the lower end, Accenture (NYSE: ACN) was the only consultancy that saw revenues from those two industries at less than 10% of its 2019 total revenue (just under 9%), while EY came in at 15%. The remaining firms ranged from 22% to 26%, considerable exposure for two of only nine industries tracked in the benchmark. We can state with confidence that the consultancies that deployed automation internally, implemented asset-light strategies, and invested in remote delivery and robust remote employee structures will fare better than peers. From an organizational perspective, we will also likely see consultancies that have 20-plus distinct industry “specializations” consolidate into broader and more diverse verticals, spreading out the risk of any one practice suffering from another pandemic-like economic crash.

‘Every company is a technology company’ is new mantra for post-digital world

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TBR perspective

“Every company is a technology company.” That combined description and imperative from Accenture Group Chief Executive—Technology and CTO Paul Daugherty made clear how the company sees its clients now and entering the post-digital future. All companies will need the technological savvy and innovative culture of digital natives while pivoting from pilots to execution. In simple terms, digital is everywhere, so every company must be able to execute digitally, including developing a digital core, optimizing operations and investing in new technology-driven offerings. For Accenture, maturation as a technology company has resulted in an increase in technology-centric headcount, paired with an emphasis on platforms and tools (see below analysis on myNav, myWizard and myConcerto). A new recently announced growth model has shifted former Accenture Technology leader for North America, Annette Rippert, to be the new Group Chief Executive leading the combined Strategy and Consulting services, further cementing Accenture’s role in moving its clients toward a future where “every company is a technology company.” Building on the technology mantra, Accenture can now bring leadership deeply rooted in emerging technologies applied at scale to its strategy, supply chain & operations and talent & organization consulting clients. Based on Rippert’s long-standing emphasis on Accenture’s relationships with technology partners, clients can expect ecosystems and alliances will factor substantially into the company’s strategic advice as the post-digital future nears. 

Following Daugherty’s presentation, Accenture CIO Penelope Prett emphasized the role cloud continues to play in Accenture’s own digital journey, even describing cloud as “mandatory to capitalize on innovation.” Prett noted that roughly 95% of Accenture’s applications reside in the cloud, with adoption of some legacy architectures still a challenge. Among the lessons Accenture has drawn from its own experience are the need to consider the pace of business change and the need to account and plan for interoperability and long-term simplifications. Echoing Daugherty, this imperative to move to cloud at scale and to innovate plays well into Accenture’s overall go-to-market strategy around technology enablement.

Overall, Accenture’s belief that “Every company is a technology company” raises questions about how the company will engage with its clients going forward. Accenture has excelled at developing talent with specializations and exceptional, often industry-specific skills. As the company shifts toward assembling teams with diverse talents and skills and takes those teams to scale, how prepared is Accenture’s middle management leadership? What resources have they dedicated to training the military equivalent of majors and lieutenant colonels? Prett spoke of teams assembling within hours, rather than weeks, which provides a tremendous boost to productivity, provided leadership can keep up.  

In addition, Accenture’s evolving approach to industries will come under pressure from two forces. Clients, according to Accenture and its peers, increasingly look beyond their own industries for best practices, recognizing that emerging technology solutions typically start with horizontal capabilities applied within an industry and business context. Internally, Accenture must continue to share broad, industry-agnostic best practices across the entire company, even as it develops a common language, separate from industry. Secondly, ecosystem partners such as Google (Nasdaq: GOOGL) and Amazon Web Services (Nasdaq: AMZN) are not organized by industry, which may make it easier for Accenture to align with those hyperscalers. Though more traditional partners, such as SAP (NYSE: SAP), pushing an industry-led approach, through initiatives such as Model Company, may challenge Accenture’s ability to manage competing ecosystem pressures.

The Accenture Technology Symposium brought together over 200 Accenture (NYSE: ACN) clients, along with industry leaders and practitioners. Similar to last year’s event, Accenture discussed and showcased disrupting technologies in areas including cloud, blockchain, AI, automation and security while using client case studies and testimonials to highlight Accenture’s innovation-led approach to solving business problems.  

COVID-19 pushes automation to the forefront of business strategies

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Automation shifts from a discussion to an imperative across all industries

The decision to embrace automation typically requires an organization to engage in careful strategic planning and analysis over a period of time. On one hand, automation enables a level of efficiency, consistency and quality that manual deployment alone cannot achieve. On the other hand, skeptics have long questioned the point at which automation can go too far and how to find balance and decide which tasks should and should not be automated. That debate is now over, as the deployment of automated processes and technology is imperative to fill in the innumerable voids in a new reality where COVID-19 is not just part of our vocabulary but a new abnormal in which we all live. 

