IBM helps customers extend IP ‘inside out’ to anyone, anywhere

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TBR perspective

After shifting the format from multiple events in years past to one major customer event in 2018 at a single venue, this year IBM (NYSE: IBM) moved its massive customer event, IBM Think 2019, from Las Vegas to San Francisco with far fewer logistical glitches than last year. Analysts were guided by a reinvigorated analyst relations team due in large part to IBM’s decision to shift Harriet Fryman from overseeing internal marketing functions to serving as VP of analyst relations.

In many ways shifting an IBM executive from internal marketing to this external-facing role aligned with the overarching theme of the event that coursed through CEO Ginni Rometty’s keynote speech. The theme last year focused on how the “axis has flipped” on business best practices, while this year the theme cascading throughout the sessions was “inside out.” IBM noted that until recently, much of the transformative power of technology had been dictated from an outside-in perspective in an effort to redesign customer-facing engagement. This, IBM asserts, is why only 20% of the data under management has been transformed to better inform enterprises and why the heavy work ahead will be from the inside-out perspective as enterprises choose which assets to transform beyond just sales and marketing elements. This theme plays well with IBM’s best-in-class reputation for building trust and for understanding the complexities large enterprise IT instances cause in terms of technical debt in need of refinancing and redesigning as enterprises strive to become true digital businesses, beyond the influence of outside-in feedback.

The theme last year focused on how the “axis has flipped” on business best practices, while this year the theme cascading throughout the sessions was “inside out.” IBM noted that until recently, much of the transformative power of technology had been dictated from an outside-in perspective in an effort to redesign customer-facing engagement. This, IBM asserts, is why only 20% of the data under management has been transformed to better inform enterprises and why the heavy work ahead will be from the inside-out perspective as enterprises choose which assets to transform beyond just sales and marketing elements. This theme plays well with IBM’s best-in-class reputation for building trust and for understanding the complexities large enterprise IT instances cause in terms of technical debt in need of refinancing and redesigning as enterprises strive to become true digital businesses, beyond the influence of outside-in feedback.

To address inside-out innovation, IBM’s marketing message tagline of “Anywhere” flows throughout its management control planes, analytics enablement technologies, and the emerging blockchain technology. Many businesses are now capable of transforming from the inside out, or from (oftentimes) Z-based on-premises instances out to the multicloud world. IBM’s “Anywhere” mantra is a big bet that resonates with existing accounts, and the challenge will be to simplify the access and interaction potential new accounts will have with IBM IP assets to prove that IBM understands all elements of the customer experience on a persona-by-persona basis, beyond trust, security and market making for emerging technologies.

IBM Think 2019 brought together tens of thousands of IBM partners, customers and employees to showcase recent portfolio expansions and updates that underscore the company’s continued innovation in cloud-based emerging technologies.

In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter

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TBR perspective

Since the dawn of outsourcing, BPO has allowed enterprise buyers to trust third-party providers with the support of many internal and external processes. While in the past, the risk associated with managing IT and business assets was heavily weighted toward the buyer, in today’s age, where social media is leveraged as a sounding board for both positive and negative customer experiences, there is a heightened expectation for services vendors to deliver brand promises. During its 14-year tenure as an active participant in the CX support services market, TELUS International has successfully navigated the ever-changing dynamics of the BPO space by investing heavily in its employees. The company has an average annual attrition rate of approximately 25%, which is about 50% below the BPO industry average, as its employees and executives trade on trust and share a common goal of servicing customers. Deploying and managing learning and collaboration platforms globally as well as adopting many of the same technologies used to support clients, TELUS International’s approach to people, processes and technology shapes the company’s culture in the era of the machines. While the CX support space has been augmented by the increased use of AI-based technologies and one might consider the BPO industry to be highly commoditized from a labor arbitrage perspective, TELUS International continues to build a human-centric culture that empowers staff (most of whom are millennials) to take charge of their careers while also being brand ambassadors in their local communities. Touring TELUS International’s Las Vegas delivery site, which is one of the company’s 27 global hubs, during the event helped bring TELUS International’s strategy and vision around its employees and investments in innovation to life, further supporting the “from slides to code” trend TBR has observed in the industry over the past 18 to 24 months.

Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and retune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities. 

At its inaugural Analyst Summit, TELUS International brought together industry analysts, company executives and clients. The company used the two-day event to prove why, according to President and CEO Jeff Puritt, TELUS International is the “best kept secret” when it comes to company culture, employee engagement and customer satisfaction in the highly competitive customer experience (CX)-enabled BPO market, especially in the area of talent.  

CSPs accelerate 5G deployments to realize the significant cost efficiencies that are inherent in the technology

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According to TBR’s 1Q19 5G Telecom Market Landscape, though a viable business case for operators to grow revenue from 5G has yet to materialize (with the exception of fixed wireless broadband), the main driver for operators to deploy 5G is realizing the efficiency gains the technology provides over LTE.

Operators in developed markets worldwide have accelerated their 5G deployment timetables over the past year, primarily because 5G is a significantly more cost-effective solution to handle rising data traffic in their traditional connectivity businesses but also to remain competitive in their respective markets.

TBR estimates over 80% of 5G capex spend through 2020 will be driven by operators in four countries: the U.S., China, Japan and South Korea, with the remaining 20% of spend through 2020 predominantly stemming from Europe and developed countries in the Middle East and APAC that have relatively small populations. Most Tier 1 operators in these countries have aggressive 5G rollout timetables and intend to leverage the technology for fixed wireless broadband and/or to support their mobile broadband densification initiatives. The seamless software upgradability of new RAN platforms to 5G will facilitate deployment at incremental cost, keeping overall spend scaling quickly but at a relatively low level compared to prior RAN generation upgrades.

TBR’s 5G Telecom Market Landscape tracks the 5G-related initiatives of leading operators and vendors worldwide. The report provides a comprehensive overview of the global 5G ecosystem and includes insights pertaining to market development, market sizing, use cases, adoption, regional trends, and operator and vendor positioning and strategies.

Cost of ‘intelligent connectivity’ must decline significantly for intelligent world to unfold

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TBR perspective

Realizing the intelligent world presented by the mobile industry at Mobile World Congress Barcelona 2019 (MWC19) will require a fundamental change in how networks are architected, including a radical reduction in the cost of providing connectivity. It will also require business transformation for companies tied to the old world, namely communications service providers (CSPs) and their incumbent vendors.

It was readily apparent at the event that technology is advancing at a much faster pace than the establishment of business cases that economically justify deployment of the technology. The reality for the mobile industry is that the cost of building, owning and operating networks is too high and networks are too inflexible to support the business realities of the digital era, whereby connectivity is relegated to a commodity service and the value lies in the platforms and applications that run over the network. The industry has known this for years, but changes have been minimal, until maybe now.

The entrance of Rakuten to the mobile industry could be a game changer and provides a glimpse into what a digital service provider will look like. In what could arguably be the most important takeaway from the entire event, Rakuten’s approach to building and operating a network could signify a paradigm shift in the industry. Not only will Rakuten’s network be agile, flexible and dynamic to provide digital services, it will also enable a dramatic reduction in the cost of connectivity.

The theme of MWC19 was “intelligent connectivity” and centered on how 5G, IoT, AI and big data are coming together to enable the intelligent world. Against this backdrop, Rakuten stole the show with the evangelization of its end-to-end virtualized and cloud-native network, which is being deployed across Japan this year. Rakuten’s network provides a glimpse into what the intelligent network of the future will look like.

As customer zero, Accenture employs an innovation-led approach to ease concerns of clients investing to scale DT

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TBR perspective

As emerging technologies become a pervasive part of both IT and line-of-business leaders’ daily agendas, Accenture’s value proposition, amplified through the Accenture Innovation Architecture, positions the company to successfully address the complexity of clients’ IT systems, including through educating employees and optimizing, automating and managing the systems. Accenture’s outlook as well as the company’s investments in solutions that navigate post-digital era operations are backed by 30 years of experience supporting IT systems and working to alleviate clients’ concerns around disruption and transformation. Being customer zero, in many cases, helps Accenture showcase successful use cases of innovation-led transformation at scale where people, processes and technology can drive toward industrialized operations. Accenture recognizes that clients’ business priorities vary, but by deploying common frameworks such as cloud-first approaches, design thinking workshops and automation maturity assessments, among others, the company can continue to trade on trust with its clients, thus easing the introduction of capabilities and use cases in new areas such as blockchain and quantum computing.

