What Caused the Initial Slowdown in M&A Activity in Federal IT Services?

In March 2022 the Federal Reserve raised the federal funds rate for the first time since 2018, increasing it by 0.25% Prior to this, contractors like Accenture Federal Services (AFS) and Booz Allen Hamilton (BAH) had been rapidly acquiring digital transformation capabilities to capitalize on the demand for IT services as well as emerging technologies from the Department of Defense (DOD) and Intelligence Community (IC).

Macroeconomic Pressures Mount

M&A activity by the vendors tracked in TBR’s Federal IT Services Benchmark began to slow down over the course of 2022 as borrowing rates continued to increase and target company valuations climbed. IBM Consulting’s acquisition of Octo Consulting during 4Q22 to expand the federal unit’s digital transformation capabilities for defense and civilian agencies signaled the end of meaningful M&A activity by IBM Consulting and these 10 other benchmarked competitors: AFS, BAH, CACI, CGI Federal, General Dynamics Technologies (GDT), ICF International, KBRWyle, Leidos, Maximus and SAIC.

What Have Vendors Been Doing to Counteract the M&A Slowdown?

In 4Q23, statutory and organic* revenue growth rates converged for the first time ever in TBR’s Federal IT Services Benchmark. These rates remained essentially the same during 1Q24, reflecting the lack of M&A activity in federal IT.

 

Vendors have been monitoring opportunities over the last couple of years but are largely prioritizing using their free cash flow to repurchase shares, make internal investments or reduce debts. For example, while ICF pursued an aggressive M&A strategy between 2020 and 2022 to penetrate the federal health market by vastly expanding its digital modernization business’s capabilities, the company has since focused on making its balance sheet healthy again while interest rates remain elevated.

 

Most vendors have also turned to strengthening their relationships with existing partners and expanding their alliance ecosystem while M&A has been off the table. For example, General Dynamics Information Technology (GDIT), a segment of GDT, has been working with Fornetix to capitalize on the DOD’s Combined Joint All-Domain Command and Control (CJADC2) vision by demonstrating zero trust security at the tactical edge during military exercises.
 

Click the Image Below to Watch: Senior Analyst John Caucis and Analyst James Wichert review key trends and happenings for the federal IT services market in 2024 as well as provide their outlook for the sector

A Different Route

Some vendors are also being creative. For example, BAH has seemingly favored making venture capital (VC) investments after spending over $725 million on M&A within a two-year period. By doing so, BAH can safely expand its capabilities and relationships without needing much financial leverage.

 

BAH launched Booz Allen Ventures, the company’s $100 million VC arm, in 3Q22. Since then, BAH’s capital allocation strategy has increasingly favored funding small promising companies that are innovating with emerging technologies. For example, in 3Q23 BAH invested in a startup AI security solutions developer called Hidden Layer.

 

Maximus also unveiled its own VC arm in 4Q23 called Maximus Ventures. However, unlike BAH, Maximus has not publicly shared any investments it has made with its VC arm and has stated little about Maximus Ventures other than noting the business was beginning to establish relationships with Seed to Series C partners.

Is M&A Activity Ramping Back Up?

While multiple leading federal systems integrators have indicated they will continue to deprioritize M& during 2024, there have been signs that company valuations have begun to decline, which could cause M&A activity to pick back up.

Recent Moves

ManTech was taken private by the Carlyle Group in September 2022 for $4.2 billion. As ManTech’s restructuring efforts continued, it leveraged the private equity company’s financial backing in September 2023 to purchase IT contractor Definitive Logic Corp. The move expanded not only ManTech’s headcount by 330 but also its AI, cloud and other digital transformation capabilities. It also expedited ManTech’s plans to provide a wider array of services to clients, such as by launching a digital transformation consulting practice.

 

While the acquisition of ManTech was notable, the biggest move from the vendors we cover came from AFS. In April the business announced its intent to buy digital transformation and cloud computing firm Cognosante. The deal was finalized in May and adds around 1,500 people to AFS’ workforce, strong relationships with health IT customers as well as a new health portfolio.

 

Shortly afterward, Deloitte announced it had acquired Gryphon Scientific. While this acquisition is significantly smaller in comparison to the other two acquisitions (Gryphon Scientific is expected to add around $6 million to $8 million in inorganic sales over the next year), it expands Deloitte’s public health research and advisory capabilities with AI and increases Deloitte’s expertise in biosecurity and data science.

 

These recent moves by AFS and Deloitte show that vendors are becoming increasingly interested in lucrative public health opportunities. While they could signal that a period of renewed M&A activity in federal IT is beginning, it is important to note that AFS and Deloitte have fundamentally different business models than most other federal players. They also have the scale and financial backing from their parent companies that most others do not have.

TBR Expectations for the Federal IT Services Market in FFY2025

When the M&A environment actually begins to ramp up, we anticipate that vendors will prioritize acquiring peers that can expand their niche capabilities in AI, cloud, cyber, electronic warfare (EW) and other areas as the DOD, IC and civilian agencies are showing more interest in emerging technologies. While private equity firms remain interested in expanding their capabilities in these areas as well, they will be under greater scrutiny by the Federal Trade Commission (FTC) and the Department of Justice’s (DOJ) Antitrust Division. These agencies published a request for information in May to assess how serial acquisitions are impacting competition in multiple industries including defense and cybersecurity.

 

If Tier 1 vendors do revive M&A activity in federal fiscal year 2025 (FFY2025), expect CACI to be one of the first to get involved. CACI has historically used acquisitions to expand its capabilities and penetrate new markets. Do not expect to see vendors abandon their alliance ecosystem or their joint ventures if this happens, though. Vendors will increasingly lean on the hyperscalers and partners that can help expand their capabilities with the emerging technologies as discussed in TBR’s U.S. Federal Cloud Ecosystem Report.

 

 

*TBR calculates organic growth based solely on the impact of acquisitions, unless the company in question provides guidance regarding the impact of divestitures on its top line. We consider the calendar quarter in which the acquisition was made to be the first of four calendar quarters, or one full year, in which inorganic revenue from the acquired company accrues to the acquiring company’s top line. After the one-year anniversary of the acquisition, we consider the peer purchase to be fully integrated from a revenue standpoint.

For the first time in person since 2019, EY hosted a global analyst summit at the start of the firm’s Innovation Realized event, which was held at San Francisco’s Palace of Fine Arts. The 2024 EY Global Analyst Summit included at least 50 analysts, multiple main stages sessions and breakouts. The following special report highlights conversations between TBR and EY leaders during the event.