Past discussions of whether to automate were typically highly dependent upon factors like industry vertical, whereby sectors with a heavy manufacturing arm, for instance, were much more likely to embrace automation than others. Massive staffing shortages are now the primary driver behind the call for widespread automation, and the interest has manifested itself in multiple forms, such as the deployment of robots, drones and AI — technologies that are being leveraged by industry verticals across the board.

Staffing shortages have affected every grocery store and pharmacy, and many are relying on robots to transport goods from warehouses and stores to delivery vehicles. In agriculture, there has been an increase in the use of terrain-based robots to convert agricultural units into disinfectant sprayers. In manufacturing and delivery, Baidu (Nasdaq: BIDU) has partnered with Neolix to deliver critical items such as food and supplies to hospitals in Beijing with the use of the Apollo autonomous vehicle. Baidu has additionally applied AI algorithms to track the spread of infection and predict where the next hot zone may crop up so that local facilities are better prepared. While the number of riders of public transport has plummeted, railways, buses and subways still must operate even if on a skeleton schedule. The deployment of automated technology such as self-driving trains has increased dramatically, as has the use of robots to disinfect and clean cars.

The healthcare industry faces the most pressing challenges as it seeks to employ remote workforce programs and develop scalable solutions on an emergency-fueled time line. While some degree of on-site presence is unavoidable, the risk is being mitigated, in some cases, by the use of disinfection robots, which were deployed by Xenex Corp. to over 500 hospitals in China and are also now being shipped to Italy. Drone delivery of medication is anticipated to be the next wave of automation, and companies like Drone Delivery Canada (DDC) Corp. predict that they will become commonplace, and soon. DDC President and CEO Michael Zahra stated, “The company is in dialogue with governments at various ministries and levels emphasizing that the current situation is an ideal use case for our proven drone logistics solution to limit person-to-person contact; bring needed medical and pharmaceutical supplies to remote, rural, and suburban communities; transport blood samples to laboratories for testing; and deliver other relevant supplies.”

The application of automated technologies is clearly not confined to one area and will continue to ease the burden that COVID-19 has placed on all of our lives. When the pandemic eventually subsides, the silver lining to the shortages, panic and crippling effect on the economy will be that healthcare providers, companies and individuals will be more apt to embrace the use of automated technology in almost every aspect of their daily lives.

Click here to listen to this audio clip, COVID-19 Business Impacts | Remote Work, in its entirety.

The federal IT market braces for impact

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Uncertainty underpins the short- and long-term outlook for the impact of the coronavirus pandemic on the federal IT space. Federal agencies and their IT contractors face disruptions across their supply chains, operations, procurement functions and fiscal management.

Near-term turbulence is inevitable

Defense majors Northrop Grumman and General Dynamics, on March 19 and March 23, respectively, published 8-K filings updated with assessments of the potential negative impact of the coronavirus on their businesses. Risk factors are far-reaching and extend beyond company fiscal health, including diminished employee productivity and contract performance, supply chain disruptions, increased cost of and diminished availability of investment capital, temporary suspension of operations at customer facilities or work sites, and reduced demand for company products and services stemming from possible economic downturns in the U.S. and abroad. These contractors and others issuing similarly cautionary remarks have further noted they cannot predict the full impact of COVID-19 on their business or the industry at this time.

TBR foresees additional near-term challenges in the form of purchasing delays and deferred starts (and thus revenue recognition) on recent awards as the entire procurement cycle shifts to the right, along with project execution on programs already underway. Travel bans or restrictions will further impact project delivery and impede business development efforts.

As the federal IT market moves into calendar 2Q and the fiscal reporting season for calendar 1Q20 begins in late April, COVID-19 will be a major factor driving revised outlooks for 2020 fiscal performance for contractors amending their guidance (and we expect many, if not most, will be compelled to do so). During its earnings release on March 19, Accenture revised its projections for fiscal 2020 global top-line revenue and growth from its previous forecast of 6% to 8% growth over fiscal 2019 to a new projection of 3% to 6% top-line growth over fiscal 2019 (both ranges in local currency).

