Disrupting, but Not disrupted: Accenture Pivoted to Become a Solutions Broker Through Innovation

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Accenture Industry Analyst Conference 2019: During a two-day event 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 Next 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.     

TBR perspective

Building on the trust and relationships Accenture has built with IT buyers for over two decades has helped the firm become a household name for IT services, but expanding relationships into the C-Suite has been an ongoing challenge. During the conference, Accenture executives often mentioned that many of the company’s digital transformation (DT)-related opportunities stemmed from conversations with the CEO, and as the conference progressed, Accenture Strategy increasingly became a central talking point in presentations and client use-case discussions.

 

We believe as Accenture continues to operate in a matrixed format, led by its vertical industry experts, the company’s integrated scale and ability to offer locally sourced services through its network of Innovation Hubs and Studios will help it win business against many disrupted rivals. The company certainly has some 500,000 questions to answer for itself and its stakeholders about its future, but in the meantime investments in “the new” will remain central to Accenture’s innovation-led go-to-market strategy as the company transitions from a human capital-focused to a technology-enabled organization.

Even in a hybrid IT services world, it is all about talent — and Accenture knows it

While discussions around talent often come after companies showcase their latest shiny objects in terms of software solutions, as well as their client testimonials, in the case of Accenture, developing a right-skilled and right-sized bench is at the core of what the company is all about. Talent is not a new investment priority for Accenture, whose Global Delivery Network (GDN) has proved to be a differentiator for over two decades now, especially against Big Four and consultancy rivals that still struggle with developing cohesive global strategies and integrated scale.

 

The company’s constant refinement of what and how skills need to be developed highlights Accenture’s efforts to secure a market-making position in both legacy and new domains. Investing approximately $1 billion annually on training, re-investing 60% on every dollar saved from using automation in service delivery into reskilling, and developing self-learning, analytics-enabled job platforms such as Accenture Future Talent Platform and Job Buddy are some examples of how Accenture elevates the need for upskilling and reskilling talent.

 

TBR recognizes Accenture is not perfect when it comes to managing multidisciplinary, multigeneration talent, and the company, like many of its IT services peers, is facing attrition challenges. In 1Q19 Accenture’s attrition rate climbed 200 basis points year-to-year to 15%, but remained below the industry average of 16.6%, indicating the company’s brand and employee career plans are helping Accenture retain staff at a higher rate than rivals. While Accenture does not seem to be concerned with rising attrition levels, TBR monitors the trend closely as newly acquired design talent may leave amid a culture clash with the legacy outsourcing, run-the-business personnel, potentially challenging performance in evolving in “the new” areas.

 

As Accenture’s headcount approaches 500,000, questions about the company’s resource management and employee efficiency metrics are emerging, especially as the advent of cloud and the adoption of “as a Service” model vendors such as Accenture were supposed to drive sustainable nonlinear revenue growth. As TBR’s 4Q18 Global Delivery Benchmark outlines, this goal is still a mirage for IT services vendors including Accenture. TBR does not expect Accenture’s headcount to reach 1,000,000 in the next three to five years, but also, departing from labor arbitrage opportunities will be even harder, especially as the firm embarks on new frontiers such as engineering R&D services, blockchain and quantum where initially the human component will still be critical to develop, teach and manage the applications layer.

 

The question remains, though: What will Accenture’s organization look like in the next five years? Will it become a single-person company with exclusive access to 500,000 highly skilled, certified freelancers? Will automation really gain traction, impacting the composition of Accenture’s employee pyramid and forcing Accenture to eliminate redundancies? These are questions without an immediately clear answer, but the current environment in terms of talent management and availability leads us to believe Accenture’s future will likely encompass a combination of some, if not all, scenarios.

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.

 

The two-day conference 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 — but 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.  

‘The Next New’ cannot be achieved without mastering the old

While investments in its talent and partner ecosystem may seem to be a continuation of Accenture’s long-term success story, the company did not miss the opportunity to highlight its success in emerging areas including cloud, security and digital, as well as new frontiers such as blockchain and quantum. From client use cases through demos of the company’s proprietary and codeveloped solutions, Accenture showcased its capabilities to drive innovation while drawing heavily upon its experience in application services and managing clients’ operations.

