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.

Edge computing is a cross-industry revolution that will reshape every industry

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The edge computing market spans a spectrum of use cases that meet various customer needs, including sensitivity for latency and analytics. According to TBR’s 1Q20 Enterprise Edge Compute Market Landscape, while the edge is not new, its use for low-latency-dependent applications and close-to-the-data computing has increased and will continue to do so to support connected devices, emerging workloads such as IoT, and faster time-to-insight. For example, in-store robots can interact with customers to create a customized shopping experience on the floor and use data around purchases to help restock inventory.

TBR predicts a rapid increase in enterprise edge spend through 2024. The dynamics within the webscale space   include a desire by managed service providers to run their offerings on bare metal hardware and ODMs with the ability to provide this bare metal hardware at lower price points than OEM peers. These dynamics will be a key driver behind the upswing in enterprise edge revenue through 2024 as webscales capture opportunities typically fulfilled by OEMs.

Nearly all webscales and some telcos utilize ODM hardware, and most enterprises are expected to use OEM gear for their edge environments

ODMs have perhaps the largest opportunity at the enterprise edge. White-box hardware is of rising interest to major service providers, and the low-margin, high-volume play that ODMs embrace is an excellent fit for the enterprise edge market.

 

TBR’s Enterprise Edge Compute Market Landscape, which is global in scope, details edge compute trends among vendors and their customers. Vendor coverage includes Amazon Web Services, Atos, Cisco, Dell Technologies, Digital Realty, Equinix, Hewlett Packard Enterprise, Huawei, IBM, Lenovo and Microsoft. This research includes current-year market sizing and a five-year forecast. Interested in hearing more of TBR’s analysis on the emerging and rapidly evolving opportunity in the enterprise edge market? Check out the replay of our recent webinar, The emerging and evolving landscape of enterprise edge computing.

TBR projects CSP spend on edge compute infrastructure will grow at a 54.5% CAGR to $90B by 2025

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TBR estimates over 1.2 million network sites and cell sites will become mini data center (edge) locations globally by 2025, up from nearly 9,000 sites globally at the end of 2019. The primary driver of edge build-outs from 2019 to 2024 is telcos’ and cablecos’ network transformations, which entail migrating to a cloudified and virtualized network, and webscales’ edge initiatives to support their cloud businesses and digital lifestyle endeavors. In this new architecture, network functions will be virtualized and housed in network functions virtualization infrastructure, which is essentially a data center. Network sites, such as central offices, have been the primary edge compute locations to date, with cell site builds expected to ramp up significantly in 2021 and become the primary locations for the CSP edge by 2025.

Most CSP edge sites will be located in the U.S. and China by 2025

TBR estimates over two-thirds of global far edge sites that are owned or leased by CSPs will be located in the U.S. and China by 2025. This heavy concentration of sites will be due, in part, to webscales pushing the ecosystem into the edge to realize their distributed computing initiatives, which encompass migrating mission-critical and latency-sensitive enterprise workloads into their clouds as well as enabling and supporting their digital lifestyle initiatives.

Telecom and cable operators in these two countries will also be active participants in building out their own edge infrastructure, but this will mostly be to transform their networks into automated, virtualized and cloudified systems.

CSPs in other countries will also build out edge compute infrastructure over the next five years, but the scale will be dwarfed by what stakeholders in the U.S. and China intend to pursue.

TBR’s Telecom Edge Compute Market Forecast, which is global in scope, details edge compute spending trends among communication service providers (CSPs), such as telecom operators, cable operators and webscales. This research includes current-year market sizing and a five-year forecast by multiple edge compute market segments and geographies, with the most recent publication covering 2019 to 2024.

While upselling Zoho One and maintaining focus on SMBs, Zoho taps into enterprises as its portfolio matures

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Zoho integrates enterprise capabilities into Zoho One and pushes upmarket

While new enterprise customers are more likely to utilize apps from multiple vendors, Zoho has been successfully upselling Zoho One to customers, such as IIFL, that start with smaller product suites like CRM Plus. Zoho One includes Zoho’s bundled offerings for CRM, finance, human resources, collaboration and commerce, and is more cost-effective than buying the offerings individually. Enterprises that purchase Zoho One subscriptions for a select number of employees pay $75 per user, per month. However, enterprises that go all-in on Zoho One pay $30 per user, per month.

