AI in Strategy and Geopolitics at BCG Henderson Institute

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AI in Strategy and Geopolitics at BCG Henderson Institute
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In this episode of “TBR Talks,” Senior Director David Martinez shares his point of view on key topics covered by his BCG Henderson Institute team, particularly regarding geopolitics and artificial intelligence. The BCG Henderson Institute is an internal think tank at Boston Consulting Group.

David Zuluaga Martínez is a Senior Director at the Geopolitics & Society Lab, based in BCG’s Brooklyn office. Prior to his current role, David was a partner affiliated with BCG’s Public Sector practice. Previously, as an Alum Ambassador at the Tech & Biz Lab (2023-2024), he co-authored research on generative AI and, as an Alum Ambassador at the Strategy Lab (2021), on business resilience amid the COVID-19 pandemic and collective business action to address climate change. Since joining BCG in 2018, David has worked on strategy, operations and technology projects primarily for social impact and public sector organizations.

Episode highlights:

• Designing a research agenda

• The importance of feedback in the research process

• Go-to daily sources

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Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

AI in Strategy and Geopolitics at BCG Henderson Institute

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional services, IT and telecom vendors.

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about artificial intelligence, the research process, and philosophy and consulting with David Martinez, Senior Director at the BCG Henderson Institute’s Geopolitics and Society Lab.

From philosophy to BCG

David, thank you so much for coming on TBR Talks. I really appreciate it, and we’re kicking off season four, this is pretty exciting. We’ve been doing this for a while now. So, we’re so happy to have people from outside of TBR come in and give us their insights. And so, I’d love to, if you could just tell us a little bit about yourself and about what you’re doing right now. We know you’re with BCG and you’re in the think tank part of BCG, which is fascinating to me. But just give us a little bit of your background and what you’re up to right now.

David Martinez, Senior Director at the BCG Henderson Institute’s Geopolitics and Society Lab: Of course, and Patrick, thank you for inviting me to the podcast. Very, very excited to be joining you today for this conversation. So, my background is in philosophy, so I have a bit of a heterodox non-business background in terms of my academic training. I have a PhD in political philosophy and joined BCG as a consultant once I left academia. I was until recently a partner at BCG’s public sector practice, working primarily with state and local clients in the US and have for a couple of years now been in a different role as a senior director at the BCG Henderson Institute. That is, as you mentioned, BCG’s think tank.

It’s a very different job compared to regular consulting work. It is not client facing in the same way. So, we don’t do projects for specific clients, but rather we spend our time thinking about and researching the topics that we think are decisive in shaping long-term strategic outlooks for companies. And in all fairness, for policymakers as well, for leaders in all walks of life. So, we do research on, you know, AI of course, technology, we do research on geopolitics, on, kind of, traditional strategy topics from a business perspective, uncertainty, resilience, optionality. Now we’re doing more work on demographics, for example, and the impact of demographic change in many, especially affluent societies. So, these are all topics that might feel a tad removed from the immediate exigencies of running a business, but precisely because they are slightly removed and nevertheless vital when you take on a sufficiently long-term perspective, someone’s going to think about them. And we think as a company that somebody within BCG has to think about them. That’s the role of the BCG Henderson Institute. That’s what I do specifically in the technology and geopolitics space.

Designing a research agenda

Patrick: That’s really fascinating. And I want to get back to the technology and geopolitics in a second, but one thing that you said at the beginning was how it’s topics and trends and issues that you think are most important. And so, we’re in market research here at TBR, so, we have the things that drive our research and a lot of it is tied to the earnings cycle. So, companies release their earnings, we’re all over it. If you’d like to release your earnings as BCG, I would certainly appreciate it, I know you can’t today, but maybe you will someday.

David: *laughs* Above my pay grade.

Patrick: *laughs* But that’s where we’re getting those- we look at the company’s activities, what they’re doing. And that drives how we think about, and what we go after in terms of our research. So, do you get any feedback from or any insights from companies themselves who are coming to you and saying, hey, can you take a look at this? Or maybe it’s BCG partners that are saying, this topic keeps coming up with my clients, what do you guys know about it? Are there other sources of inspiration for what you want to go after? Or is it more you guys sitting around and thinking about what are the most important topics today?

David: Yes, to all of those.

Patrick: Okay.