 

The Accenture Innovation Architecture, which has begun to ride a second wave of opportunities, especially as clients transition from the proof-of-concept stage to the large-scale implementation of their DT initiatives, sits in the center of the company’s strategy in “the new.”

 

Accenture Ventures, which tracks over 385,000 startups, 30 of which Accenture has invested in across 40 countries, provides access to the talent and IP needed to compete for opportunities in emerging technology areas such as AI and quantum. TBR does not believe startups will truly have a direct impact on Accenture’s financial performance, and one may see these investments as more of a PR move than an effort to deliver tangible outcomes, as Accenture could create a blind spot for itself by not investing in these entities and thereby allowing competitors to do so.

 

Accenture Digital, which has in many respects become the crown jewel of Accenture’s businesses, was heavily highlighted across all its parts, including Accenture Interactive, Applied Intelligence and Industry X.0. Following the acquisition of Droga5, Accenture Interactive’s story fully centered on the agency’s focus on designing Experiences. While Accenture Interactive is somewhat mature, especially as it relies heavily on Accenture’s legacy application services capabilities to capture share in the mobile and commerce customer experience (CX) markets, Accenture’s investments in creative in the past 18 to 24 months, mainly through acquisitions, have positioned the company to better compete for business from the holding companies. Additionally, Accenture Interactive Operations, which organizationally sits within Accenture Operations, draws on Accenture’s years of experience providing BPO services for clients’ HR, finance, procurement, supply chain and now marketing operations, is a perfect example of how matrixed and well-oiled Accenture’s organization is in terms of process.

 

Accenture Applied Intelligence, which in many respects cuts across other parts of Accenture, just as analytics, automation and AI do, also plays a central role in Accenture Interactive’s performance and capabilities as the need for developing automated, tailored services requires quality data that can lead to business outcomes at scale. Just like the rest of Accenture, the Accenture Applied Intelligence practice did not grow linearly, but corporate leadership is optimistic as automating the data supply chain will diminish the need for additional data scientists, helping to drive sustainable profitable growth. The third pillar of Accenture Digital, Industry X.0, while the least mature compared to the other two, expands Accenture’s addressable market in areas such as engineering R&D services, IoT, and hardware engineering. Recent acquisitions such as Pillar Technology, Mindtribe and designaffairs, as well as partnerships with Dassault Systemes and Siemens, provide a conduit to Accenture’s efforts and ability to trial, launch and scale a product.

 

Engineering R&D and hardware services, while utilizing a lot of Accenture’s knowledge of embedded software and/or software engineering support, is somewhat of a new area for the company, and Accenture could face competition from more established vendors. For India-centric rival HCL Technologies (HCLT), for example, engineering R&D services is one of the company’s core service lines and generates about 25% of HCLT’s revenues at about a $2 billion annual run rate.

 

After attending the Accenture Technology Symposium in February 2019, we wrote that Accenture recognizes legacy systems cannot support innovation at scale. Accenture’s approach to digital decoupling connects clients’ use of legacy mainframe architecture to the world of adopting microservices and containers through evaluating and re-architecting legacy and new systems. As Accenture Technology embarks on opportunities across intelligent software engineering services, AI and automation, transforming processes at scale can be challenging due to hurdles such as change management and data silos. As enterprises demand a more agile and targeted scope for their process transformation, microservices emerge as the go-to architecture for Accenture to deploy as it moves between legacy and new systems, with change data capturing and pub-sub (publish-subscribe) synchronizing key steps.