Despite the lower revenue per user, the enterprise pricing model requires a subscription for all employees within the customer’s organization, likely increasing the number of user subscriptions. TBR expects that Zoho will leverage this strategy to drive upmarket, using CRM Plus as a common inroad to enterprise customers, then using the CRM Plus pre-integrations with the vendor’s broader portfolio as a selling point for Zoho One.

Zoho’s journey upmarket is impressive as the company thus far has managed to penetrate an increasing number of enterprise accounts while holding true to its vision. One has to wonder, however, what is next and how Zoho will adapt to its own growth if the journey upmarket continues. Will Zoho continue to grow by word of mouth and fly under the radar with a portfolio of almost altruistically priced applications? Or is there an identity crisis looming on the horizon whereby philosophy, market dynamics and ambition may come to a crossroads? TBR will continue to monitor Zoho’s growth, customer acquisition and geographic expansion as a potential market gamechanger who flies under the radar – and is happy to do so.

Proprietary IT stack enables Zoho to quickly develop new apps alongside new AI, analytics and developer tools

Zoho is able to maintain lower-cost products by utilizing its own data centers, rather than hosting on external infrastructures such as those provided by Amazon Web Services (AWS). In addition to avoiding high storage and compute costs from a third-party vendor, owning and developing the entire technology stack also simplifies the app development process. Part of the reason for this is that the infrastructure layer, platform layer and database models are uniform throughout Zoho’s technology stack, rather than cobbled together through acquisitions. This decreases the development life cycle, enabling Zoho developers to quickly move from product idea to product release, while ensuring a more seamless integration across the portfolio.

At ZohoDay 2020, about 60 analysts attended a series of interactive presentations in a relatively intimate forum that highlighted Zoho’s unique journey and industry-divergent principles. Zoho senior executives interacted with analysts one-on-one, and clients spoke about their “voice of the customer” experiences.

Becoming the bridge: EY and its 2020 Global Information Security Survey

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TBR perspective

EY’s latest Global Information Security Survey illuminates critical aspects of how EY sees itself positioned in the cybersecurity services market, even as it informs on the trends and troubling developments across the information security space. Reviewing a preview of the results, TBR was struck by three elements: First, EY clearly sees itself as the bridge between security professionals and their internal colleagues, a role that requires technical expertise and, more importantly, trust from all sides. Second, understanding the toughest challenges facing chief information security officers (CISOs) does not require EY staff to be security experts as much as it requires navigating clients’ organizations and budgets and metrics. Third, evaluating security concerns (or lack thereof) across an entire client’s organization becomes even more challenging for EY when the threats change dramatically, as this year’s survey shows.

The bridge between security and … everyone else

When previewing the survey results with TBR, EY security leaders repeatedly described the firm’s role within a client’s organization as the bridge: between security professionals and business leaders, between security professionals and board members, and between security professionals and industry leaders (both internal and external). According to EY, the firm revamped the survey for 2020 with a fresh approach to reflect clients’ emerging appreciation for the role bridging often difficult and strained relationships between security professionals and their own colleagues. One of the starkest findings, in TBR’s view, showed respondents’ ratings of the relationships between the security teams and other groups within their organizations, ranging from Neutral, Distrust or Non-Existent to High Trust and Consultation. Not surprisingly, IT departments had the most trust in security teams while more than 70% of the respondents indicated the relationship between marketing and security teams rated neutral or worse. While understandable that marketing teams would chafe at restrictions placed on them by security concerns, EY’s critical insight revolved around “New Initiative Owners,” which includes marketing. If new investments and reallocated budget dollars (as well as C-Suite and board interest) flow toward lines of business, R&D and marketing, but security teams have poor relationships with those groups at more than 55% of enterprises, EY’s role as a bridge becomes even more critical. Security teams cannot get sustained support and new funding if their colleagues driving new business do not see them as teammates or even positive actors within the organization.

TBR believes that EY’s efforts to position as a bridge conforms with the firm’s overall approach to consulting and plays to EY’s strengths around risk and compliance. In addition, playing that role demands a high level of trust among all the groups within a client; EY has invested heavily in building that level of trust and continues to benefit from it. Immediate technology-centric opportunities in connection with migration and management of SAP S/4HANA workloads can serve as a use case and strengthen EY’s trust with the IT buyer, a persona the firm looks to strengthen its relationship with, especially when it comes to application and data security management. Challenging for EY, however, is the fact that most organizations continue to make reactionary decisions around security and frequently bring security concerns and requirements into a business initiative well after the first few developmental stages. These variables create opportunities for EY as a security services consultancy and potentially enhance the firm’s role within clients.