EY: ‘We are Business Engineers’

In a space designed to compel analysts, clients and partners to rethink EY’s innovativeness, creativity and technology capabilities, Pat Sullivan, EY’s global digital engineering leader, and Errol Gardner, EY’s global vice chair of consulting, kicked off the Global Analyst Summit by challenging attendees to see EY in a different light and appreciate how much had changed since the firm last hosted analysts, pre-pandemic, at a similar space in Boston.

 

Sullivan noted EY’s daily incorporation of AI, cybersecurity and cloud into consulting engagements, establishing one of the event’s themes: the breadth, depth and interconnectedness of EY capabilities. Gardner described the firm’s strategic marketing position, the value EY can provide by helping clients train and upskill their talent in the generative AI (GenAI) age, and the imperative EY sees in leading the market on sustainability.

 

Both Sullivan and Gardner stressed how much had changed at the firm and suggested the two days of presentations, breakouts and one-on-one discussions during the weeklong event would lead analysts to reconsider — to rethink — what they previously thought about EY.

 

Spoiler: TBR has tracked EY closely over the years, and the event confirmed and solidified TBR’s assessments while adding details around specific practices and a clear sense of EY’s strategic outlook beyond 2024. The following reflects TBR’s observations from the summit and analysis of EY.

‘The Best Edge We Have in Innovation Is the People We Have’

Professional services — especially any kind of consulting — depend entirely on talent. Despite business model disruption occurring across seemingly every industry, EY’s business model remains fundamentally unchanged: Bring the best people to a client’s problem.

 

Underpinning this business model traditionally has been an apprenticeship-based talent development and management model that has seen tweaks and improvements (EY’s badges program stands out) but remains in place, even as generational demands and expectations change, technologies such as GenAI threaten to replace people, and the people adjust and readjust to in-office, remote and hybrid work policies. Garder noted that career experiences are the single biggest thing that motivates people, especially younger professionals, to look for “possibilities, not just job security.”

 

In this human capital management maelstrom, EY’s strengths, including attracting, promoting and retaining its own talent, can likely be credited to the firm’s own People Advisory Services practice (see TBR’s special report EY Puts People First: Navigating Growth with Human-Centric People Advisory Services). Amid the competitive and sometimes chaotic market, EY’s talent strategy relies on reskilling professionals, including through an apprenticeship model, rather than acquiring those professionals and providing them with the top technology.

 

In addition to the blocking and tackling of human capital management, Gardner said the cultural shift requires training “more people to get used to the fact that change is constant, transformation is constant.” TBR believes EY has consistently told a talent story that revolves around upskilling to retain and attracting — not acquiring — talent. Even if this year’s Global Analyst Summit did not lead TBR to rethink its assessment of EY, the consistent talent message from all the EY leaders further cemented TBR’s understanding of the firm as being adept at using its culture to inculcate a talent-centric ethos.

EY’s AI Proposition: ‘Take the Toil Out of People’s Work’

Rooted in a robust data and partner story, EY’s AI strategy aims to disrupt both EY’s and clients’ business models. Five years ago, AI was one of the five demo stations featured at the EY Global Analyst Summit in Boston. Not surprisingly, this time the technology had earned a main stage presentation, followed by a dedicated breakout session.

 

While GenAI continues to dominate news cycles and is influencing EY’s investment and go-to-market strategies, the firm is not new to AI. EY Fabric, a global foundational technology platform, has continued to provide the critical distinction for the firm by being run as one global operating model. It now acts as the cornerstone for the next phase of EY’s AI strategy. EY Fabric’s intelligence layer underpins both technical and functional AI patterns, which are necessary to support the firm’s efforts to drive platform-enabled services revenue.

 

The recently launched EY.ai, a unifying platform, leverages EY Fabric as its technology backbone, allowing EY to deliver the necessary tools and technologies, backed by over 10,000 AI-skilled professionals, as many digitally mature clients pivot from proof-of-concept GenAI discussions to scaled deployments. In September 2023 EY launched EY.ai EYQ, an ecosystem of GenAI capabilities powered by EY Fabric, in addition to upskilling EY employees in AI learning and development.

 

While EY Fabric provides the necessary link to managed services, the platform also connects well with partner technologies. For example, Fabric provisions with EY IP (e.g., analytics, optimized business processes) on top of their partner capabilities such as SAP (NYSE: SAP), Snowflake (NYSE: SNOW), ServiceNow (NYSE: NOW) and Microsoft (Nasdaq: MSFT) to expedite delivery and value to their clients. Microsoft underpins the cloud-first EY Fabric and coinnovates with EY on the hooks into customer data.

 

ServiceNow provides the base workflow shell for many of the EY managed services workflows. These relationships further amplify EY’s enterprise transformation value proposition. We believe EY is aware of its strengths as the firm continues to collaborate with partners, including technology and services companies, to ensure it maintains service quality and protects its brand.

 

As with any technology, use cases accelerate time to market, so EY is tapping into its internal transformational efforts as well as across its broader portfolio, including its tax, audit and risk assurance practices, to demonstrate value. Earning and sustaining client trust through audit-grade transparency play to EY strengths but also heighten expectations, especially as vendors often struggle to highlight the golden opportunity of data.

 

With EY transforming its own business model to account for the implications of AI, building a repeatable framework around three pillars — augment (inject AI streamline ways of working with AI-enabled professionals), disrupt (prioritize and execute an AI refactoring of EY’s portfolio) and drive repeatability with GenAI platform and agents (driving new revenue through repeatability) — the firm has an opportunity to test its risk-taking boundaries, as executing on such disruption often requires broader internal consensus, which is not an easy task and is especially harder for Big Four firms.

 

Pivoting from a traditional time-and-materials commercial model to an outcomes-based setup is not a new concept, but EY’s aspiration to make the firm’s AI-enabled services offerings 10 times better and 10 times cheaper will also test the firm’s ability to monetize the technology not just as a service enabler but as a software asset. (Note: During the event, EY claimed it was the 30th-largest software provider. TBR will publish a separate blog post on EY’s software and assets practice.)

 

Strong examples within EY’s Third-party Risk Management solution helped bring ambition to life and highlighted what analysts can expect as the firm applies its own business transformation efforts at scale with clients. On one hand, EY’s “cheaper” and “better” messaging raises questions about the firm’s decision to position AI as a loss leader to drive consulting and managed services opportunities.