 

Accenture also used the conference to highlight its work and investments in what the company calls “the Next New” including blockchain, extended reality and quantum. TBR sees the most immediate use case and tangible results stemming from blockchain, considering the applicability of the technology in many areas, from optimizing business applications through the token economy. As the blockchain leader of one of Accenture’s rivals put it, “We’re just getting rid of paper.” With over 30 of Accenture Innovation Centers and Labs focused on blockchain and over 150 clients engaged globally on blockchain, Accenture seeks to establish a foothold in an emerging technology market that can drive long-tail managed services opportunities, falling in Accenture’s sweet spot. Accenture, however, is not alone in the race for blockchain supremacy, and the company knows it. Big Four rivals appear to be the most challenging contenders, as their heritage in governance, risk and compliance provides them with access to frameworks that can be replicated through the lenses of blockchain technology. In a recent special report, TBR wrote that EY asserts the efficacy of public blockchains to revolutionize business by drawing parallels to the internet evolution that revolutionized social interaction.

 

Accenture’s play through the software angle in quantum computing mimics the company’s application services heritage and positions it to drive advisory through connectivity and managed services opportunities. Accenture patented a multistate quantum optimization engine and pursued minority investment in 1QBit. (See TBR’s Digital Transformation Insights Report: Emerging Technology focused on quantum for more details on Accenture’s and other software, hardware and services vendors’ investments and positions in quantum.)

 

Of course, the success of all these investments and “the Next New” technologies would not exist without Accenture Security. While the practice maintains global leadership and P&L, it permeates across every discussion Accenture carries with existing and new clients. Largely focused on lowering the cost of security while increasing capabilities, Accenture Security provides end-to-end offerings enhanced through automation and backed by the partner ecosystem. Just like in other emerging domains, Accenture Security faces increased competition across the spectrum of pure security vendors, one with infrastructure capabilities and consultancies leveraging C-Suite relationships to perform risk assessment through support services. Accenture Security’s focus on managed services while leveraging its global network of security operation centers in both offshore and nearshore locations provides the scale necessary to support global clients, while acquired assets such as those from the iDefense acquisition help Accenture Security elevate the intelligence Accenture Security provides at the chief information security officer level and above.

In conclusion

Riding the wave of the current boom macroeconomic cycle, amplified by Accenture’s appetite for innovation, has paid off. We expect the trend to continue as the company gains traction within its Diamond client base using its investments in non-IT capabilities, while leveraging alliance partnerships such as that with Microsoft will support Accenture’s efforts to enter new frontiers such as the upper midmarket.

Dell Technologies knew what it was doing all along

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Dell Technologies’ strategies

Deliver ‘essential infrastructure’

Dell Technologies’ key strategy is to deliver on what it promises: comprehensive and competitive essential infrastructure, specifically, hardware and systems software for PCs, data centers and cloud vendors. Dell Technologies fills in this spectrum with a mantra of “from edge to the core to the cloud,” where edge includes PCs, gateways and near-the-edge data center hardware. By “core,” Dell refers to on-premises data centers. Dell has been investing in R&D and in breaking down internal silos to compete in its core business, with a successful recent track record. For the last two years, part of this strategy included consumption-based pricing to compete with cloud offerings. Dell Technologies’ main competitors, Hewlett Packard Enterprise (HPE) and Lenovo, have similar strategies, including flexible pricing.

‘Better together’ with VMware

The company differs from its competitors in its ownership of VMware, a provider of popular software products that provide an abstraction layer between workloads and hardware, allowing flexibility and efficiency. VMware products run on all vendors’ hardware — a necessity for VMware’s continued presence in the market. Dell Technologies seeks to leverage its relationship with VMware to make it easier for customers to benefit from VMware solutions when they buy them on Dell hardware. This “better together” approach is delicate; “better together” implies “worse apart.” One company spokesperson described Dell Technologies’ approach as offering a combined solution to those who prefer Dell hardware or are indifferent and continuing to offer separate solutions for customers who prefer competitors’ hardware.