In a discussion with TBR prior to the release of the 2020 Global Information Security Survey, EY previewed the survey’s findings and how the firm sees a changing role for itself in the security services market. In TBR’s view, the survey’s most notable findings underscore strategic moves by EY to evolve its security services practice, including a focus on bridging organizational gaps between security teams and business leaders within EY’s clients.

TBR projects CSP spend on edge compute infrastructure will exceed $82B by 2025

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TBR estimates over 1.2 million network sites and cell sites will become mini data center (edge) locations globally by 2025, up from nearly 9,000 sites globally at the end of 2019. The primary driver of edge build-outs during the forecast period is CSPs’ network transformations, which entail migrating to a cloudified and virtualized network, and webscales’ edge initiatives to support their cloud businesses and digital lifestyle endeavors. In this new architecture, network functions will be virtualized and housed in NFVI, which is essentially a data center. Network sites, such as central offices, have been the primary edge compute location to date, with cell site builds expected to ramp up significantly in 2021 and become the primary location for the CSP edge by 2025.

Webscales and disruptive startups are positioning early to capture new value created by edge computing, threatening to limit telco and cableco opportunity

In 2H19 several of the largest telcos in the world, namely AT&T, Verizon, Vodafone, SK Telecom, KDDI and Telecom Italia, established strategic partnerships with key webscales pertaining to edge computing. In each of these situations, the webscale provides the extension of its public cloud via a physical compute stack, which is being housed in the telco’s site at an edge location and integrated with the telco’s network. TBR views these partnerships as necessary for both parties but is wary that telcos will be largely confined to providing connectivity while webscales get point position at the edge to accrue most of the new value created from new use cases of the cloudified network.

Telcos and cablecos could generate significant edge-related revenue by opening their network sites to colocation opportunities. Existing network sites could be repurposed to house a telco’s or cableco’s equipment and the edge stacks of other companies, which would pay rent to the site owner. CenturyLink and Frontier are both all-in on colocating their existing sites, and TBR expects more telcos and cablecos to follow in their footsteps over time.

TBR’s Telecom Edge Compute Market Landscape, which is global in scope, deep dives into the edge compute-related initiatives of stakeholders in the telecom market including telecom operators, cable operators, and vendors that supply the telecom market. The report also covers leading webscales’ edge computing-related initiatives. The research includes key findings, market size, regional summary, technology trends, use cases, business models, operator and vendor positioning and strategies, and acquisitions and alliances.

SAIC and Unisys Federal: Penetration, growth and confidence, with questions around IP and integration

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Consolidation continues

SAIC’s agreement to purchase Unisys’ federal business for $1.2 billion (which includes present value tax assets of approximately $175 million) is just the latest example of the continued consolidation of the public sector IT services market, which has been ongoing for the past four years. For example, Leidos (NYSE: LDOS) purchased Lockheed Martin’s (NYSE: LMT) IT services business; General Dynamics Information Technology (GDIT; NYSE: GD) purchased CSRA; DXC Technology’s (NYSE: DXC) U.S. Public Sector business combined with Vencore and KeyPoint Government Solutions to form Perspecta (NYSE: PRSP), which subsequently purchased Knight Point Systems in 2019. The same year, SAIC purchased Engility, CACI (NYSE: CACI) made six acquisitions and Raytheon (NYSE: RTN) announced a “merger of equals” with United Technologies (NYSE: UTX), to be finalized in 2020. Additionally, Leidos recently finalized its purchase of Dynetics and announced the purchase of BAE’s airport security business only days before SAIC announced its plans to acquire Unisys Federal. Along with these marquee deals, the market saw a smattering of smaller and/or less strategic deals over the past four years. Much of this M&A activity has in some way emphasized scaling to compete for mega-deals such as Next Generation Enterprise Networks Re-compete (NGEN-R) or Defense Enterprise Office Solution (DEOS) contracts. Based on recent market activity and the federal government’s increasing emphasis on digital transformation and next-generation technologies, it seems unlikely the need for scale will diminish for federal market players anytime soon. For SAIC to acquire another company of this size so quickly after the purchase of Engility only underscores the importance the company’s leadership places on scale. In fact, this purchase would theoretically boost SAIC to fourth place in TBR’s Public Sector IT Services Benchmark (behind only Leidos, GDIT and Booz Allen Hamilton [NYSE: BAH]) based on the most recent trailing 12-month federal revenues of the companies we track.

