Telefonica models the transition of a traditional telco to a digital service provider

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Telefonica represents a prime model of the opportunities and challenges telecom operators will experience as they evolve into digital service providers. The digital era will enable telecom operators to become more agile and profitable as they transition away from more costly legacy network technologies and business models. The digital era will place greater expectations on telecom operators, however, as customers will turn to digital service providers to support a broader range of services and use cases.

Telefonica will benefit from recognizing that it is just a single entity competing in a vast digital ecosystem composed of a multitude of players, including other telecom operators, webscales and OTT video providers. Collaborating with the broader technology industry will enable Telefonica to reduce the cost of developing in-house solutions while enabling the company to more effectively support customers’ digital ambitions.

The 2019 Telefonica Industry Analyst Day showcased Telefonica’s (NYSE: TEF) evolution from a traditional telecom operator to a digital service provider (DSP). Telefonica is positioning as a leading global DSP through its progress in virtualizing and cloudifying its network and IT systems as well as the company’s capabilities in emerging technologies, including AI, machine learning (ML), big data and edge computing. Telefonica’s digital transformation initiatives are yielding significant cost savings as the company modernizes its network infrastructure and customer service platforms while creating new services to enhance user experience and support advanced use cases. Telefonica will face challenges in the digital era, however, including growing competition from webscales, regulatory hurdles, and unproven demand for use cases in areas including 5G and edge computing.

Atos at the edge of technology

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With the launch of BullSequana Edge and investments in quantum computing, Atos takes a pragmatic approach to executing digital transformation initiatives

For a few years, the impact of big data has created ebbs and flows in buyers’ behavior in end-consumer interactions and IT purchasing patterns, as is typical with any technology. Consumerization of business applications, demand for data quality and governance, and the adoption of connected technologies compel vendors such as Atos to explore opportunities around managing customer data and to invest in solutions that can help them protect their competitive edge.

During the Atos Technology Days 2019 opening keynote, Atos CEO Thierry Breton announced BullSequana Edge, the company’s first edge server to power AI everywhere. Built with the goal of delivering lots of power, including 165-teraflop capacity, that is stored locally, the appliance enables Atos to address the upcoming shift in data localization. Breton stated that while 80% of data globally is stored in data centers and in the cloud, that percentage is expected to shrink to 20% by 2025 as clients seek ways to analyze data in real time at the edge, where it is created. The addition of AI capabilities amplifies Atos’ position as an end-to-end services provider within the IoT space and closes gaps in the asymmetrical relationship between IT and operational technology (OT) departments.

Additionally, BullSequana Edge helps Atos address challenges of exponential data volumes and heterogenous data complexities due to the advent of AI and machine learning (ML), necessary blocks supporting the data economy foundation. With optimized security capabilities including infusion detection, disc encryption and secure boot, the BullSequana server enables Atos to alleviate common pain points of IT and OT, especially as the company builds and offers vertical-centric solutions with the hardware. Although offering a hardware appliance drifts Atos further from pure systems integrators (SIs), which typically manage asset-light portfolios, it brings Atos closer to key IT buyers, which remain the centralized governing body of the final IT purchases, even in discussions that include the C-Suite.

Atos also continues to enhance its quantum computing capabilities. As TBR wrote in its May 2019 Digital Transformation Insights Report, which focused on quantum, “Atos took its strengths in design computing for appliances and programming and emulation environments and announced several quantum research initiatives, including the opening of a global R&D lab in Yvelines, France, and Atos Quantum Learning Machine (QLM) implementations in Europe and the U.S. to enable clients to experiment with disruptive technologies, tackle the explosion of data and accelerate the number of practical use cases across industries. Additionally, about a year ago, Atos developed a consulting practice around quantum computing to educate and advise clients on whether it is possible to use quantum to accelerate business applications. During Atos Technology Days 2019, Atos announced myQLM, a light version of a QLM, which is an on-premises environment designed for quantum software developers. Users can download myQLM on their desktops and use a set of algorithms to train remotely, at home, at universities and research centers, and simulate the actual QLM. A Phyton-based language, QLM allows students and researchers to develop and share code within the community, creating additional entry points for Atos’ broader services portfolio. With customers ranging from universities and research centers to high-performing computer ecosystems and commercial clients, Atos, is building one use case at a time. For France-based oil and gas company Total, Atos is using a QLM simulator to accelerate the analysis of seismic activities, helping Total stay ahead of competitors. Atos is also working with Bayer and RWTH Aachen University in Germany to evaluate the use of quantum computing to research and analyze human disease patterns.“

Our analysis further states that we expect Atos to “monitor the underlying scientific and engineering breakthroughs of the competing architectural investments and accelerate the commercial utility through its development of leading-edge use case applications” in concert with its business partners as it looks to quantum to gain a competitive advantage. For Atos, partner ecosystems, such as with Fujitsu, 1QBit, Rigetti, IBM Q and D-Wave, will play a critical role in its ability to accelerate the development of business use cases.