With or without Dell hardware, VMware’s solutions are very profitable, and contribute approximately one-third of Dell Technologies’ operating profit. Maintaining VMware’s strong position in both core and cloud markets is critical to Dell’s continued success. For this reason, Dell and VMware must ensure that Dell hardware and VMware cannot be too much better together. VMware also plays a role in Dell’s cloud strategy by playing key roles in the company’s multicloud offering, Dell Technologies Cloud, providing a way to work with multiple clouds, both public and on premises. By providing the ability to move workloads between public and on-premises clouds, Dell makes it easier to bring workloads back on premises, where Dell’s margins are stronger and where, the company claims, customer operating costs are often lower.

Dell Technologies World 2019 was, to a large extent, a celebration of the success of a long-term plan. Dell has emerged from a sequence of going private, shedding many businesses, acquiring a huge federation of related business, and then going public as a healthy, growing company. Despite some continuing challenges, Dell Technologies has largely achieved the goals of an ambitious plan to become the dominant provider of “essential infrastructure,” which includes computer hardware, systems software and supporting services “from the edge to the core to the cloud,” including PCs, cloud hardware and data centers.

Leading CSPs pull forward 5G-related investments, driving CAGR increase in the North America TIS market

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According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services North America Market Forecast 2018-2023, the CAGR of the TIS market in North America increased compared to last year’s forecast as leading communication service providers (CSPs) in the U.S. committed to accelerate and broaden the scope of their 5G-related initiatives.

In the past 12 months, the five largest mobile operators in the U.S. have made formal commitments to deploy 5G at scale across their U.S. footprints over the next few years. This acceleration in deployment timetables is primarily in response to competitive and government pressures. Spend pertaining to these overarching trends will be partly offset by cost savings from legacy infrastructure decommissioning, cloud, and NFV/SDN as well as synergies that are realized from M&A.

Though 5G will be the primary driver of the TIS market in North America over the next five years, digital transformation-related initiatives, which encompass network and business model transformation, will also support TIS market development. With the competitive landscape in the U.S. facing significant disruption from M&A events and new entrants, CSPs will be under pressure to respond by continuing their transformations. Digital transformation requires rearchitecting networks to become cloudified, virtualized and intelligent. AT&T (NYSE: AT&T), Verizon (NYSE: VZ), Comcast (Nasdaq: CMCSA) and T-Mobile (Nasdaq: TMUS) are expected to drive the bulk of digital transformation-related spend through the forecast period.

TBR’s Telecom Infrastructure Services North America Market Forecast provides annual analysis and forecasting of the deployment, maintenance, professional services and managed services markets for network and IT suppliers.

In IoT, Oracle means business

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“Business first” is the resounding message from Oracle regarding IoT. The company leaps over the technical morass and ecosystem complexities, which often bog down any digital transformation discussion, and instead starts with the business discussion: What is your pain point? Oracle has deep relationships with a wide customer base due to its legacy solutions, including ERP and supply chain management. Oracle leverages this vendor standing to start discussions with VPs and line-of-business (LOB) managers on how Oracle can improve the client’s business outcomes. Once a set of KPIs are agreed on, Oracle and its partners work backward with operational technology (OT) and IT teams to reach the business outcome.

TBR believes Oracle has made great strides with its business outcomes focus. The first time we talked to company executives, in September 2017, they seemed to be following the traditional route of going through IT, as IT vendors tend to do. However, the company faced similar roadblocks to its peers. Tribalism inside the organization — OT versus IT versus C-Suite — made collaboration inside a customer organization difficult. Oracle found itself selling to customer IT, with customer IT having to sell to management, and Oracle admits this approach was not working. And the issue was not just with the audience; what Oracle was selling — IoT capabilities and solutions — was also an issue. Now, the company is upselling features attached to existing products.

Oracle retooled its IoT go-to-market strategy to focus heavily on selling business outcomes and making its platform accessible to the business user. Below, we outline a few important steps Oracle has taken.