Raytheon Technologies is another federal contractor that is particularly vulnerable to the impact of COVID-19. Raytheon’s legacy defense business will face the same challenges as its defense sector peers as the COVID-19 situation plays out, but as the merger with United Technologies (UT) includes the integration of UT’s Pratt & Whitney and Collins Aerospace operations, Raytheon will be highly exposed to the aerospace sector. The commercial aviation market has been particularly hard-hit by COVID-19-related travel bans and restrictions, and the negative effects will linger for years. This underscores the urgency for Raytheon to complete the merger quickly and fully assess the potential impact of the inevitable decline of the global aerospace sector.

COVID-19 outbreak pushes virtual technology events to sink or swim

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Events in general and global annual events in particular have been slow to adapt to a changed world

So many things have changed in the business and technology environments over the past two decades, but in-person events have maintained their importance. Even as digital marketing has replaced most traditional mediums and activities like cold calling and outbound email have waned, in-person events still play a huge role in most technology vendors’ go-to-market investments and strategies. However, there certainly have been changes to the types, frequency, audience and purpose of the events. Many of these changes in strategy are driven by a fundamentally different customer buying cycle. Through online research, customer reviews and other peer interactions, customers now have a very high level of knowledge before they even interact with a salesperson. Also, the pace of modern life and changes culturally make prospective clients less likely to spend business or personal time with salespeople while participating in leisure activities like golfing or attending entertainment events. As a result, many vendor marketing and sales teams utilize smaller, shorter and more meaningful events aimed at customers that have already expressed an interest in a solution, rather than targeting customers at the top of the funnel. Those changes have mostly taken place for local and regional events, while the global annual events have continued with largely the same cadence.

It is sink or swim for technology vendors with near-term annual events

Sometimes people and organizations do not know what they are capable of until they are forced to find out. Faced with no alternative, vendors like IBM (NYSE: IBM), Microsoft, Dell Technologies (NYSE: DELL) and Google (Nasdaq: GOOGL), among an ever-growing list of others, will need to recreate the in-person event through a virtual experience. The good news is that most of these companies have significantly increased their video production and social media capabilities over the past decade. For most in-person events over the past five years, video replays of the sessions are available and of good quality. Beyond video production of core content, below are some of the changes that can allow vendors to achieve the best outcomes from the necessary shift to virtual events:

  • Replicating the in-person “feel” — There is an aspect of performance during the large events that draws in the presenter and audience. The size of the crowds entering the venue and the audience for keynote sessions, the music, and the theatrics of the speaker are all part of the experience. Finding ways for virtual platforms to capture those elements can build and hold the interest of customer and partner audiences.
  • Soft selling — Nobody wants to sit through a shameless sales pitch for multiple days. With in-person events, vendors have broken that tension by bringing customers, analysts, partners and even celebrities to participate in presentations. Virtual events need the same level of third-party participation to keep the audience engaged and make the sessions more than just a vendor-to-customer sales pitch.
  • Training and certification benefits — For customers and partners, these events are great opportunities to take advantage of discounted training and certification testing. Vendors can use online platforms to increase participation through a virtual format.
  • Networking and social interaction — Informal and formal face-to-face meetings might be the most difficult aspect of in-person events to replicate virtually. Between social media and online networking platforms, there could be ways to connect people with similar interests and facilitate communication during the course of multiday virtual events.

Old habits die hard, and for technology vendors global annual in-person conferences have been a mainstay for 20-plus years. Although IT purchasing and smaller events have evolved a lot over the years, large technology events have remained largely unchanged since the mid-1990s — until COVID-19. Until at least early May, most technology vendors will have no choice but to make the best of virtual events. Modernizing the traditional annual in-person event may be one of the long-lasting impacts of the COVID-19 virus on the technology industry.

COVID-19 creates pain, change and even pockets of opportunity for the IT industry

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There is still a fog of uncertainty around COVID-19’s impact. What is clear, however, is this outbreak is unlike any event in living history. The long-term health crisis, economic disruption and social disruption are occurring at levels that were unfathomable just months ago. These changes are taking place in a world that is much different from when the last widespread pandemic, the Spanish flu, hit more than 100 years ago. Technology has become such an integral part of our lives since that time and, as such, will be deeply ingrained in many of the short-term and long-term effects of the COVID-19 virus. In this report, TBR will provide a high-level overview of the impact these recent events will have across the hardware, software, cloud, telecom and services markets we cover. While most of the market effects will be painful due to the economic disruption occurring, many will lead to changes in long-held business strategies and create opportunities as technology needs shift for both individuals and organizations.