David: So we source our topics and frankly the questions, rather, that we want to explore from yes, clients. Yes, also partners, folks at BCG who talk to numerous companies and business leaders and start noticing patterns around, not necessarily what people might be thinking about, but also what perhaps they’re not thinking about, which is just as important, and that I think ties to the third source of guidance, if you will, in designing a research agenda, which I would describe as sort of the intuition around what people aren’t thinking about and either should or will soon have to.

So, the challenge that we’ve set for ourselves is to be simultaneously responsive to the concerns that are already there in the business community amongst business leaders, but also to be able to anticipate some others. And I’ll give you an example. The topic of resilience is now everywhere, right? Everyone thinks about it. Everyone’s very mindful of it, very aware of it. I surely don’t need to mention COVID as a particular catalyst of interest, but we were doing work on that for a few years before COVID happened. Already thinking about, and this is particularly the work, for example, out of our strategy lab, thinking about how environmental systems or ecosystems rather in biology are resilient. What are the structural features of resilient ecosystems and through biological analogies, trying to understand what makes for a resilient enterprise and analyzing the value creation potential. So that’s just an example, but it goes to show that it’s a combination. It’s sourcing what people are already interested in and thinking about and in need of answers to, but also what might lie ahead.

The importance of feedback in the research process

Patrick: Okay. That’s fascinating. And I was going to go to geopolitics, but you’ve sort of teed up another question that I had, and that’s around feedback. So, I’m sure you got feedback from folks within BCG and outside of BCG, BCG’s clients, about the way that you were approaching resilience when it went from something you were thinking about to something that suddenly everybody was thinking about. But within the- and so I think of us, TBR, as an intelligence firm more than anything else, and as intelligence advisors, and part of the intelligence cycle is that feedback. You have to know what people are saying and thinking about the research you put in front of them in order to get better at your research. So has there been, maybe it was with resilience, maybe it’s with something else, where there’s been a sort of piece of feedback that you’ve gotten that has sort of changed the way you think about the way you do your work, or was just so fantastic that you said, hey, I’m the best at this, or made you question whether or not you should be even doing it at all? I mean, have you had that experience where the feedback is sort of that exceptional?

David: Of all sorts. Yes, of all sorts, actually. And it makes for a very fruitful dialectical process. I would add that it’s very important for us to also go beyond the business world in pursuit of that kind of feedback. So, one thing we’ve been doing for a number of years, for example, is this convening we call the Meeting of Minds, where we invite numerous leading scholars, but also senior policy makers and maybe journalists, and also business leaders to talk about a big societal topic. And part of the point or part of the purpose is to ensure we’re not too wedded or too anchored to narratives or concerns that might be idiosyncratic to the business world, and that would benefit from that dialogue and that exchange beyond the business world. So, I would just add that those other layers, those other spaces for conversation, are very important to the work we do as well.

Patrick: That’s phenomenal. So, you’ve got a really sort of structured way to keep yourself grounded so that you’re not wandering off into, you know, woods that don’t matter to people in the business space.

David: Yes. And the way we do this very tactically is when we start pursuing a research project, we always do an academic literature review and also a business thought leadership literature review. We need to know what’s being said, what has been said, what hasn’t, to really understand what are the prevailing narratives or beliefs or conceptions, what are the competing perspectives on a given topic. And I think we also benefit, this is true of consulting generally, but it is particularly true of the research environment at the Henderson Institute. We benefit from the combination of deep expertise and potent analytical abilities of our generalist consultants, who may not be subject matter experts, but precisely because they’re not, they can sometimes help us ask what seem to be the simplest questions. And perhaps at first, they might come across as, you know, silly questions to raise, but they get at fundamental issue. So that combination of deep expertise, business world inside, perspectives from outside the business world, and analytical horsepower that is not sort of encumbered by the baggage that sometimes come along with expertise, the combination of all of those, I think, makes for a very rich research working style for the group.

Patrick: Yeah, that’s fantastic. And the baggage that sometimes comes along with expertise, I think is a beautiful diplomatic way to say what you’re really trying to say is which sometimes people think too much.