Navigating the dynamics of the IT services markets demands vendors demonstrate innovation, which allows them to gain trust with new buyer personas. While many of Atos’ SI peers have invested heavily in areas such as marketing services to better appeal to the CMO buyer for customer experience opportunities, the company relies on its full technology stack to expand its addressable market. While some investments, such as in quantum, may not have sizable, tangible impact on its performance, Atos will benefit from being first to market once economic advantage is achieved.

According to a TBR special report on quantum and economic advantage, “What we do not know is how fast quantum computing will take off and what impact it will have on our knowledge as a society. What we do know is that it will take off — algorithm by algorithm, as economic advantage is achieved incrementally — and fundamentally change what we know.” TBR’s Digital Transformation Insights Report further states, “As vendors continue to battle business process and technological hurdles across all three phases of digital transformation — substitution, extension and transformation — quantum will be the one technology that will fundamentally transform enterprises and the way they go to market and sell products and services,” placing Atos in the spotlight through its innovation investments.

Atos Technology Days 2019, held in Paris on May 16 and 17, displayed myriad practical applications of emerging technologies. Held alongside one of the largest events centered on startups in Europe — Viva Technology, with 124,000 attendees, 13,000 startups and 3,300 investors — Atos Technology Days presented an excellent platform for Atos to showcase its innovation capabilities across its entire portfolio stack, including hardware, applications and services. Running under the theme Welcome to the Post-cloud Era, the presentations walked over 200 clients, partners, executives and industry analysts through Atos’ vision of the IT of tomorrow, centered on the edge, quantum, IoT and cybersecurity as well as Atos’ ability to stitch it all together to deliver business outcomes to its customers. Data is exploding, and Atos is preparing to accommodate this phenomenon by effectively managing, storing, securing and analyzing data.

PTC’s innovative outlook, robust solution toolbox, and legacy in CAD and PLM make it a valuable IoT partner

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Strategic findings

Shift in focus to AR/VR

In our 2018 LiveWorx EP we suggested a shift from an emphasis on PTC’s ThingWorx IoT platform to PTC being more vocal about Vuforia, its AR/VR solution, and its wider product portfolio. TBR believes that shift has continued with much of the messaging centered on the business implications of augmented reality as well as how its entire product base works in symphony, and less focus on ThingWorx as its tip of the spear into digital transformation.

This shift makes sense. The IoT platform space is saturated with established vendors, along with several smaller entrants, offering some shape of IoT platform. PTC has the key components for an IoT platform, but so do others, including the giants Amazon Web Services (AWS), Microsoft, IBM, Oracle and Google, and OT stalwarts such as Bosch and Siemens. It is hard for PTC to stand out by messaging its IoT platform alone, despite a robust offering, as the IoT platform market is busy. TBR believes the shift could also indicate IoT is not growing quite as fast as PTC hoped.

Instead, PTC has increased its messaging around AR/VR. TBR believes PTC is positioning AR as a new differentiated niche to bring customers into its wider ecosystem, positioning it as a “wow” factor and distinct from peers’ offerings, as well as enhancing the value of other products such as Creo, Windchill, and ThingWorx. Based on the compelling presentations, messaging, and customer lineup using Vuforia, TBR believes PTC has a competitive AR/VR product.

PTC’s pitch is that AR helps customers add the human element to an IoT solution — instead of getting insight from dashboards in the board room, insight is delivered in real time on the factory floor. Conversely, in PTC’s view, AR/VR helps feed data into the IoT solution. Information around what workers see, such as a fire, a faulty part, parts that need to be replaced as well as unsafe conditions, can be fed into a centralized IoT platform, much like a sensor inside a machine. Ultimately, PTC seeks to “decorate” the industrial world with real-time information, and extend the value of IoT data through AR. It remains to be seen how well AR contributes to feeding data into an IoT solution. TBR believes AR is not there yet, but believes PTC did a good job of showing how AR can provide an actionable UI and lead an IoT solution to be more operationally effective.