 

On the other hand, it would be dismissive for us to put “AI” and “loss leader” in the same sentence, given the opportunity the technology presents to generate high fidelity, data-driven insights and accelerate time to value. Contextualizing data at scale will help EY stand out from a crowded market, but only if clients and technology partners can equally praise the firm’s value proposition and service delivery execution.

‘EY Does a Great Job Providing Confidence in the Market’

Following the failed attempt to split its consulting and audit business, EY now can prove critics wrong. The firm is developing a profile of a solution broker that has the depth and breadth of knowledge of just a few but critically important technology providers, where much of the ecosystem development is occurring.

 

Selling business outcomes orchestrated by EY, and by a collection of partners, enables EY to disrupt the status quo in the traditional bilateral services technology vendor relationships and evolve toward multiparty vendor support. The concept of ecosystem with EY as an orchestrator plays to the firm’s strengths as long as EY stays focused on delivering client outcomes through the best-suited technology.

 

During a main stage presentation, Greg Sarafin, EY’s global alliance and ecosystem leader, hosted three of the firm’s top alliance partners, including Microsoft, SAP and ServiceNow. This is not the first time Sarafin and EY have taken that approach. Back in November 2022, during EY’s Global Data and AI Summit in Malaga, Spain, the firm brought six of its data and AI partner companies, ranging in size and portfolio offerings, to present onstage: Databricks, IBM (NYSE: IBM), Microsoft, RelationalAI, Snowflake and UiPath (NYSE: PATH).

 

EY’s approach to partners is different from many of its peers’ as the firm does not go to market with a particular vendor unless EY uses that vendor internally. Adopting a customer-zero approach to its alliance partners elevates EY’s trustworthiness, a key element in the firm’s efforts to act as an ecosystem enabler.

 

During the 2024 summit, the appreciation for collaboration between EY, SAP, Microsoft and ServiceNow at a multinational dairy company provided a strong use case for how each partner sees its value within the ecosystem supporting EY’s alliance-enabled business. EY’s partner-enabled business has become one of the firm’s key growth pillars. For example, EY has grown alliance-driven revenue from $1 billion in FY17 to $8 billion in FY23 and is on path to reach $10 billion in FY24.

 

Part of EY’s success is the firm’s ability to not pit partners against each other and to have specific solutions with specific partners that are not replicated across partners. This is a strategy we believe will be amplified moving forward as EY strives to grow its overall technology consulting and cloud business while also investing in proprietary software and assets.

 

While one can argue that EY is over indexed on Microsoft, given the relationship helps EY generate roughly 40% of its alliance-enabled revenue, EY’s SAP and ServiceNow businesses are also growing at a strong pace, testing the firm’s agility, especially as a result of SAP’s ever-changing priorities in terms of portfolio and commercial model adoption.

 

Pairing comments from the 2024 main stage presentations with both formal and sidebar conversations with EY’s SAP and ServiceNow practice leads, TBR walked away with a greater appreciation of the firm’s willingness to work toward establishing a preferred partner status with these vendors. For example, during an SAP breakout session, a joint EY and SAP client, a large semiconductor company that previously had not worked with a C&SI provider, discussed the value of the 360-degree relationship EY and SAP have and how that has helped with executing on a back-office transformation program and moving from on premises to cloud.

 

While that use case might appear as yet another SAP migration project, being able to convince a client that had not spent money on SAP and was now looking to try S/4HANA to optimize its supply chain process highlights EY’s ability to manage trust within the ecosystem.

 

Furthermore, now that Phase 1 of the project is complete, EY has the opportunity to not only continue supporting the client but also leverage the use case to create a three-way partnership between SAP, EY and the technology client and drive targeted conversations with clients grappling with similar issues, thus generating partner-enabled revenue from the client as well. Partner integrations with leading data service providers will be a critical component of adoption growth, creating an opening for EY to demonstrate its data orchestration capabilities and drive opportunities that could allow the firm to close the gap with Accenture (NYSE: ACN) and Deloitte in terms of its SAP practice revenue.

 

EY’s SAP strategy has required a sustained commitment to attracting and retaining the right talent, adeptly mirroring SAP’s various strategy shifts and building a credible — and substantial — collection of use cases. TBR has tracked EY’s SAP journey closely over the last decade and anticipates continued growth as the two companies see their strengths reflected in market demands. (Note: TBR is developing a research stream for 2024 focused on services providers’ relationships with back-office systems technology partners, including SAP.)

 

Meanwhile, ServiceNow’s recent purchase of EY Smart Daily Management, a connected digital worker application, highlights the trust and depth of the relationship. Both partners seek to expand addressable market opportunities within the operational technology space, where EY also manages strong relationships with Dell Technologies and PTC. Additionally, ServiceNow’s knowledge-managed text-to-code and text-to-app play will create capacity and opportunity for EY’s business consultants to conduct higher-value work with less need to add talent on the services deployment side.

 

People, technology and processes will remain the key pillars of EY’s ability to grow partner- and overall technology-related revenues. As the firm continues to invest in training and development initiatives across the organization to account for GenAI implications, developing dedicated career tracks will help EY strengthen ecosystem trust. For example, EY is in the process of designing the Distinguished Engineer track, which will be among the highest and toughest EY designations one can earn, helping EY to more closely transform its identity into that of a technology-enabled company.

 

Launching such a career track is a smart strategy and is in line with some of EY’s prominent partners such as IBM. EY understands the gap it must close with some of its services peers when it comes to C&SI revenue. But as long as the firm executes on doing cloud right, rather than pursuing a cloud-first strategy, EY has a chance to increase client and partner stickiness, especially as tech partners now face remaining performance obligations with clients, thus creating a consulting opportunity around FinOps, education and change management for EY.

Keeping It All Together: Supply Chain, Cybersecurity and Managed Services

Everest, the elephant that left the room at the Global Analyst Summit, provided a common, if unintended, theme connecting many of the breakout sessions: EY brings clients a wide range of professional services capabilities, with cross-firm collaboration and coordination more central to EY strategy than ever before. TBR attended breakout sessions in addition to the ones detailed below and will provide details in future EY-specific reports and within the upcoming Management Consulting Benchmark.

‘I Believe Supply Chain Can Change the World’

On the main stage during a presentation titled “How EY teams are helping provide value for a new economy in which businesses, people, and planet thrive” and the following discussion of EY’s sustainability offerings, Sheri Hinish, EY’s global sustainability, technology and ecosystems leader, set the bar high for the subsequent Supply Chain breakout session with her comment about the supply chain’s world-saving ramifications.