Portfolio simplification

Figuring out IoT is difficult for customers. It is not always clear which direction to go in, which use case to chase or how technologies will benefit the business. Ultimately, the number of paths to follow can lead to choice paralysis. Oracle addressed this with a narrower (but not less impactful) portfolio with five primary applications, or packaged solutions, aimed at specific business goals:

  • Asset monitoring: Focuses on asset health, utilization, availability and predictive maintenance
  • Production monitoring: Manufacturing equipment and production line monitoring and prognostics
  • Fleet monitoring: Monitors shipments, fleet vehicles, driver behavior and costs
  • Connected worker: Focuses on worker safety by monitoring workers and their environments
  • Service monitoring for connected assets: Allows customers to engage in value-added services to their end customers through incorporating asset monitoring and manipulation capabilities into products

Red Hat builds the digital transformation autobahn, where developers are king of the road

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Red Hat production systems curate community IP into a simplified horizontal platform, paving the way for scaled innovation

In a 2015 conference for financial analysts, Red Hat CEO Jim Whitehurst declared victory in commoditizing the enterprise OS market into RHEL and Windows Server, while outlining Red Hat’s intentions to do the same thing to the (then) emerging PaaS layer with OpenShift.

The closing guest speaker during the Red Hat keynote address at the 2019 summit was Microsoft (Nasdaq: MSFT) CEO Satya Nadella, who announced Azure Red Hat OpenShift. While it might still be premature to declare victory in fulfilling that aspirational objective from 2015, it certainly can be said that Red Hat has made significant progress in a short period of time.

RHEL and OpenShift represent the curation pillars for open upstream community innovations, coupled with Red Hat’s decades of open-source and service experience to deliver a capabilities-based advantage to its users. Red Hat represents the virtuous cycle of trusted platform delivery, user-contributed innovations, and Red Hat production-grade delivery of those innovations back to the community via a platform layer that is increasingly easier to deploy.

RHEL 8 delivers additional simplicity and automation capabilities to allow operators to better facilitate developer innovation

Red Hat heralds RHEL 8 as a significant improvement over RHEL 7, best illustrated by the fact that the upgrade process to RHEL 8 constitutes a simple point-and-click operation, after which automation can take over the rest of the process in seamless fashion.The latest release is said to be designed for applications to run across open hybrid cloud environments, addressing the enterprise hybrid reality. Before its official release to market at the summit, there were over 40,000 downloads of RHEL 8 in beta, which underscores pent-up demand for the release and also helped Red Hat to enhance the operating system based on invaluable feedback from those beta users.

TBR attended the Red Hat (NYSE: RHT) Summit, which featured the usual slew of product announcements. This year, the company focused intently on enhancements to Red Hat Enterprise Linux (RHEL) 8 and Red Hat OpenShift 4, which are the foundational products for the enterprise. However, more interesting were the general discussions throughout the summit about Red Hat’s business model and cultural uniqueness, which contribute to the company’s success in curating openly sourced IP into enterprise-grade technology products underpinning an ever-increasing share of business software. The value of its people and processes were regularly emphasized by reminding attendees that IBM (NYSE: IBM) is paying $34 billion for a $3.2 billion company that owns no IP.

In its third annual blockchain summit, EY calls this ‘Year 0’ for blockchain

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EY lays out its digital blueprint as ‘now, next and beyond’ with blockchain use cases easily fitting into the construct

This fundamental playbook repeated in many of the use cases discussed in breakout sessions at EY Global Blockchain Summit:

  • Early efforts focus on cross-collaborative business entities establishing business rules.
  • The rules become the digital contracts.
  • The first use case is either low-dollar-value or intracompany; the sponsoring enterprise working with EY becomes “customer zero.”
  • Once fully operationalized, EY and the client partner look for ways to enroll additional participants to:
    • Broaden the use case into an industry utility
    • Extend the underpinning business logic into adjacent industries for the repeatable capability to build out industry utilities

Gaming: The editors for the EY-Microsoft playbook

Much of the content shared at the 2018 event revolved around EY’s ongoing collaboration with Microsoft to deliver a blockchain royalty payment system to track developer community activities in the gaming space. This year, EY and Microsoft touted the collaboration on many different levels that easily fit into the “now, next and beyond” construct.