Tapping into boots on the ground for geopolitical questions

I want to get to geopolitics, but I want to come at it in an angle, a very specific angle. You, your firm, BCG, has people all over the world. You’ve got incredibly brilliant consultants who are day-to-day working in different countries with different kinds of clients. When it comes to tackling geopolitical issues, how often do you sort of tap into or directly tap into the people that you have, that have their feet on the ground that are living in a particular country and in a particular environment? Let me give you a very specific use case of what I’m thinking about, sort of framing this up. So, if one of your questions or one of the topics you’re looking at is sort of the economic implications of political turmoil in France, you’ve got, I don’t know, 15,000 people or so working in France. You know, you got 15,000 French people that you can directly tap into and say, hey, what’s it feel like right now? What do you think is going on? Do you ever use BCG itself as a source of primary intelligence for geopolitical questions?

David: Absolutely, we’ll be remiss not to. I think part of what we are very mindful of is that the credibility that the Henderson Institute has in offering a perspective is in large measure a function of its proximity to the front lines of business activity and strategic decision making. And that we know through our staff, through our colleagues who are doing work on the ground with clients. So, we do it. I think we have to do it. We always do it. And it helps us sort of navigate sensitive topics also in a way that is very strictly grounded in facts and analysis. Because for any firm, there are questions that are challenging in terms of developing a perspective and putting it out there. Geopolitics, of course, is particularly sensitive in many cases, but what we do is always fact-based and we endeavor to develop points of view that are analytically robust. We can do that because we can rely on the distributed knowledge of BCG as an organization and because we have very clear principles for the kind of quality in the research output that we commit to.

Patrick: That’s fascinating. A lot of your peers do not do that. I’ve spent time speaking with folks that are in a similar position to you and in a similar kind of firm that have that global capability. They have those boots on the ground in many countries, and they don’t really tap into that as well as you guys do. So, it’s fascinating to me.

Research questions we want to answer

I want to ask a little bit about the challenge that we always have when it comes to research, and that’s you sort of, you can’t please everybody. You put out a piece of research and somebody tells you, “you didn’t go deep enough.” And then this, you know, the same piece of research generates the, “you missed the bigger picture here.” So I want you to sort of take, I was literally, I’m not- don’t literally take your headphones off, but take your mind back, just step back for a second and think to yourself, okay, give me six months to just research anything I want to research in the world. What’s that? What’s David’s six months, I’m looking at anything I want to kind of project? What would you go do?

David: Well, I think right now, a very important question in our minds is how the roles of the corporations and governments are changing in the economy and how some of the traditional boundaries of strategy, as in, well, you think about your strategy in a competitive environment is primarily responsive to business factors, how that is changing. Because what is a business factor that you ought to take into account, is actually an expanding set. I think that’s an important, kind of a foundational question for how companies think of a strategy for the foreseeable future, given the current geopolitical trajectory of the world, which I recognize is a hopelessly vague statement, but I think you know what I mean.

AI research questions

Patrick: I understand exactly what you mean. Yeah. And then I will say we can’t have this conversation without talking about AI at some point. So is there an AI sort of trend or issue that you look at and think, okay, if I had, six months is probably too long with AI because it’ll change. But if there’s some, is there a top of mind issue for you right now that’s sort of gnawing at you that you really wish you could spend more time diving into with respect to AI?

David: Yes. And I think I’m not alone in suspecting that one of the big unanswered questions is how should we think about adoption for generative AI technologies in particular? There’s a lot of noise and a lot of uncertainty around this, and it matters because it shapes how we form expectations for, say, productivity effects or cost reduction or revenue enhancing effects for businesses. And at what point should you expect to see some macroeconomic indicators of AI making a difference? All of this has to do fundamentally with the extent of adoption of this technology by businesses on the ground. We know those processes too historically have been slow, much slower than people usually expect. How much faster the process might be with GenAI, which builds, of course, on top of the internet, which makes the distribution of new technologies, new digital technologies much faster. Nobody really knows. But I think the specific question that really fascinates me is how could we better understand the extensive versus the intensive margins of adoption? If you ask companies in binary fashion, do you use GenAI or do you not? You’re going to get the overwhelming majority saying yes. But what does that mean?

Patrick: Right.

David: If you pay for a Copilot subscription that nobody uses, does that count as adoption? Really, in the interesting sense, how do we even get our heads around that intensive margin and its structure, I think is a very, very important and puzzling question that many big economists are thinking about that I am not comfortably qualified to explore, but that I wish I could devote more time to, because I think it’s very important.