With innovation, however, comes challenges. Accenture vigorously addresses hurdles such as data quality, staff skills and systems adaptation and encourages clients to do a hard reset of their IT department to close the innovation achievement gap. In the long-term battle for dominance in the IT services space, currently driven by AI, Accenture certainly walks the walk. But to maintain its leading position, the company would be better served to adopt outcome-based pricing models at scale to widen the gap with competitors. According to respondents in TBR’s 4Q18 Digital Transformation Customer Research who reported the existence of an outcome-based pricing structure with their digital transformation (DT) services vendor, the vast majority of contracts used traditional KPIs such as cost savings, technical performance or uptime as the measure of whether agreed-upon outcomes were delivered. This suggests this pricing structure remains immature, as basing even a portion of a vendor’s fees on the client’s business performance is risky for both parties. We expect DT pricing methods to mature as more data becomes available around whether and how solutions impact business outcomes.

The Accenture Technology Symposium brought together over 200 Accenture (NYSE: ACN) clients with Accenture and industry leaders and practitioners. While disrupting technologies in areas including cloud, blockchain, AI, automation and security were discussed and demoed, Accenture used the event to promote its innovation-led, industry-centric approach to solving business problems.  

Distributors and VARs: The unsung heroes of the IoT market

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The background

Commercial IoT has received substantial press over the last three years. It started in 2015 with hyped claims of IoT’s ability to deliver total transformation, but expectations around the technology have matured and IoT is now viewed as a reasonable technique for solving business problems. However, one thing has not changed: When it comes to IoT market participants, the focus of the discussion remains on larger IT vendors, SIs and customers. The missing story is the involvement of the distributors, VARs and smaller SIs, and the current needs of the small to midsize customers.

What are distributors?

Distributors sit between IT vendors and VARs or SIs, procuring equipment or software from the former and distributing it to the latter two. Because distributors generally have a very large customer base, they can help vendors reach more customers or provide a channel for vendors that cannot afford to build their own, such as smaller ISVs. Because distributors procure equipment from vendors and stock it themselves, they are incentivized to educate VARs or SIs about vendor products and help market them as well as to deliver sales training, demos and exhibitions. Distributors are masters of the supply chain, bundling and contract negotiations.

What are VARs?

VARs, along with SIs, serve on the frontline of IT and offer a more tailored storefront to customers than a larger vendor. VARs will seek to build and deliver turnkey solutions by mixing and matching technology and software, as well as layering on services of their own, such as integration, customization, consulting, training and implementation. VARs are often organized by customer type, from those offering general IT services to those specializing in education, the public sector, heavy industry and other niche areas. VARs, along with SIs, often have the keenest grasp on customer challenges, making them well positioned to package IoT components, build applications or offer services.

Interoperability, consumerism and patient engagement remain perennial health IT imperatives

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Following a handful of activities that took place during the preceding weekend, including the CIO Forum opening reception, HIMSS 2019 officially kicked off on Feb. 11. Nashville, Tenn.-based Change Healthcare, a 15,000-employee provider of revenue cycle management and clinical data exchange solutions, made headlines immediately with the announcement it will launch a new solution on Amazon Web Services (AWS) to provide “free clinical data interoperability services.” The collaboration with AWS will improve patients’ access to their medical information while enhancing the integration of patient and clinician platforms with EHR systems. There is never a shortage of cutting-edge and innovative health IT technologies showcased at the HIMSS conference, but Change Healthcare’s new offering, and its well-timed introduction, reflects the efforts companies are making amid the persistent challenges of interoperability and consumer-centrism in healthcare IT.