Key outcomes PTC messages around AR/VR include reducing complexity by allowing workers to always have information on parts and machines; ensuring quality control and compliance using step-by-step checklists; and improving efficiency through gamification. It also offers a drastic reduction in training time as the Vuforia Expert Capture (formerly Vuforia Waypoint) solution allows expert employees to transition knowledge to novice workers or a machine or solution vendor to train a new customers’ IT or OT team.

PTC has a lineup of customers leveraging its Vuforia technology as proof points. Customers seem to adopt in two ways: by leveraging PTC’s polished tools Vuforia Expert Capture and Vuforia Studio, such as Howden and Aggreko, or by building upon PTC’s foundation, such as Fujitsu and Caterpillar, which are leveraging Vuforia Engine to build a proprietary solution.

How well Vuforia is performing monetarily is still questionable to TBR. TBR expects many Vuforia customers are in the pilot and proof-of-concept stages, which could indicate Vuforia is not yet being fully monetized while in multiple trials. However, in speaking about PTC’s strategic partnership with Rockwell Automation, PTC CEO Jim Heppelmann noted 40% of Rockwell Automation’s IoT wins have included AR with joint customers particularly interested in Vuforia Expert Capture. According to Heppelmann, Vuforia contributes 7% of PTC’s current software revenue, a respectable amount compared to its larger legacy PLM and CAD businesses, with growth of 80% year-to-year (TBR expects from a very small base). He also noted the AR-IoT combo is a core growth business for the company and expects the combination to contribute one-third of its sales moving forward, with continued growth of nearly 40% year-to-year.    

An interesting thread we have not seen PTC talk about, publicly or privately, is offshoots of Vuforia to the consumer market and leveraging Vuforia Expert Capture for consumer self-help applications, e.g., instead of a YouTube video on how to tie a complicated knot, a VR experience guiding people on how to tie a knot could be more impactful. This could be expanded to cooking guides, exercise guides, or sewing guides as examples within a huge pool of opportunity. Microsoft and the HoloLens team could be a good partner for these applications, such as leveraging the Xbox install base to reach consumers (if Microsoft is not already moving in this direction alone), and could help foster a content creator network. It could also be leveraged by consumer-focused businesses to educate its end customers, such as sporting goods company Coleman delivering a VR walkthrough of setting up a tent.   

In a day of personal stories, EY showcases the results of corporate commitment to talent recruiting

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A small but influential group from EY’s leadership team, including incoming Chairman and CEO Carmine Di Sibio, were on hand in a newly redesigned wavespace to recognize the winners of the EY NextWave Data Science Challenge. An extension of the program deployed in Australia last year, this global challenge resulted in 12,000 submissions from 4,500 participants from 477 universities in 15 countries.

The basic challenge: Predict human traffic patterns

The overarching goal of the project was to take a data set provided by EY partner Skyhook of citizens in the greater Atlanta area. The challenge was to take the citizens’ locations as of 3 p.m. and predict where those citizens would be located at 4 p.m. EY Global Analytics Program Director Antonio Prieto, who spearheaded this effort that will be expanded on in November, stated the intention was to connect students to a challenge that resonates with EY’s mission of building a better working world, which can be done through analytics-optimized smart cities.

Participants were allowed to enter multiple submissions as their models evolved and as they generated new “what if” scenarios. The award winners received cash prizes, EY badges and EY internships. The winners and their locations were:

First Place: Sergio Banchero is studying electronics in Australia and is a native of Brazil.

Second Place (shared): Katherine Edgley and Philipp Barthelme shared the second-place prize and are both studying applied mathematics at the University of Edinburgh.

Third Place: Chia Yew Ken of Singapore has an affinity for natural language processing and finds the parallels to AI pattern recognition interesting.

Each participant presented their basic findings and discussed the underpinning mathematical calculations and manipulations in ways that challenged this mature worker with a liberal arts background to comprehend. The incremental improvements on the algorithm scores seemed slight until put into context by Banchero, who translated his algorithm’s net improvement over the average of all submissions as ultimately capable of reducing 3,200 pounds of CO2 emissions, which would require rain forest acreage equivalent to 16 football fields to remediate naturally.