 

Glenn Steinberg, global supply chain and operations leader, and Matthew Burton, EMEIA supply chain leader, did not shy away from the challenge and made a compelling case for EY’s role as a leading consultancy and supply chain orchestrator. Steinberg described his firm’s value promise as “resilient, sustainable and tax-efficient supply chains,” notably highlighting tax as a component, which was a prevalent sentiment throughout the event. Steinberg said over 6,000 EY supply chain professionals support “90% of the 50 largest supply chains and 75% of the Fortune 500,” while cautioning that EY cannot serve those clients alone: “You need an ecosystem to deliver.”

 

Burton and Steinberg added that while the firm’s offerings include pure cost-containment engagements, the supply chain practice earns most of EY’s annual revenue from transformational consulting and implementations.

 

Turning back to tax, Burton said the firm has found upward of $100 million in tax savings for clients through supply chain transformation engagements. At the same time, Burton noted that “nearly every [supply chain] project includes a sustainability component … and that percentage is growing.”

 

In TBR’s view, the seemingly seamless connections between EY’s supply chain, tax, cybersecurity and sustainability professionals — not to mention its strategy, transformation and cloud practices — in an unexpected way underscored Gardner’s main stage comment that we are currently in an “era where it’s not about one organization or a single buyer.”

 

Gardner was stressing the importance of EY as an ecosystem partner to technology vendors, academic institutions and other ecosystem actors, but the supply chain leaders highlighted that even within EY, getting the most value comes from tapping into multiple parts of the organization — echoing, fittingly, supply chains.

EY Cybersecurity and Risk: ‘Their Chore Is Our Core’

During a breakout session dedicated to cybersecurity and risk, EY Global Cybersecurity Leader Richard Watson and Global Risk Consulting Leader Whitt Butler described the firm’s go-to-market strategy as rooted in confidence in EY’s capabilities and assurances to clients that the firm can bring the best collection of ecosystem technology partners, most notably Microsoft, Splunk, ServiceNow and CrowdStrike (Nasdaq: CRWD), to any transformational engagement.

 

Butler highlighted EY capabilities around internal audit modernization, responsible AI, resilience (including getting in front of supply chain shocks) and digital risk management. Watson stressed EY’s strengths in cybersecurity transformation, incidence resilience and response, and trusted AI, as well as EY’s fast-growing Cybersecurity Managed Services business.

 

Watson added that Cyber Managed Services currently contributes approximately 30% of the firm’s cybersecurity revenues, and EY expects to reach a 50-50 revenue split between consulting and managed services work by 2030.

 

In mid-2023, TBR spoke at length, over multiple meetings, with EY cybersecurity leaders and noted that in the maelstrom that is cybersecurity, EY has “demonstrated a willingness and ability to play well, enhancing the technologies and capabilities of strategic alliance partners and vetting, nurturing and accelerating the development of smaller firms without compromising EY’s core value proposition around trust and transformation.”

 

TBR stands by that assessment a year later and notes that among the various breakout sessions during the San Francisco event, the cross-practice alignment between Cybersecurity & Risk and Supply Chain stood out, reinforcing another point TBR made in its 2023 special report: EY has shown a “commitment to seamless and highest-quality security services at any client’s location, including the necessary talent on the ground lends credibility to EY’s claim that the firm is a market leader for cybersecurity.”

Managed Services: Evolving Toward $9B

During EY’s Managed Services session, Paul Clark, EY’s global vice chair of managed services; Scott Mullan, EY’s data and insight managed services leader; and Sameer Sinha, an EY technology consulting and finance & data technology partner, discussed the current state of EY’s Managed Services practice and highlighted recent advancements through the firm’s partnership with GE.

 

EY projects the practice will generate $9 billion in EY’s FY24 owing to four main trends: speed, AI proofs of concept, industry layers, and interoperability of data and intelligence. EY looks to evolve the practice, bringing in new domain and industry expertise to transform clients’ business processes and address challenges beyond traditional business functions.

 

Through its work with GE, EY developed the Finance Data Lake (FDL), which connects the talent at GE to data and outcomes. Through the platform, EY was able to centralize and consolidate GE’s back-office functions, providing greater visibility into back-office operations and improved productivity. Further, EY improved GE’s divestiture management by creating three separate businesses enabling a commercial mode. Using the FDL platform, EY can pursue subindustries while also delivering core capabilities that enable users to leverage data insights, enhance user experience and manage a unified data model.

 

EY’s Managed Services continues to focus on people and asset-based functions to support core business needs, enabling EY to provide clients with the tools and services needed to leverage data and insights, experience, and productivity. Leaning on its sector and domain expertise positions the practice to execute on technology needs through a services lens, bolstered by EY’s ecosystem, enabling clients of the Managed Services practice to achieve business function outcomes.

EY-Parthenon: 10 Years of Staying Focused on the Biggest Problems

EY’s 10,000-plus-employee strategy consulting sub-service line, EY-Parthenon, which has been part of the firm for more than 10 years, remains focused on clients’ big-spend events: large transactions and transformations. During the Strategy breakout, Barak Ravid, EY-Parthenon’s Americas leader, and Pierre Beaufils, EY’s Global Business Consulting leader, detailed the firm’s changes and current focuses of EY-Parthenon.

 

Divest, sell and spin activities continued to remain a core piece of the practice as many clients consolidated business operations, requiring the establishment of new operating models. Further, EY delivers on Sell & Separate, Buy & Integrate, and Diligence services.

 

Ravid and Beaufils emphasized the strength of EY-Parthenon’s team and leaders, growing its scale to deliver on client needs and expand the business. Further, hiring both lateral and executive talent extends the strategy brand and enables EY to work closely with its clients on these bigger spend areas. EY-Parthenon focuses on strategy and execution to provide clients with the sales strategy and channels as well as pipeline management they need to progress and navigate in a new operating environment.

People and Organization: Transform and Transact

The People and Organization breakout, led by Joe Dettmann, EY’s Global People Advisory Services Solutions Enablement leader; Maya Smallwood, EY’s Global People Advisory Services People experience leader; Jonathan Sears, EY’s People Advisory Services Global Technology leader; and Randy Beck, EY’s Global and Americas Organization & People Field of Play leader, focused on the influence of AI on people management and resource strategies. The leaders discussed three main points: transact to transform; “humans at the center” and the importance of people; and insight to action.

 

With people experience as a core element of EY’s People Advisory Services, the EY leaders discussed cultural transformation and the importance of bringing talent to the center of the transformation, lessening the uncertainty caused by transformation. For example, as EY has integrated its technology tools within People Advisory Services, it provides analysis on where disruption lies to help manage the impact AI has on the organization. Further, following the analysis, organizations can adjust compensation and talent management measures to reap the benefits of transformation projects.