During HIMSS19 TBR spoke with healthcare IT professionals from hardware, software and services vendors; management consultancies; and professional services organizations possessing a bird’s eye view of current market trends and the strategic levers healthcare organizations are pulling to align with market movements and meet evolving demand for value-, data- and patient-centric health IT solutions.

Interoperability is a still a big problem that remains to be solved

Illustrating interoperability as a common and protracted concern among health IT professionals, conference organizers described the HIMSS Interoperability Showcase as “the most trafficked area of the exhibition floor.” There, attendees found demonstration areas where as many as eight health IT vendors could cooperate to showcase use cases for interoperability solutions. Beyond the exhibitions, interoperability-related panel discussions and presentations touched on how the recent Carequality and CommonWell alliances have created a national infrastructure, or informal backbone, of sorts to support and enhance interoperability across disparate health IT systems. The topic of open APIs received significant attention, as did how open source collaborations can help drive the industry toward a more interoperable future.

 

 

HIMSS 2019 hosted over 45,000 attendees and more than 1,300 vendors and featured more than 300 education sessions. Due to the massive scale of this industry conference, TBR elected to focus on seminars, round table discussions and exhibitions that emphasized interoperability, consumerism and patient engagement.

The IoT market has begun sorting itself out in 2019 — a vast improvement from its disorganized past

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It has been a wild and chaotic ride for Internet of Things (IoT) vendors, with many placing big bets on IoT in the past and entering 2018 largely disappointed by the results. While IoT will likely never meet the expectations placed on it in 2015 and 2016 — the peak of hype — IoT’s contribution to IT vendor revenue will increase, with IoT ultimately becoming a core revenue driver. IoT, as a technique to solve business challenges through the assembly of technology to drive results, such as predictive maintenance, resource efficiency, value-added services or generally, increase insight, is not going anywhere.

The good news for vendors is IoT is getting a lot easier as the ecosystem sorts itself out. The increase in portfolio focus and partnering is making the market easier to navigate for vendors and customers. Offerings are becoming easier to implement and integrate as vendors begin to converge on architectures and standards, as well as orient go-to-market strategies toward coopetition rather than “winner takes all.” Customers are coming to market with a greater understanding of what they are looking for thanks to efforts by vendors and early adopters educating the market and cutting through the hype pays off. TBR believes 2019 marks the emergence of “go-to-market 2.0” as an evolved strategy for both IT and OT vendors seeking to better profit from IoT.

 

The 1Q19 Commercial IoT Market Landscape looks at technologies and trends of the commercial IoT market. Additionally, TBR catalogs and analyzes by vertical more than 450 customer deals, uncovering use trends, identifying opportunities, examining maturity, and discussing drivers and inhibitors.

What an energy sector use case teaches us about getting digital transformation right

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TBR has kept a close eye on the energy sector as macroeconomic pressures have forced adoption of digital solutions to problems as old as oil itself. As the business of providing digital transformation services has evolved, TBR has increasingly seen use cases proving substantive, transformative change for companies not in the news or in every emerging technologies presentation. PwC provided TBR a deeper dive on one particular use case, which pulls together those two strands and serves as a useful marker for the present moment in digital transformation.

Show me how I can shrink my inventory using data and analytics

For an oil field services company, PwC deployed elements of its Supply Chain Opportunity and Optimization Platform (SCOOP) offering, including analytics and visualization tools. The company, an existing finance, tax and IT services client, admitted to having “no visibility” into its inventory, making it a perfect case for PwC’s Supply Chain and Data & Analytics practice offerings. By delivering prescriptive analytics across a single product line stored in more than 200 warehouses globally, through a visualization tool that “sold the project,” PwC identified opportunities for the client to reduce inventory by approximately 20% and reduce associated costs by as much as 5%.

Change management determines everything

In debriefing TBR, PwC shared some additional insights into what made the project a success — with success in part defined by the client’s decision to replicate the analytics-based approach across additional product lines. First, PwC baked change management into the engagement, declaring that “managing the change is part of everything we do.” While TBR has heard similar assertions around the criticality of change management in digital transformation engagements, PwC brought forward a few new elements, including a redefinition of the client’s operating model based on the talent the client would need to have on hand to gain the most benefit from PwC’s SCOOP solution. PwC planned upfront for the client’s talent needs and ensured the business model implications would minimize downstream efforts to train client personnel.