Unisys Federal impact and opportunities

Aside from the additional scale in both employees and revenue, Unisys Federal will provide SAIC with deeper access to the Department of Homeland Security and Treasury Department through U.S. Customs and Border Protection (CBP) and the IRS, respectively. For calendar year 2019, Unisys Federal had approximately $179 million in obligations to CBP and $84 million in obligations to the IRS. Both agencies are relatively underpenetrated by legacy SAIC and should provide more opportunity for growth with other civilian agencies. Unisys Federal realized a CAGR of 10% over the last two years, far outstripping the average of 4.6% for the 15 companies tracked in TBR’s Public Sector IT Services Benchmark, supported by a $1.8 billion backlog (2.6 backlog-to-revenue ratio), which TBR believes should provide ample opportunity for the new SAIC to continue Unisys Federal’s strong growth, especially in cloud adoption and other modernization services. Most of this backlog consists of slightly higher-margin projects than legacy SAIC engagements. TBR expects this deal will improve margins for SAIC by somewhere between 20 to 40 basis points by the two-year mark. In addition to the scale, agency access and large backlog, SAIC now has the right to sell CloudForte, a key platform for Unisys Federal’s business in the public sector that typically forms the backbone for the cloud services the company has delivered and likely will continue to offer as part of SAIC.

TBR believes SAIC’s (NYSE: SAIC) purchase of Unisys Federal, announced on Feb. 6, 2020, will provide the combined company with broader agency access and a strong potential for growth while signaling the extreme confidence of SAIC’s leadership. We also believe the lack of IP included in the deal and the challenges associated with SAIC’s previous and upcoming integrations mean this deal likely carries more risk than reward. This acquisition comes almost exactly one year after SAIC’s purchase of Engility for $2.5 billion, which has yet to produce organic growth for SAIC, though SAIC claims cost synergies have been fully realized. The inorganic boost of Unisys Federal (which achieved approximately $689 million in revenue for the trailing 12-month period ending Sept. 30, 2019, with an impressive 10% two-year compound annual growth rate) will bring the combined organization’s annual federal revenue for the same 12-month period to approximately $6.6 billion on a pro forma basis.

HCLT builds its IoT practice on experience, expertise and IP

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TBR perspective

While HCL Technologies (HCLT) initially used its intellectual property (IP) to create complete solutions for its customers, it is now making available other third-party solution packages, white-labelled components and solutions for end customers, other systems integrators, and value-added resellers. The company’s partnerships with PTC and edge hardware vendors Dell Technologies and Hewlett Packard Enterprise (HPE) facilitate the delivery of integrated software and hardware solutions for engineering- and manufacturing-centric OEMs. These edge-to-cloud solutions integrate IT and operational technology (OT) data sources and are highly scalable; HCLT’s representatives estimated that they are now approximately 50% to 60% preconfigured and can be rolled out to multiple plants and locations in a pre-built factory model. Irrespective of HCLT’s decisions regarding routes to market, the company continues to create reusable IoT building blocks.

Reuse is at the heart of IoT maturity

The continual development of reusable solutions and components has always been the key to growth of information technology. In the wave of interest in IoT, starting about five years ago, the relative lack of reusable solutions and components demonstrated the immaturity of this segment. While growth has been substantial, it has not been explosive, similarly reflecting this immaturity. Technology Business Research, Inc. (TBR) estimates the current size of the IT portion of IoT at $565 billion, growing at a slightly accelerating 24.6% annual rate, and we do not anticipate growth to slow for at least five years. One driver of this acceleration is the accumulation of experience, expertise and intellectual property by vendors and customers.