The State Of Cloud Profitability Has Never Been Stronger

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More than a decade after taking a leap of faith, cloud vendors prove profit possibilities

For vendors such as Microsoft (Nasdaq: MSFT), Oracle (NYSE: ORCL) and SAP (NYSE: SAP), offering cloud solutions required them to leave the safe and profitable confines of their traditional software businesses, where they were confident in the business models and drove consistent double-digit operating margins. Even for born-on-the-cloud companies such as Salesforce (NYSE: CRM) and Workday (Nasdaq: WDAY), the lack of short-term profit required them to adjust funding requirements and sell this new business model to potential investors. All vendors that chose to participate in the nascent market had to take on the cloud financial risk without a clear picture of when or how their businesses would reach sustainability and profit.

More than a decade after the initial cloud transition, nine of the leading providers in the space, which come from a variety of business backgrounds, are proving out the benefits of cloud business models. It has taken adjustments to almost every major category of financial and operational strategy, but profitability has improved significantly and is gradually approaching the levels seen with traditional software businesses. In summary, the state of cloud profitability has never been stronger.

Gross profit gets little attention but delivered most of the improvement to cloud profit

The direct costs of delivering a solution — and their inverse, gross profit — get little attention in the cloud business model discussion. Although shifts in sales and marketing strategy may be more attention-grabbing, gross profit and cost of goods sold have made the bigger impact to overall cloud profitability. As shown in Figure 2, the “big nine” cloud vendors have increased cloud gross margin by 5 basis points over the last three years. At 65%, cloud gross margin is still lower than the traditional software gross margin of close to 85%, but it has improved significantly for the cloud businesses. The improvements have been driven by a variety of factors, most notably:

  • Increased scale of data centers: For IaaS vendors that own and operate core data center locations and infrastructure, their growing scale has led to greater cost-effectiveness. The cost of IT infrastructure has gone down, and automation allows vendors to operate data centers more efficiently. Additionally, there is a greater availability of third-party services such as colocation, which allows cloud providers to cost-effectively scale to new regions and expand capacity.
  • Professional services cost declines: As vendors across all cloud service types initially rolled out their services, most of the professional service needs were met by the providing vendor out of necessity. However, as these platforms and services have scaled, the level of third-party skills has expanded, shifting a lot of responsibility and opportunity for service engagements away from the cloud vendors. The result has been a shifting of professional service opportunity to the partner ecosystem, allowing cloud providers to focus on the higher-margin cloud solutions.
  • Declining acquisition-related costs: Acquisitions played a large role in the establishment of cloud computing leaders. IBM (NYSE: IBM) buying SoftLayer, Oracle purchasing NetSuite and SAP buying SuccessFactors are just three examples of the purchases that have shaped the market over the past decade. Many costs of those purchases are borne out in the acquiring organization’s cost of goods sold. As the scale of cloud businesses has grown following the large acquisitions, the overall gross margin has rebounded.

Bosch is a things company at heart but will leverage new capabilities to capitalize on emerging data opportunities

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Bosch takes off its tie

To achieve its current position, Bosch self-admittedly had to transform from a traditional components manufacturer to an evolutionary technology and services company. Bosch CEO Volkmar Denner characterized this transformation as the “taking off of the tie” as the company evolves from a stiffer, traditional mindset to one more like that of Silicon Valley, which focuses on agility, innovation and attracting young talent through corporate flexibility. Denner suggested that while this was indeed a technological development, the path to transformation necessitated a culture change. To help, in 2018 Bosch brought Dr. Michael Bolle on board as chief digital officer, tasked with organizing companywide digital transformation efforts, corralling shadow IoT efforts, and breaking down business silos to share resources, knowledge and capabilities.

Denner indicated Bosch has been implementing proto IoT, often termed telematics, for decades, but its evolutionary journey started in earnest in 2014 as the company began realizing the disruption IoT, AI and other emerging technologies would cause within its business and wider market. To outmaneuver peers and expand the reach of its business, Bosch began taking steps toward transformation:

  • Bosch’s journey began in 2008 when it acquired Innovations Software Technology. It was the foundation of the newly founded Bosch Software Innovations and was positioned as corporate Bosch´s IoT software and system unit and was leveraged to begin building a horizontal software foundation to link together Bosch’s vertical businesses’ efforts in connected equipment.
  • From 2014 to 2016, Bosch began focusing on enabling IoT inside its larger business. This included making strategic acquisitions to build a stronger horizontal software footing, building the Bosch IoT Suite, establishing the Bosch Center for Artificial Intelligence, and setting the goal for all of the company’s electronic products to be connectivity-enabled by 2020. By the end of 2018, 52 million IP-enabled products were sold by Bosch.
  • Starting in 2016 Bosch began to emphasize the digitization of existing ecosystems and the scaling of IoT within those ecosystems. Bosch also started leveraging its Bosch IoT Suite to corral data from a client’s entire operations and using AI to generate elevated insight.