In addition, PwC considered the client’s needs to demonstrate success internally — to justify the costs, ensure additional investments, and keep the project funded and viable — and said simply that “change management includes showing that [the PwC solution] is working.” This marks a subtle shift of KPIs from measuring clients’ satisfaction with the consultancy to serving as part of internal change management. Pulling the various strands together, PwC noted that change management can be the most complex element in an engagement: “Training, communications, implementation, coaching, building the metrics, and ensuring changed behavior” all determine whether a project takes four weeks or more than 12 to go from visualization to full-on implementation.

 

Deconsolidating Worldline: Atos gets ready for new age of digital transformation

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At its 2016 Investor Day, Atos publicly set its course for the next three years, identifying digital transformation as the high-growth, high-value segment of the market on which it aimed to capitalize. The company then positioned itself as the digital services and payments leader in Europe and leveraged its Digital Transformation Factory (DTF) and e-payments subsidiary Worldline to shift its revenue mix to higher-value, next-generation solutions. Back in 2016 TBR predicted that Atos was making a smart move that was in line with industry trends. We expected that staying with its digital services and payments strengths as well as diversifying its geographic reach by expanding in North America would enable Atos to sustain revenue growth and improve profitability. Atos met its financial goals for 2018, and the company is now making a shift in its strategic direction. At its 2019 Investor Day, Atos updated its course for the next three years. While Atos will continue to expand in digital services, the payments services component will not be part of the equation as Atos is deconsolidating its e-payments subsidiary Worldline. Deconsolidating Worldline as a stand-alone listed pure play business is a logical move that will have an immediate positive effect and enable Atos to focus on its core digital services activities.

The big break: Separating Atos and Worldline

TBR believes Atos began to prepare Worldline to become a stand-alone business with the initial public offering (IPO) of Worldline in 2014. During the past four years, Worldline has operated as an Atos subsidiary and, as part of financial reporting, was one of Atos’ four divisions along with Infrastructure & Data Management (IDM), Business & Platform Solutions and Big Data & Cybersecurity. Worldline had its own CEO, leadership team, brand identity, strategy and financial goals, and the separation from Atos will not hinder the new company. With annual revenues of €2.2 billion (or $2.5 billion) and 11,500 employees, Worldline will continue to pursue its goal of becoming a leading payment services provider in Europe, especially after the acquisition of SIX Payment Services in May 2018. At its Annual General Meeting on April 30, Atos plans to submit a resolution to distribute to Atos shareholders 23.4% of Worldline’s share capital, out of the 50.8% currently owned by the Atos Group. After the transaction is complete, Atos will retain 27.4% of Worldline’s share capital, 26.9% will be held by SIX Group, and the balance of 45.7% will be free float shares.

As of May, Atos and Worldline will become two listed global pure play services providers specializing in digital services and payment services, respectively. TBR sees this split as inevitable as it enables both companies to individually pursue their goals utilizing their core expertise and gives them a targeted direction for their strategic activities. While the preparations to scale Worldline to a stand-alone company took several years, the Atos board was very quick to organize the separation process by establishing an ad hoc committee in December 2018 and announcing the decision on Jan. 30. As noted during the presentation, Atos and Worldline will maintain all existing partnerships “on an arm’s length basis,” pursuing a joint go-to-market strategy and continuing their industrial and commercial partnership.

 

 

Atos’ 2019 Investor Day was held at the company’s headquarters near Paris. The meeting was hosted by Atos Chairman and CEO Thierry Breton and key members of Atos’ executive leadership team. The company used the event to announce to the financial and industry analyst community its vision, strategy and three-year plan through 2021. The main message was that Atos is positioning as a trusted partner for clients’ digital journeys. Atos focuses on enabling customers’ digital businesses with secure, data-driven ecosystems and end-to-end, industry-specific services and technologies.