 

Data and analytics have changed the way People Advisory Services influences client decisions, providing dashboards with insights over spreadsheets of data, equipping clients to gather insights and best practices. To upskill and reskill talent following the business decisions, the EY leaders discussed the use of GenAI to create educational videos as opposed to previous in-person training sessions, which took longer and were more expensive. Keeping true to the themes of the sessions, the leaders indicated the old way of transformation only sought to transform; using the technology and tools enables clients to both transform and transact.

Sustainability Is Front and Center and Has to be ‘Infused’ Into Everything

When EY leaders discussed climate change and sustainability during both the main stage presentations and a special breakout session, they echoed many of the event’s overall themes around talent, partnering and technology. In addition, EY leaders stressed the firm’s dedication to setting an example through its own sustainability commitments (TBR will dive deeper into this topic in our upcoming Decarbonization Market Landscape, scheduled to publish in July).

 

As part of EY’s strategy to advance broad societal goals around climate change and sustainability — while playing to the firm’s own strengths as an ecosystem orchestrator — EY leaders mentioned cooperation with various nongovernmental organizations and academic institutions, including advocating for standards that promote trust and transparency. Unsurprisingly, EY leaders noted regulatory and reporting changes will be a key source of revenue growth for the firm’s Climate Change and Sustainability Services practice. Assurance is now a global sustainability issue, driven in part by U.S. companies with European operations being compelled to adhere to European Union requirements.

 

During a sustainability breakout session, EY leaders noted that many engagements begin with clients seeking capabilities and skills needed for specific sustainability-related issues. EY, which has more than 4,000 professionals dedicated to sustainability and climate change-related services, can bring highly specialized capabilities to address specific problems, and then pivot to broader strategy, transformation and tax consulting services to meet clients’ wider range of sustainability needs.

 

Widening the scope to all professional services, EY Global Climate Change and Sustainability Services Leader Matt Bell noted that “it will be hard to sell anything in professional services without considering sustainability.”

‘Rethinking Is a Deep Process’

Rethinking clients, partners and portfolio offerings requires a commitment by leadership, something that we experienced firsthand at EY and that has set a high bar for the next Global Analyst Summit. The constant presence of multiple EY leaders and partners who were engaged throughout the event provided ample opportunities to have both formal and informal conversations.

 

During the event, TBR captured insights and assessed EY as the firm irons out its new go-to-market strategy. Transformation and the need to recalibrate an organization’s portfolio and skills are topics often discussed by EY peers, but many lack EY’s approach to change, which consists of three steps: recognize that change permeates all layers of the firm and its ecosystem stakeholders; pivot quickly to execute against those changes; and help clients optimize existing assets now, rather than rattling on about digital transformation programs.

 

Following EY’s 2019 Global Analyst Summit, we wrote: “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.” Five years later, as EY continues to maneuver in choppy macroeconomic conditions, we believe the compass readings are even more clear: EY must be the partner of choice for clients and alliances that matter.

 

TBR believes EY’s post-Everest, post-pandemic, GenAI-era strategy will center on three poles: industry expertise, deep-seated technology alliances, and selectivity around clients and opportunities. One consistent element highlighted during the 2023 GenAI hype cycle that has persisted into 2024 has been technology-centric ecosystem players turning to consultancies, such as EY and peers, for domain knowledge.

 

Making AI useful in a business setting requires an understanding of the business setting. Sullivan’s description of EY as “business engineers” fits perfectly within current market trends and can help EY maintain its position in the AI, GenAI and broader technology ecosystem. And within that ecosystem, EY has turned its go-to-market restrictions into an asset: As EY Americas SAP Strategy Lead Jesse Rothermel noted to TBR, EY’s audit responsibilities with Oracle, Salesforce and Workday “give SAP some extra confidence” in working with EY. This is making lemonade out of lemons, perhaps, but it is also how TBR sees EY’s strategy as the firm’s technology partnerships continue to evolve into deeper, more intertwined and more aligned alliances.

 

Lastly, TBR expects EY will focus on using the breadth of its offerings to go deeper with select clients, potentially forgoing an expanded client base in an effort to bring as many of its consulting, tax and technology services to those clients whose needs are most aligned to EY’s capabilities. TBR anticipates EY’s next strategy will focus on being industry experts with tighter-than-average technology alliances that can address clients’ every professional services need.

 

TBR will continue to assess EY’s evolving business model and GTM strategy and will include our analysis in the upcoming Management Consulting Benchmark profile on EY, ecosystem intelligence report series, and Digital Transformation and Professional Services reports and benchmark coverage.

  

At our first MongoDB, Inc. event, MongoDB.local, TBR was able to learn firsthand about MongoDB’s evolution from an operational database to a developer platform for modern apps. The keynote, breakout sessions, executive Q&A and customer stories reinforced the value of MongoDB’s widely accepted document architecture, which is already powering many enterprise applications today and will propel MongoDB in its efforts to build new developer capabilities and cutting-edge applications. Partners, including all three major hyperscalers and SIs, had a significant presence at the event, speaking to MongoDB’s ability to tap into a growing ecosystem of hyperscalers and global system integrators (GSIs) eager to harness a technology-agnostic data layer for generative AI (GenAI) leadership.

TBR Perspective

In his opening keynote, MongoDB (Nasdaq: MDB) CEO Dev Ittycheria put GenAI in perspective, offering a realistic point of view that while GenAI may help draft emails, it is premature to be used in truly transformative ways. In other words, there is no comparison between the rise of GenAI and the internet boom and subsequent evolution of brands like Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX), Google (Nasdaq: GOOG) and Uber (NYSE: UBER), which launched new business models, elevated consumer experiences and completely transformed markets.

 

We see his point, as our own Cloud Infrastructure & Platforms Customer Research continues to reveal that back-office tasks like customer support and administration are the most common GenAI use cases. We also share his optimism that GenAI will help streamline developer productivity and thus pave the way for a new set of applications that are actually disruptive, not only in how they enhance productivity and cut costs but also in how they transform business operations.

 

MongoDB humbly recognizes that becoming the standard platform to enable this next wave of apps may be a longer-term play, as we are still only scratching the surface of GenAI’s potential. The first players to recognize the benefit will be those that enable, provide and host large language models (LLMs), namely NVIDIA (Nasdaq: NVDA) and the hyperscalers. But the next set of companies to benefit will be platforms like MongoDB, and by honing the document database architecture, relationships with the hyperscalers and an R&D engine catered to the developer experience, MongoDB is positioning to become the standard developer platform for GenAI.