Leveraging common technology and business processes across vertical divisions

Some of HCLT’s solutions, outlined here, require integration typically performed by HCLT:

  • Manufacturing: Remote Services Management, Inventory Management, Predictive Operations Monitoring, and Real-time Manufacturing Insights
  • Healthcare: Remote Patient Monitoring, Smart Clinical Trial, Medical Devices – Remote Monitoring and Servicing
  • Travel, Transportation, Logistics: Remote Asset Monitoring, Warehouse Automation, Building Automation
  • Energy and Utilities: Remote Asset Monitoring and Predictive Operations, Intelligent Linear Asset Monitoring, Active Grid Management, ADMS and AMI Testing, Distributed Grid Operations – Resilience at the Edge
  • Retail: Real-time In-store Insights, Warehouse Optimization, Cold-Chain Logistics, Supply Chain Insights

There is overlap of solutions across verticals, which reflects overlap in both business processes and relevant technologies. In keeping with IoTWorks’ orientation toward reuse, common pieces of solutions are joined to additional components to create new solutions. In the case of Real-time In-store Insights, HCLT added radar-based customer tracking hardware to keep track of customers with lower data-related costs, while improving customer privacy. HCLT Engineering designed the radar modules. An RFID-based asset tracker for end-user devices was adapted to help make sure airplanes have the full tool kit accounted for before takeoff. A similar solution applies to surgical kit tracking and compliance monitoring in hospitals.

AI, Accenture and Amazon: HITS acquisitions update 2020

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Accenture’s steady appetite, Amazon’s potential new offering and Google’s uncertain moves

Accenture’s acquisition of Clarity Insights follows the company’s INTIENT purchase and rounds out a typically active acquisition year for one of the leaders in TBR’s HITS benchmark. Clarity Insights brings Accenture AI and machine learning capabilities, 350 healthcare data scientists, and healthcare industry clients. As noted in our most recent full report on Accenture’s HITS business, “Accenture targeted the AI opportunity in life sciences in mid-2019, launching its INTIENT platform for collecting, storing, monitoring and analyzing data from life sciences clients’ business environments. The platform leverages Accenture Applied Intelligence to provide AI and analytics services, improving efficiency and data management.” Beyond extending Accenture’s capabilities, the Clarity Insights acquisition reinforces Accenture’s strategy around AI and life sciences that the INTIENT purchase supported. The report adds, “TBR believes Accenture must foster industry-specific partnerships to extend the capabilities of INTIENT and drive traction for the platform in the industry.” TBR will closely track how Accenture’s partnerships evolve and how the company drives new revenue based on these acquisitions.

Echoing Accenture’s focus on AI, Amazon acquired Health Navigator, a platform designed to foster more expeditious collaboration between healthcare providers and patients, in part through natural language processing and enhanced analytics. Amazon reportedly purchased the company amid efforts to build out Amazon Care, its in-house healthcare services, which it launched in September 2019. On the surface, Amazon’s healthcare-related acquisitions and moves denote neither an immediate threat to traditional HITS vendors nor a clear signal Amazon intends to become a different kind of player in the HITS space. Analyzing Amazon only on the surface would be foolishly shortsighted. Once the company irons out the challenges within Amazon Care, including fully integrating Health Navigator, TBR expects the company will craft a new offering for Amazon clients, potentially starting first with healthcare joint venture partners JPMorgan (NYSE: JPM) and Berkshire Hathaway (NYSE: BRK.A; NYSE: BRK.B). At 1.2 million employees for those three companies combined, Amazon would have a sizable test bed for enhancing current capabilities and developing new offerings. If Amazon can demonstrate an ability to provide top-notch healthcare services for its own employees and a few select partners, every household will wonder if the first step in getting healthcare should start with, “Alexa …”     

In acquiring Fitbit, Alphabet (Google) alarmed some data privacy and industry analysts concerned that the search engine and advertising giant bought the wearables company to gain access to massive amounts of personal, and specifically healthcare-related, data. Both companies’ executives declared data protections would be unchanged and the underlying reasons for the acquisition centered on Fitbit’s expertise and intellectual property around wearable devices and health-tracking applications, platforms and user experience. In TBR’s view, acquiring Fitbit conforms with Google’s overall expansion strategy and specifically boosts the company’s potential role in the overall HITS space. Enhancing Fitbit’s platform with Google’s AI capabilities could further minimize perennial HITS challenges, such as around data privacy and population health, but only if Google can manage the delicate tasks of leveraging user data without violating privacy, crafting and enhancing algorithms that improve the user experience, and maintaining the streamlined seamless flexibility of Fitbit even as the data flows into the highly regulated healthcare ecosystem.