EY Tesseract: A clear view not to be confused with a short distance

The Tesseract-like aspirational objective is autonomous vehicles; period. To achieve the objective requires prototyping the IoT sensoring and business rules ahead of when specific technologies and revised public policy regulations have been hardened. Interim steps revolve around building out the ecosystem participants required to allow autonomous vehicles to be serviced absent human accompaniment as the vehicles course through the physical world based on their digital instructions.

The third annual EY Global Blockchain Summit gave an indication of the rapid acceleration in adoption that had EY describing this as “Year 0.” With hockey stick charts for the number of proof of concepts (POCs) and live applications, blockchain appears poised to deliver on its anticipated promises to transform business interactions and greatly reduce operating expenses while creating new business services networks. The event was held at 32 Old Slip in the heart of New York’s financial district with several hundred attendees and 28 breakout sessions organized in four tracks consisting of blockchain business applications (where TBR spent most of its time); blockchain assurance, tax & compliance implications; financial services and the token economy (where TBR attended a session on decentralized finance); and blockchain technology.

Most CSPs in developed countries will widely deploy 5G networks by mid-2020s

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According to Technology Business Research, Inc.’s (TBR) 5G Telecom Market Forecast 2018-2023, an increasing number of CSPs globally, predominantly in developed countries, are accelerating and broadening the scope of their 5G build-outs, which prompted TBR to increase its 5G infrastructure market size forecast compared to 5G Telecom Market Forecast 2017-2022. There are a few reasons for this pull forward, including the need for CSPs to stay competitive for customers of traditional mobile broadband and high-speed internet services, reduce the cost-per-gigabyte of carrying traffic (network opex efficiencies), and build a foundation in preparation for new use cases of the network. The availability of 5G devices, including a variety of smartphones, in 2019 is another key driver prompting earlier infrastructure investment.

The software upgradeability of some newer LTE base stations will enable some CSPs to more quickly and seamlessly migrate to 5G. However, nearly all CSPs will need to deploy net-new 5G base stations and 5G mobile core over time as CSPs transition from a Non-Standalone (NSA) to Standalone 5G architecture. This seamless software upgradability of new RAN platforms to 5G will facilitate deployment at incremental cost, keeping overall 5G capex spend scaling quickly but at a relatively lower level compared to prior RAN generation upgrades.

Mobile broadband (MBB) and fixed wireless access (FWA) will be the two predominant use cases for 5G technology by CSPs through the forecast period, with other use cases materializing in the middle to later years of the forecast period, mostly as it pertains to machine-type communications such as massive IoT or mission-critical IoT.

Now. Next. Beyond.: EY’s road map for moving from current to future

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TBR perspective

Norman Lonergan, EY global vice chair, Advisory, opened the EY 2019 Global Analyst Summit with an outline for a new strategy called Now. Next. Beyond. Having executed extremely well against its earlier strategy, EY needed to raise its own bar. In a way, it is adhering to a strategy that it likewise seeks to use to assist its key clients in adopting and leveraging technology to enter the digital economy as a stronger and more vibrant operating business.

Achieving these objectives does not happen overnight, nor will it occur without false starts and shelved proof of concept trials. From TBR’s perspective, Now. Next. Beyond. broadly translates into the following:

  • Now: The point in time where the heavy advisory lifting takes place to establish the foundational business rules required for further automation on the way to becoming a truly digital business.
  • Next: Obtainment of the low-hanging fruit in quick operational enhancements to cut costs (and prove value) and to enhance the overall customer experience. This phase likewise lays the foundation with anchor ecosystem participants to harden the automated or smart contract pieces necessary for the network effect at scale.
  • Beyond: The aspirational objective that in some ways could be entirely different business models made possible through atypical partnerships with business entrants from radically different business domains.

The EY construct is not necessarily groundbreaking or unique, but it is the strategic framework and corporate language the firm intends to deploy as it moves forward in the industry evangelizing its best practices and promoting the tight working relationships it has built over the past decade with enterprise technology stalwarts such as Microsoft and SAP.