 

MongoDB has solidified itself as the most popular NoSQL database but quickly realized that to handle the demands of complex applications, developers need broader functionality than what a core operational database offers. Adding features like Atlas Search and Time Series collections to its document database has allowed MongoDB to deliver a more complete, integrated platform and grow mindshare with the 175,000 developers who try MongoDB for the first time each month.

 

Naturally, MongoDB has recently focused on adding features for GenAI as part of its longer-term play to power next-gen apps, as evidenced by MongoDB’s launch of Atlas Vector Search last year. Other cloud database vendors also offer vector search, which retrieves information from unstructured data. Enhanced features like Vector Search are also key to the allure of Atlas, the fully managed, scalable, multicloud offering of MongoDB’s platform that is an alternative to Enterprise Advanced (EA) and Community Server, the free version of MongoDB.

 

Since Atlas launched in mid-2016, MongoDB has been actively leveraging GSI partners, its own professional services division and a series of code conversion tools as part of the “technology + process + people” methodology. This approach helps customers transition from on-premises MongoDB products, as well as external relational databases like Oracle and Microsoft SQL Server, to Atlas.

 

These initiatives, coupled with go-to-market support from the hyperscalers eager to have a feature-rich platform on their infrastructure, are making MongoDB largely synonymous with Atlas. With over 46,000 customers, Atlas now accounts for 66% of MongoDB’s total revenue and is available in 117 cloud regions across Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP).
 

MongoDB Rallies Ecosystem Around its Evolving Developer Platform to Power Next-gen Apps

A prerequisite for any successful platform company, MongoDB partners with all the major hyperscalers, tapping into their vast infrastructure scale, customer bases and native toolsets, to attract new workloads. Looking to make Atlas the foundational data layer for GenAI in the cloud, MongoDB has made its Vector Search capability available with all the hyperscalers’ GenAI hosting services, including Amazon Bedrock, Google Vertex AI and Azure OpenAI Service.

 

Vector search is by no means a unique capability in the age of GenAI. Hyperscalers are also using vector search in their own databases, but the vast amount of operational data already sitting within MongoDB will be a key consideration for customers that would otherwise consider a stand-alone vector database.

 

Meanwhile, integrating with the hyperscalers’ code assistants and copilots to abstract complexity and make it easier for developers to build on MongoDB will be a key component of the partner strategy. From a go-to-market perspective, cloud marketplaces will remain key to MongoDB’s success, as they give customers a way to consume Atlas as part of their existing cloud commitments.

 

MongoDB has added hundreds of customers by incentivizing direct sales teams to land more self-service customers on the hyperscalers’ marketplaces, an approach that will serve as a productivity lever by freeing up strategic resources for top enterprise accounts with a focus on onboarding net-new workloads.

Key Takeaways From Each of MongoDB’s Hyperscaler Relationships:

• AWS: Over the years, we have seen AWS become more welcoming of ISV solutions that overlap with its own native services, provided those solutions land on AWS infrastructure. This shift has benefited partners. For example, MongoDB is delivering integrations with AWS, including Atlas Vector Search with Amazon Bedrock, which allows for the customization of models in Bedrock using data stored as vector embeddings in MongoDB. Developer empowerment has always been a trademark for AWS and with Bedrock, AWS’ goal is to democratize GenAI, making it accessible to not only the largest corporations but also startups, which closely aligns with MongoDB’s value proposition. Meanwhile, after experiencing triple-digit growth in the active number of customers, the expansiveness of the AWS Marketplace is unmatched and continues to be an investment focus for the cloud giant, more recently in the form of new APIs, IaC (Infrastructure as Code) assets and lower prices.
• Microsoft: Microsoft (Nasdaq: MSFT) has taken a large stake in the legacy database market, and with roughly 20% of new Mongo EA business coming from applications migrated from legacy relational databases, MongoDB has arguably a more contentious relationship with Azure compared to that with the other hyperscalers. However, as highlighted during a one-on-one chat between Ittycheria and Microsoft VP of Global ISV Solutions Alvaro Celis, over the past two years Microsoft has become more effective at embracing the platform mindset to make Azure the de facto platform for enterprise data estates. Like AWS, Microsoft had a shift in mindset to overcome when it comes to partners; for Microsoft, it was recognizing that if it wanted to truly be a prominent cloud platform company, it had to offer customers maximum choice. We are now seeing this approach facilitate ISV activity and pave the way for MongoDB to align with Azure more closely in areas like engineering to improve the Atlas on Azure experience and deliver more integrations with Azure data services, including Microsoft Fabric. MongoDB’s primary focus is becoming a standard for the enterprise at the operational data layer, and the company appears to recognize the value of staying in its own swim lane. Having partners deliver solutions like Fabric that address the upper-level analytics components of the stack and help make MongoDB part of a more complete solution is important and adds a level of differentiation to the Azure-MongoDB relationship that may not exist for other hyperscalers that have yet to adopt Microsoft’s platform-first mindset.
• Google Cloud: At the event, MongoDB and Google Cloud announced an expansion of their alliance to optimize Google Cloud’s Gemini Code Assist for MongoDB. This announcement comes as Gemini replaces DuetAI throughout the entire GCP portfolio. MongoDB already optimized AWS’ code assistant Code Whisperer by using a customized foundation model so Code Whisperer can make suggestions specific to MongoDB use cases. While the technical relationship is less integrated, the coselling relationship has been well-developed for some time now and is poised for rapid growth given Google Cloud’s audience of born-in-the-cloud developers and increasing focus on empowering developers, the bread and butter of MongoDB.

New MongoDB Services Program Unites Major Players Across the GenAI Stack

One of the top announcements at MongoDB.local was the launch of the MongoDB AI Applications Program (MAAP), a high-touch services offering designed to make it easier for customers to build modern applications. Launch partners include AWS, Microsoft and GCP, as well as LLM providers like Anthropic and Cohere. Collectively, technology partners will align their technology with MongoDB Professional Services through a series of hands-on engagements like prototyping sessions and hackathons, both of which are good ways to engage developers and generate pipeline.

 

Despite all the hype, many customers are still looking for ways to get started with GenAI, and MAAP will be a good way to unite the multiple vendors that MongoDB customers will ultimately use for their GenAI projects. When customers do start taking advantage of GenAI, they will also look to tie the technology to a specific business outcome and work backward from that outcome. This is where the industry and business focus of the SIs come in, and they will undoubtedly play a role in MAAP, supplementing MongoDB Professional Services.