Social distancing challenges core of IT services industry

Pain: At the core, IT services and professional services are human-centric businesses, delivered by humans and intended to improve employees’ efficiency or accelerate their ability to connect with clients and enable growth. Changes in travel and personal interaction as well as business disruption all challenge the existing IT services business model. Additionally, many of the largest IT services providers will have new leadership tasked with managing these disruptions. In 2019 TBR noted a large number of C-level changes at the largest IT services vendors and consulting firms, as well as their technology partners. Those leaders will be tested in the coming months, and TBR anticipated more positive than negative reviews. More significantly for the long-term business impacts will be the performance of those leaders at the team and business group level, the equivalent of squad leaders and company commanders in a military organization. Adjusting to COVID-19 safety measures; managing people remotely; delivering to clients and managing their expectations, particularly in a tough economy; and continuing to lead — those will be massive challenges for team leaders. How well prepared they are, how well their companies have trained them, and how agile and flexible they can be in an ever-changing business climate are the factors that will distinguish high-performing IT services vendors and consultancies from struggling ones in 2020. The CEOs and top leadership will set the tone, but execution at the lower levels will become exponentially more difficult with this pandemic. 

Change: TBR has already spoken with consultancies and IT services vendors grappling with changes to their business models, particularly around collaborative design sessions in the early stages of digital transformation engagements. Vendors with pilot projects to enhance global coordination and project management have accelerated those efforts and expect to invest heavily in the infrastructure needed to perform at speed and at scale. Vendors have also begun evaluating their technology alliances and resetting expectations around large-scale systems integrations. Also being mentioned are new engagements based on COVID-19, including technology consulting around delivering healthcare — and, critically, testing — through “drive-up” systems.

Opportunity: TBR expects that recent trends around automation, AI and platform-delivered services will be catalyzed by the spread of COVID-19 and imperatives to work remotely and with minimal in-person contact, resulting in a few knock-on effects across the broad IT services and consulting space. Most significantly, those companies that have invested most heavily in automation and remote delivery will see the least impact on their engagements, even if clients begin to freeze or reduce spend in line with a broader economic slowdown. Second, consultancies and IT services vendors with experience in online, remote training and upskilling will be able to both continue their own digital transformations and provide offerings around human capital training and management based on their own lessons learned and best practices. Third, vendors that anticipated a global economic slowdown and prepared to take advantage of lower costs for acquisitions and new opportunities to assist clients in distressed markets — while they likely did not anticipate this virus — are best positioned to provide consulting and IT services throughout the pandemic.

In a market ripe for DT, Logicalis’ LATAM roots and innovative portfolio position it to lead the charge

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TBR perspective

As the LATAM ICT market rapidly catches up to North America and Europe in terms of adoption of digital-related technologies and, most importantly, a transformational mindset, Logicalis’ investments across its Digital Accelerators and Digital Solutions portfolios, backed by a strong foundation enabled by the company’s heritage as an infrastructure provider, strengthen its value proposition when it comes to scale and trust among regional buyers. With Logicalis LATAM’s footprint spanning virtually all (99%) of the region’s 500 largest companies, the next chapter for the company will be about growing mindshare through cross-selling and upselling services in new areas. Adopting an integrated approach by blending business consultants, security specialists and Digital Accelerators’ professionals will enable Logicalis to elevate the value around digital transformation (DT). Remaining cognizant of pricing and budget constraints among regional buyers will likely compel Logicalis to further adopt outcome-based contracts, a necessary step as clients seek to offload the financial burden of managing legacy infrastructure to vendors’ “as a Service” offerings.

Strong foundation provides reliable use cases as Logicalis strives to shift its value proposition

Logicalis’ roots in LATAM date back to 1960 and engineering services company Promon, which currently owns a 35% stake in the company and boasts a large footprint across most of South America. The combination provides the integrated scale necessary to support price-sensitive clients, especially as most of the services opportunity is fueled by legacy infrastructure. According to Logicalis’ executives, 80% to 90% of the current market opportunity is tied to “lift and shift”-type activities, but the trend is rapidly changing toward scalable transformation. In TBR’s view, Logicalis’ heritage supporting clients’ IT infrastructure will play to the company’s advantage as regional buyers increasingly adopt and seek support for managing both the infrastructure and software layers of their hybrid IT environments. According to TBR’s December 2019 Digital Transformation Insights Report: Voice of the Customer, “Cloud computing remains the most common technology investment area for DT initiatives. Removing the cost and capacity constraints of fully on-premises infrastructure enables enterprises to explore new ways of working and leveraging their data through mobility, IoT, analytics and collaboration software. Complexity continues to drive demand for integration tools, new skills and management services.” We believe as regional buyers gradually shift toward “as a Service” offerings, Logicalis’ value proposition will also have to adapt or even lead the change when it comes to risk sharing and new pricing models.