Appropriately, EY hosted its annual Global Analyst Summit at a working cruise terminal at the water’s edge of Boston’s Seaport District, in a facility that served as an EY innovation hub before turning back into the assembly area for an oceangoing cruise ship. The venture-forth vibe in the physical facility amplified the sentiments expressed by EY’s leaders, particularly around making the firm more global, including global engineering across service lines and developing IP in a more industrialized way. As one EY professional explained, “When we solve a problem through applying tech, and thus creating an asset or tool, we want to productize and commercialize and globalize.” Like a ship making course corrections while still navigating toward a desired destination, EY has adjusted its business model, folded asset-based consulting and managed services into traditional consulting, and committed to emerging technology.

Cyber liability insurance: Modern security apparatus for modern security threats

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Cyber liability insurance: Leveraging an old concept for modern challenges

Despite modern security challenges, there are modern solutions emerging to help customers navigate security risks, reduce risk for enterprises, generate better security hygiene, and perhaps even foster stronger standard bodies. One solution is taking an old concept, insurance, and modifying it for the data age.

Insurance is a concept that has existed since the Babylonians built the hanging gardens, and likely in some form before that. Insurance generally exists in a love-hate relationship with those that are covered. However, it is often deemed essential (or made essential through law) to cover the many what-ifs of life.

We discussed in the prior section several ongoing security challenges related to liability and business risks that are causing customers to reconsider pursuing digital transformation. However, what if customers’ digital footprints were insured? What if damages from a breach were paid through an insurance company, or if an expert recovery team was funded through a policy that would be dispatched as soon as there was an incident? And what if such a policy included damage control and positive marketing services following a breach? This would make customers much more comfortable by mitigating part of the risk associated with taking the technological leap toward digital transformation.

This is not an “aha” moment. Cyber liability insurance already exists on the market. It is defined by the International Risk Management Institute Inc. as:

 A type of insurance designed to cover consumers of technology services or products. More specifically, the policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network.

Most notably, but not exclusively, cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. The policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.

Companies such as Nationwide and Hiscox, among a long list of others, provide it. However, it is hardly brought up in the digital transformation discussion, and TBR believes it has important market impacts as well as drives opportunities for current security vendors. In terms of the market, TBR believes the more mature cyber liability insurance becomes, the faster organizations will adopt digital transformation. It would be beneficial if cyber liability insurance were part of the conversation when a vendor leads a digital transformation implementation, just as car insurance must be a consideration when buying a new car.

Do not concern yourself with quantum supremacy; the opportunity is in ‘economic advantage’

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Economic advantage is a key, repeatable milestone for quantum computing

TBR defines “economic advantage” as the point at which there is a significant benefit, either in time to insight or the ability to obtain an insight, that makes it cost-effective to pursue a given problem with the help of quantum computing. This does not mean that the benefit needs to be achieved exclusively with a quantum computer. In fact, TBR believes that initial economic advantage will be achieved by disaggregating a complex problem from classical computing to quantum computing and then back to a classical computer to maximize the cost efficiencies of gaining a given insight. Just as quantum computing will hit the market algorithm by algorithm, so will economic advantage.

It is not necessary for quantum computing to reign supreme across the IT space in order for value to be abstracted from the technology. It is also not necessary for quantum computing to take the place of a classical computer in order to provide value. This is a key factor that many vendors in the market are overlooking. Just as cloud is not all or nothing, neither is quantum computing. Cloud, as it currently exists, works in partnership with on-premises environments. In fact, customers prefer the consumption of cloud in this hybrid manner. This is a similar consumption-type model we foresee quantum computing taking, in which classical computing and quantum computing work together to fully harness the power of quantum computing.

As the prevalence of quantum computing continues to increase in the IT realm, there are many different views on the technology. Some believe the technology is so far from being relevant that it is not worth worrying about. Others believe the technology is already here, while still others believe the technology is on our doorstep and the wealth of knowledge it will release for society is almost upon us. Here is one thing we all can agree on: Quantum computing has not achieved quantum supremacy. However, TBR believes there is a far more important metric to concern ourselves with as a society that is much closer than we think: economic advantage.