 

MongoDB does work with Tier 1 GSIs like Accenture (NYSE: ACN) and Infosys (NYSE: INFY) but has long adopted a strategy of taking a stake in boutique SIs and scaling them over time. This strategy has a lot of merit, especially as our findings continue to reveal that while the GSIs are excited about the GenAI opportunity, they appear to view data architecture as a pass-through layer to higher-value components of the stack like analytics.

 

This may change as customers recognize the symbiotic relationship between data strategy and GenAI, but GSIs seemingly less interested in dedicating resources to a close-to-the-box data platform will appreciate having a niche SI train Tier 1 consultants on MongoDB. This expected rise in interest level will increase the likelihood that these smaller firms will get acquired by the likes of Accenture, creating new opportunities for MongoDB to expand its relationship with a brand-name professional services firm and tap into its enterprise base.

Conclusion

MongoDB.local NYC told a story of continued product and go-to-market execution, with a meticulous focus on improving developer experiences and driving a more cohesive partner ecosystem inclusive of technology and services players.

 

While the event showcased new partner integrations and Atlas feature updates, it did not highlight any major strategic changes, adding a refreshing and humble tone to the event that suggests MongoDB understands the role it plays and will continue to play in the GenAI revolution.

 

While in some ways waiting for the hyperscalers’ and subsequent customer investments in GenAI to materialize, MongoDB is actively developing and integrating with partners, recognizing that over time, it stands to benefit as customers look for a neutral platform to develop a new set of modern, disruptive applications.

TBR perspective

Comcast Business (Nasdaq: CMCSA) is entering a new phase of evolution as the unit aims to extend its enviable 18-year track record of consistent, steady revenue growth in the face of new competitive threats and market maturity. Since its formation, Comcast Business has increased revenue from $256 million in 2006 to $9.3 billion in 2023, a CAGR of nearly 24%, and is on a path to achieve $10 billion in revenue in 2024.

 

Most of this growth over the past 18 years stemmed from the SMB segments, where Comcast Business’ superior DOCSIS-based, hybrid-fiber coax (HFC) fixed broadband offerings were priced right compared to non-fiber-to-the-premises (FTTP) telco offerings and met a market need for more bandwidth. This strong competitive advantage enabled the company to take a commanding market share lead (i.e., Comcast Business now has over 50% market share in the small business segment in its network footprint markets).

 

However, the broad prevalence of 5G fixed wireless access (FWA), which Verizon (NYSE: VZ), T-Mobile (Nasdaq: TMUS) and a range of other mobile network operators across the U.S. market are actively promoting, has created a strong competitor to Comcast Business’ fixed broadband offerings, especially in the small business segment, which tends to include businesses with fewer than 25 employees.

 

This headwind, in addition to overall market maturity in the SMB domain for network services (e.g., internet access and VoIP) and the sustained decline in pay-TV subscriptions, has prompted Comcast Business to focus on selling small businesses value-added services and solutions, such as mobile broadband (via its MVNO offering) and internet failover services (using cellular technologies) as well as network security, such as SD-WAN.

 

Additionally, from a global enterprise and U.S. public sector perspective, Comcast Business has been driving growth from these higher-end segments, thanks to acquisitions and organic growth, but the unit is encountering stiff competition from entrenched incumbents, notably AT&T (NYSE: T) and Verizon.

Impact and opportunities

Solution sales approach is winning formula for larger customers

Comcast Business’ sales approach is evolving, especially as it pertains to its larger customers. Leveraging best practices from Masergy (such as orienting salespeople to sell solutions versus point connectivity services, and fine-tuning how to assemble solutions with out-of-footprint aspects) has enabled Comcast Business to broaden the scope of its deals and embed itself deeper into its customers’ operations, which reduces churn and drives more favorable outcomes for both sides. Masergy has also helped Comcast Business better understand the SLA requirements of larger entities, preparing Comcast Business to be more relevant to a broader swath of customers.

Mobility stabilizes SMB revenue amid FWA threat

Comcast Business’ cellular MVNO offering has enabled the unit to offset (or prevent via bundling) revenue erosion in fixed broadband and pay-TV, but there are limitations to how much this service can contribute because Comcast’s arrangement with Verizon restricts customers to 20 lines per account.

Comcast Business has also been cross-selling network security products (such as SD-WAN and SASE-based solutions) to SMB customers in a bid to capture more share of wallet.

AI is not new for Comcast

Comcast Business leaders outlined several ways the unit has been part of the AI revolution since the technology entered the scene in the early 2010s. Specifically, Comcast has been using “traditional AI,” also known as predictive AI, for its TV remotes (i.e., built-in voice search function), customer care operations (i.e., chatbots) and network operations (e.g., anomaly detection and preventive maintenance), and the company claims it has 250 people on its AI team, including 35 employees who have PhDs.

 

The next phase of AI embedment into Comcast Business’s operations pertains to GenAI, which is likely to be leveraged in customer care and sales domains initially. Comcast Business is also leveraging data and automation to provide key insights and tools to help customers make decisions as well as increase analytics and remediation capabilities.

 

Additionally, Comcast Business is increasing the number of AIOps use cases and applying AI and machine learning (ML) across its managed solutions platform to improve service delivery, assurance and management, both for customers and the internal teams that support customers (e.g., network operations center [NOC] and security operations center [SOC], help desk).

Comcast Business intends to balance AI and automation with the “human touch”

Comcast Business leaders believe keeping humans in the loop is a differentiator in an AI-infused world and emphasized the need to balance AI and automation with human involvement in the unit’s customer interactions.

 

One key way to achieve this balance is to keep a human in the loop and leverage AI and automation to augment and make existing salespeople and customer care agents more productive. Ultimately, business customers expect to be able to pick up the phone and talk to a real person in a quick and effective manner. AI and automation can help staff be more efficient in preparing sales proposals and resolving customer issues.

International business strategy remains unclear

Though Comcast Business’ domestic U.S. strategy and value proposition are clear and fine-tuned, the unit’s international strategy still seems disjointed, consisting of a patchwork of various acquisitions (e.g., Sky, Deep Blue Communications, Blueface, iTel, Masergy) and off-net partnerships with a range of service providers and vendors that seem to lack a clear and coordinated plan for growing revenue in the international business sector.

 

Opportunities since the Masergy acquisition remain the strongest component of Comcast Business’ international approach, but much of this traction is driven by Comcast Business working with its U.S.-headquartered customers in their locations outside the U.S. rather than securing significant net-new organic customers from international markets.