To help speed its transformation, Bosch acquired inubit AG and ProSyst early in its journey to enhance its IT foundation in the application and platform space. But Bosch has also been investing organically in technical talent. Bosch leadership indicates the company had 69,500 associates in R&D as of 2019, a significant jump from when the company began its journey (though an exact compare was not provided); 27,000 software developers, which is a sizeable pool for a manufacturing company; and more than 5,000 dedicated IoT developers. Denner indicated AI is a cornerstone of Bosch’s IoT strategy and that the company has over 200 dedicated researchers in the field. Bosch is leveraging all of this talent to not only improve its verticalized products and services but also to grow its capabilities horizontally, akin to an IT company. The Bosch IoT Suite, which is examined in depth in this report, aims to serve as a foundational layer to support customer deployments across multiple verticals, in addition to enhancing the company’s own capabilities.

Bosch ConnectedWorld is an IoT and digital transformation conference hosted annually in Berlin. It stands out in the sea of IoT conferences due to its emphasis on operational technology (OT), with sessions often headed by industrial partners talking about industrial challenges, and its use as a platform for EMEA-based technology and industrial companies to highlight their products and strategies in a technology area that is sometimes dominated by U.S.-based messaging. Bosch ConnectedWorld has grown from 500 attendees in 2014 to nearly 5,000 in 2019, indicating customers’ increasing interest in digital transformation, as well as the power of Bosch’s messaging around connected products.

CSP spend on edge compute infrastructure will grow at a 76.5% CAGR to over $67B in 2023

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According to TBR’s 2Q19 Telecom Edge Compute Market Landscape, cost optimization of the network is the primary initial justification for CSPs to build out edge compute infrastructure, with new revenue from low latency use cases expected to materialize in a few years. This initial edge build-out will lay a foundation for CSPs to support new business models as they emerge, particularly as it pertains to low latency services.

Cost savings from the use of edge sites stem from infrastructure virtualization and real estate footprint consolidation as well as bandwidth optimization. One of the key areas of cost savings for CSPs is the use of white-box hardware in their virtualized networks. According to TBR’s research, white-box hardware can cost up to 50% less than black-box hardware. This represents significant cost savings to CSPs that adopt white boxes at scale. Webscales already widely use white boxes in their central data centers, and leading CSPs such as Rakuten, AT&T, Verizon and Telefonica are beginning to build their edge sites using almost exclusively white boxes. The use of white boxes will make it economically feasible for the capillary network to be built out, as cost feasibility is one of the primary inhibitors to edge build-outs.

CSPs are in the experimentation phase of testing new business models that leverage edge compute, with low latency services being the focus area. Though there are myriad potential use cases that would require low latency connectivity, such as connected transportation and AR/VR gaming, the business case remains unclear and the theoretical investment to enable and support said use cases is high. TBR believes it will take a few more years before new revenue-generating use cases for the network that require edge compute become commercialized and begin to contribute to CSPs’ revenue.

Lenovo Accelerate 2019 stresses vertical integration, process agility and people

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Experience tells these Lenovo executives that the hard work of driving execution at scale and transforming channels lies ahead

While Lenovo has turned the corner on revenue, profits will come from driving scale through the retooled operation. Known challenges outlined during the event include:

  • Services: Lenovo DCG services at the time of the acquisition of the IBM x86 line consisted of holding the paper while IBM executed on the service. From there, Lenovo has built its own break-fix programs, added consulting and education, and aspired to build out vertical solutions through collaborative work with partners and customers. Tuck-in acquisitions to rapidly acquire repeatable frameworks and subject matter expertise will likely arise as Lenovo goes about the painstaking process of creating a people-centric business necessary for solution assembly and maintenance and management.
  • Direct go-to-market pivots: Lenovo will organize its selling functions around solution stacks in addition to general territory reps. To gain the hearts and minds of the traditional territory reps, the company has added monitoring of storage and services attach to quotes to break the existing sales mindset of thinking in terms of server units. Lenovo has multiple transformational initiatives occurring within its go-to-market motions, in some ways reminiscent of the old Hewlett-Packard Co. selling motions of the 1980s and 1990s. Lenovo plans to have more dedicated selling units with deeper domain expertise around:
    • Targeting the hyperscale market where the lead sales point of contact needs deep engineering expertise to engage in capturing the design requirements for custom-engineered systems.
    • Adding dedicated storage reps to push harder to scale out the storage product cross-sell opportunities from the NetApp alliance and China-based joint venture. This team will be led by Dave Mooney, who joined Lenovo shortly after the event as the VP of Worldwide Storage Sales. Motruney has over 25 years of storage experience, most recently as the VP of Worldwide OEM Sales for NetApp.
    • Taking a vertical approach to IoT. While not necessarily distinct from competitors, Lenovo will be taking specific multivendor collaborations built on a custom basis and hardening them to be delivered as solution bundles at scale.
    • Leveraging TruScale to entice channel partners to sell through a new business model — reinforced by arming its channel partners with the entire ThinkSystem and ThinkAgile stacks behind this push.
  • Channel first: Many a firm has made this claim before, and Lenovo is no different. Lenovo claims it has made the activity revenue neutral and has put teeth into the policy regarding noncompliance among its direct sales force. Time will tell in terms of its success.
  • “As a Service” monetizations: Lenovo’s established Device as a Service (DaaS) commercial offering is being replicated for the data center in what it calls its TruScale Infrastructure Services program. Lenovo makes great pains to assert TruScale is not just a new form of operating leases. For DaaS, Lenovo will take back underutilized devices and bring them back into service when the customer requires. For the data center, the service arguably provides true public cloud consumption opex provisioning by only charging for the amount of data storage used on premises. Future service innovations outlined under nondisclosure agreement (NDA) make this offering a service to watch from Lenovo over the next several years.

Interchangeably called Lenovo Transform 3.0 and Lenovo Accelerate, the three-day combined customer and analyst event made several things abundantly clear. Lenovo believes it has turned an operational corner, that it has the right people and processes in place, and now all Lenovo has to do to drive growth and lift margins is to execute on these hardening operational best practices at scale across an ever-expanding array of technology assets including a growing contribution of software and services to offset persistent macroeconomic pressures on hardware margins.

Informatica touts AI benefits with a caveat: Data cleanliness and management are critical

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To be widely effective, AI needs clean data and cloud scale

Informatica World 2019’s focus was on customers of all backgrounds and sizes leveraging AI to accelerate digital transformation. While AI is not a new or novel discipline, cloud computing has supported its growing accessibility by enabling scalable, cost-effective data processing. In that spirit, Informatica has forged partnerships with the three most prominent public cloud brands, Amazon Web Services (AWS; Nasdaq: AMZN), Microsoft (Nasdaq: MSFT) and Google Cloud (Nasdaq: GOOGL), and put these three Platinum partners on stage throughout the event’s keynotes and breakout sessions.

Google Cloud

Google Cloud was represented on the keynote stage by new CEO Thomas Kurian, who harped on both data processing at scale and the idea of ensuring you’re informing AI and analytics with clean and comprehensive data sets. Informatica and Google jointly announced that as of the conference, Informatica’s Intelligent Cloud Services (IICS) and Master Data Management (MDM) solution were available on Google Cloud, better enabling customers to move their data warehouses to Google Cloud Platform, leverage Informatica’s products in the environment, and run analytics through BigQuery and Google’s AI capabilities.

AWS

Ariel Kelman, VP of Worldwide Marketing at AWS, joined Informatica CEO Anil Chakravarthy on stage to describe how AWS is innovating and enabling customers with AI, but more importantly to explain the relationship between Informatica and AWS in supporting their joint customers. Kelman admitted that “a lot of [AWS’] services need data and a lot of that data is still on premises.” Though AWS is bringing its services into customers’ environments through AWS Outposts, customers also want help bringing their data to the cloud. In addition to supporting integration between Informatica products such as Power Center and IICS with Amazon Redshift, the partners announced a joint offering with Cognizant (Nasdaq: CTSH) that enables customers to complete a free, self-service data migration assessment. The assessment service leverages Informatica Enterprise Data Catalog on AWS and Cognizant’s data-to-cloud migration assessment and strategy services to help customers begin planning and mapping their data migrations to cloud. The service is intended to accelerate customers’ data migrations to AWS infrastructure while ensuring enlistment of Informatica data management products and Cognizant consulting and systems integration services in the process.