While the company’s business consulting unit spearheads outcome-based pricing initiatives, we believe Logicalis could further accelerate its value proposition transformation if it approaches every opportunity with scale in mind from the beginning. To execute on such a strategy, the company would need to further build out its consulting and application services capabilities, with acquisitions in these domains highly likely.

We acknowledge the volatile environment Logicalis LATAM must navigate to operate in, but the company has an opportunity to use the region as a test bed to deploy DT-ready frameworks across global operations. For example, Logicalis’ Software Defined X unit’s NEPAL framework provides a strong automation-centric use case around provisioning, troubleshooting, monitoring and event-oriented services supporting SD-WAN and SDN environments. This work will prove to be a steppingstone toward 5G infrastructure, a key area considering 50% of Logicalis LATAM’s revenue stems from telecom clients, largely fueled by Logicalis’ relationship with Cisco (Nasdaq: CSCO) and its work providing infrastructure management services.

Additionally, Logicalis’ services portfolio, enabled by Optimal, an integrated, automation-based services platform, acts as a strong backbone to the company’s infrastructure heritage and bridges clients’ legacy and new infrastructure support needs, helping Logicalis to ensure knowledge sharing across teams is standardized. As Logicalis continues to manage technology maturity across various countries in the region — being an incumbent in some and the challenger in others — addressing broad market challenges, such as specialized skills shortages, likely presents the greatest opportunity for the company. Working with regional universities to establish DT-aligned courses and curricula could help Logicalis deepen its roots and expand its addressable market for recruitment.

Logicalis Latin America Analyst Summit: Recognizing LATAM’s status as the region contributing the largest share of revenue and offering the most comprehensive portfolio opportunities, Logicalis tapped its Brazil headquarters in Sao Paulo to host an industry analyst summit. Operating under the slogan “Architects of Change,” a tagline the company recently adopted as part of its rebranding, Logicalis hosted a client and more than two dozen regional and international analysts at a two-day event, showcasing the company’s ability to drive change in a rather volatile market — from both a macroeconomic and political perspective. Logicalis’ ambition to transform from a reseller into a solutions provider is well aligned with the company’s investments in its portfolio, partners and staff.

Vendors are embedding IoT throughout their organizations

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Vendors are rebuilding their IoT GTM strategies

Although vendors are deemphasizing IoT publicly, their overall businesses continue to grow at an accelerating rate slightly over 20%. While TBR is seeing more IoT-based projects than before, the average project scale is shrinking. And though a growing number of specialized solutions and components are entering the market, most still require substantial configuration and integration.

Many vendors enthusiastically embraced IoT as a way to open new markets and bring in new customers. Apart from the major IoT platform vendors — Amazon Web Services (AWS), Microsoft, Google and PTC — smaller vendors are now using IoT to enhance and promote their existing products and services, largely to existing customers. This reflects how IoT has become an often-implicit part of companies’ digital transformation offerings and go-to-market strategies. In many cases, IoT development, marketing and sales organizations have be folded into product, service and vertically oriented organizations.

The number of IoT use cases continues to grow, particularly those with smaller-scale and specific applications

IoT projects are proliferating across verticals and geographies, despite the reduced level of promotion and discussion among vendors. Customers, and therefore vendors, are focused on solutions, and IoT is a class of solutions. While customers concentrate on using IoT concepts to solve specific problems, vendors are turning to vertically oriented  products and sales structures as well as relationships with vertically oriented IT and OT partners.

As a result of multiple vendors having similar needs, there is a large variety of use cases from which common use cases in specific verticals are emerging. For instance, in manufacturing, there are production-related use cases that increase productivity and quality, as well as product-oriented use cases that help monitor and service products in the field. In the public and utilities verticals, there are many instances of smart metering of power and water. In the public vertical, use cases focusing on air quality, parking and lighting are common.

TBR’s semiannual Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them.