 

To leverage its international assets and drive sustainable growth, Comcast needs to formulate a cohesive strategy and competitive value proposition for non-U.S. markets, similar to the approach it has taken in the U.S. Focusing on specific countries and/or industries may be a prudent approach, at least initially.

Nascent growth areas remain experimental and ad hoc

Though Comcast Business continues to explore opportunities and be pragmatic in private cellular networks, edge computing and network APIs, the company acknowledged that sustained market development in these areas is lacking but that nascent opportunities may gain traction over time.

 

Comcast Business is specifically focused on scalable use cases in which 5G is superior to Wi-Fi, such as computer vision and autonomous guided vehicles (AGVs), and on edge computing-related use cases where low latency is a requirement. Comcast Business is also focused on leveraging edge computing to make its internal network operations better, such as for localized content caching or for enhanced cybersecurity offerings.

Do customers really need multi-gig symmetrical bandwidth?

Comcast Business continues to trumpet the strength of its DOCSIS-based, HFC network platform, with multi-gig (up to 10Gbps) symmetrical bandwidth now heralded as the newest and best offering on the market.

 

While this claim may be true, most businesses do not need that much bandwidth at one location. Therefore, Comcast Business’ claim could create a disconnect between what marketing is pushing and what customers actually need. As evidenced by the robust uptake of FWA, small businesses especially are more concerned with the value they are getting for the price paid, and they are migrating to lower-cost broadband offerings to obtain internet access that more closely meets their needs and aligns with what they are willing to pay.

 

T-Mobile and Verizon are feeding this market shift to “rightsized bandwidth” through clever marketing and customer education about what businesses actually need. Comcast Business will need to demonstrate why its cutting-edge broadband offerings are necessary for its customers in order to justify the premium pricing.

Conclusion

Comcast Business remains a dominant competitor in the U.S. SMB market and a credible challenger in the U.S. enterprise and public sector segments. As FWA and market maturity challenge Comcast Business’ SMB segment, the company is preparing to offset this impact via stronger traction with larger entities. A more cohesive international strategy will strengthen Comcast Business’ growth profile, and TBR projects the unit has more years of steady growth on the horizon.

In early March, TBR met with Alec Massey, Principal, Connected Solutions, PwC US, to discuss recent developments, the overall state of the technology consulting market, and near-term expectations for Connected Solutions. The following is based on that discussion and TBR’s ongoing research on PwC.

Embracing Partners to Elevate the Value of Connected Solutions

PwC Connected Solutions has evolved in recent years to encompass an unexpectedly — for a Big Four professional services firm — broad set of offerings, ranging from sensors and hardware to network and cloud to dashboard analytics and reporting. Using a managed services business model, PwC Connected Solutions provides physical IoT sensors, using either a third-party’s hardware or a client’s existing technology.

 

The firm also installs the necessary connectivity for IoT solutions and provides configuration, testing and analytics, rounding out the IoT package. Massey shared extensive details about the firm’s technology capabilities, particularly about PwC’s patented Indoor Geolocation Platform, which has deployed in numerous hotels and casinos currently, and the firm’s Signal Graph analytics platform that uses AI and machine learning tools to draw insights from streaming time-series datasets. The firm has begun expanding its platform IoT solutions to the hospital sector and various opportunities in Mexico.

 

While TBR cannot evaluate the technological advantages of PwC Connected Solutions, one clear difference between the firm’s IoT practice and those of similar consultancies is PwC’s willingness to embrace the channel partner business model. According to Massey, the “channel partner model is an innovative concept for PwC where large technology firms are licensing our applications to sell and deliver to their clients.”

 

According to Massey, channel partners allow PwC to accelerate and scale into new markets that the Connected Solutions team has not prioritized. In TBR’s view, PwC’s decision to adopt a business model that is outside of the firm’s traditional approach but is prevalent in the IoT ecosystem reflects a strategic approach to meet technology partners where they are and meet their business model needs.

The Next Necessary Evolution: Operational Optimization

According to data from TBR’s December 2023 Digital Transformation: Voice of the Customer Research, IoT ranked No. 7 as a technology supporting buyers’ digital transformation (DT) initiatives in 2H23 (as shown in Figure 1), down from No. 3 in 2H22 (as shown in Figure 2). While generative AI (GenAI) has pushed down IoT as a priority investment area among enterprise buyers, we believe there is still plenty of potential for the technology to drive opportunities. A new set of stakeholders, including operational technology departments, are becoming comfortable with IoT, and this is particularly the case for more mature enterprises that are further along with their DT programs.

 

We believe customers and vendors are treating IoT as one of the technologies of DT through which an organization creates and executes a strategy around its current and future data assets. Operational departments plan for IoT to enable operational improvements and to contribute to organizationwide strategic DT plans. Overcoming the dichotomy around the perception of IoT lies in vendors’ ability to build use cases applicable to all ecosystem participants rather than developing pilot projects in a vacuum. Vendors such as PwC need to evolve their approaches and act more as operational optimizers as opposed to just operational visionaries.

 

 

Enabling PwC’s Steady Evolution

TBR has closely tracked PwC’s steady evolution from the staid, white-shoe accounting firm with budding consulting capabilities to the multifaceted professional services goliath with capabilities in cybersecurity, cloud, managed services and, increasingly, its own technology solutions.

 

Through development of its Connected Solutions capabilities and offerings, PwC is quietly expanding how the broader services and technology ecosystem perceives what kind of firm PwC is and what PwC can do. In TBR’s view, public perceptions — and possibly enterprise buyers’ perceptions — may remain mired in an accountancy-centric understanding of PwC, but the firm’s ecosystem partners that are selling, innovating and collaborating with PwC know well that the firm’s technology experience and capabilities extend well beyond previous limitations.

 

Take just one example from the discussion above: PwC now uses channel partners to extend its technology offerings to enterprises outside the firm’s usual clientele. Through that business model decision, PwC opens itself up to a wider technology ecosystem and extends its reach well beyond the firm’s traditional client base. Connected Solutions remains a relatively small part of the firm’s overall revenues, but PwC’s ongoing willingness to experiment with its business model bodes well for the firm’s continued growth, particularly in a tumultuous consulting and technology market.

 

TBR’s coverage of PwC includes semiannual profiles of the firm as part of TBR’s Management Consulting Benchmark, special reports, and inclusion of PwC in other TBR reports, such as the AI & GenAI Market Landscape, as appropriate.