Microsoft

While Microsoft and Informatica did not make a formal announcement on stage, Microsoft had a large presence in the final keynote of Informatica World and in breakout sessions, highlighting how Microsoft approaches AI innovation and use cases across various industries and customer roles. At the outset of the event, Informatica announced its support of the Microsoft Common Data Model (CDM), data frameworks meant to ultimately reduce data silos across workloads and applications through data model standardization on Microsoft Azure. Informatica’s support of the Microsoft CDM, which is a key aspect of the widely discussed Open Data Initiative between Microsoft, Adobe (Nasdaq: ADBE) and SAP (NYSE: SAP), enables customers to utilize Informatica’s portfolio of products and solutions to manage data across applications and enable analytics and business intelligence efforts across the data landscape. TBR believes there’s a clear opportunity for Informatica to similarly extend its Customer 360 and Customer 360 Intelligence solutions into the Open Data Initiative alliance, particularly to bring greater light to the capabilities brought with Informatica’s recent acquisition of AllSight, a storyline that was overshadowed at the event despite its deliberate inclusion in the narrative.

Disrupting, but not disrupted: Accenture pivoted to become a solutions broker through innovation

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No single vendor can do it on its own, not even Accenture

While maintaining a workforce bench that can operate in hybrid IT environments remains key to Accenture’s long-term success, managing relationships with core technology partners also adds another building block to the company’s foundation. As seen with talent-based conversations, discussions around Accenture’s ecosystem were part of almost every single presentation during the two-day conference. While Accenture maintains relationships with over 200 technology partners, SAP (NYSE: SAP), Oracle (NYSE: ORCL), Microsoft (Nasdaq: MSFT), Salesforce (NYSE: CRM) and Workday (Nasdaq: WDAY) are the top five platforms that truly move the needle for the company, helping it generate approximately 40% of services revenue.

From codeveloping solutions to engaging in joint go-to-market and sales efforts, Accenture recognizes the need to prioritize solutions with specific partners to operate in a more agile way, as the company rapidly departs from being truly technology agnostic. TBR does not necessarily think this is a bad move considering that the majority of Accenture’s clients operate in one or more of these technology environments, which alleviates the pain points around migrating applications workloads from on-premises only to hybrid IT environments. Additionally, according to TBR’s digital transformation insights research, the majority of DT buyers are in the “extension” phase, which entails buyers adding disruptive technology that allows for significant improvements to an existing ecosystem.

While Accenture, like many of its consultancy peers, often approaches client discussions with business outcomes in mind, maintaining functional expertise around a particular technology usually tips the scale in Accenture’s favor, considering that the IT buyer still maintains an active role in the DT services purchasing cycle.

Accenture Industry Analyst Conference 2019 was held at Accenture’s Innovation Hub, located in the Salesforce Tower in San Francisco. Accenture’s relationship with Salesforce, one of the top five platforms contributing to Accenture’s sales, has evolved over the years, especially as Accenture has made eight Salesforce-centric acquisitions, enabled by the Accenture Salesforce Business Group, to reach its current status. The two partners are well intertwined, evidenced by the fact that Accenture is the only partner that works on product and service cocreation with Salesforce as well as the global scale and commitment to training Accenture resources on Salesforce technologies including over 16,500 Salesforce-skilled professionals, 17 global hubs and over 55,000 training hours last year, among other attributes.  

TBR does not discount the importance of SAP, Oracle, Microsoft, Workday or any other partners — the first three of which were highlighted heavily during the conference through myConcerto for SAP and Oracle and Accenture Microsoft Business Group as well as through client use cases. However, we think the opportunity around Salesforce is somewhat unique considering it is born-on-the-cloud technology delivered in an “as a Service” model, toward which Accenture is moving its legacy and new business.  

During the two-day Accenture Industry Analyst Conference 2019 in early May, Accenture (NYSE: ACN) hosted close to two dozen analysts at its recently opened flagship Innovation Hub, which is strategically located in Salesforce Tower in San Francisco. As part of the event’s “Leading the epic disruption” theme, key topics, including Accenture’s investments in the new “new,” its partner ecosystem and its talent, were widely discussed, solidifying TBR’s view of Accenture as a market leading vendor but also raising questions about what is next for the company and what kind of disruption Accenture is facing and anticipating.