Patrick: It’s fascinating. And it’s super important for the companies that we look at, because that adoption and that expansive adoption and deep adoption is what’s going to drive their business. They are dependent on their enterprise customers actually adopting and then using AI. So, the answers that you’ve discovered are going to be important to businesses going forward.

Philosophical technology questions

I do have a question now that you’ve raised in my head that I know that you’re qualified to answer because you’re a philosopher. And the reason I need a philosopher to answer, I’ve never asked a philosopher this question before, but we talk about it all the time. So, we look at at businesses and technology and a sort of saying that we have around here is that the technology always works, the people are always the problem. So, from your perspective, that’s kind of a philosophical thing to say, you know what, it’s the people that are always the problem. When you think about AI and adoption, when you think about the changes that technology is bringing geopolitically, but also then at the enterprise level, are people always going to be the problem? Is this just going to persist?

David: Probably. And I might, I think in the same spirit, I might restate the view a little bit differently. Whether the technology has a problem or not is a function of the interests that human users have. Pieces of technology do not per se themselves carry their purpose with them, as it were. They’re instruments. And that for which they are an instrument is not set by the technology itself. It’s set by the people who use the technology. So, whether the technology fails or doesn’t fail is logically downstream from the interests of human users that that technology is intended to serve. So, I might, if you will, I would put it even further up the intellectual change ahead of the tech.

Patrick: I was putting them side by side, but you’re right. They need to be a little higher up. One more philosophy question, I promise, and then we’ll move on. But I have to know, because you mentioned this in the introduction and explaining your background, and then you said you worked with a lot of public sector, state and local clients. Having been in public sector myself, I was federal government, US federal government, for a long time, and surprising as this may be to some out there, I’ve actually been elected to local town government. So, I’m actually back in government at the very local level. I have never run across a philosopher consultant in my entire time in government. Were you the only one? Are you BCG’s only philosopher consultant?

David: No, no, no, no. There are a few more. And a friend who has since left BCG was actually a theologian. So that might have been even more interesting. It’s funny because I think the place that AI now has in so many conversations has sparked a certain interest in what are one way or another profoundly philosophical questions. So, it’s been a fun time to be a philosopher in consulting, thinking about technology topics, because even when people say, well, I’m only interested in the pragmatic business side of things, you know, have a chat with them. You’re always a few questions away from “are they conscious or not” and stuff like that. So, it’s been fun to be in this type of role with that sort of background. So, not too many of us, but also maybe more than you suspect.

Patrick: So, the WhatsApp group for philosopher consultants is bigger than I thought it might be.

David: *laughs* Yes.

Patrick: Fair enough.

Go-to daily sources

I do want to ask one question that came to mind when I was sort of thinking about this discussion we’re going to have. Because you’re in research and because of your role now with BCG, when I started with Deloitte, one of the pieces of advice I got, and it was in intelligence, and it was, look, you need to know what your boss’s boss’s boss is reading every day. You don’t want to bring to them something they already read in the paper. And so, I think about that all the time. Like for our readers, for the people that are looking at my analysis, I want to make sure I’m bringing them something- I want to know what they get every day. So, in order to do that, I need to ask people all the time, so what do you read every day? So, what are your go-to sources, both for maybe news and sort of current stuff, but then also your maybe longer-term analytical thought pieces, kind of sources, other than, of course, the stuff you and your colleagues are already writing yourselves.

David: Yes, yes, yes. I mean, you make an excellent point. I don’t think the role of a think tank like ours is to be a news aggregator. There are enough good ones out there. I think the role is to help distill the narratives that make sense of the relentless succession of news with which business leaders and leaders in other spaces too are bombarded on a daily basis. So, I think that’s right. It’s very sound advice that you got. And for me, I try to make sure because so much happens every day. I try to make sure that yes, I read the FT and I read the Wall Street Journal and look at the Times. I have a handful of newsletters, some that are more politics oriented, some that are more technology oriented. I try to balance perspectives. So, there are certain temperaments that come with these newsletters and aggregators and kind of light touch commentators. And it’s good to balance them out a little bit and have some optimists, some skeptics on a variety of questions.

But for me, what’s most important is to always make time to read deep research. I have tremendous respect for academics who do very serious, very rigorous, slow work that seldom hits the CEO’s desk but that can be profoundly illuminating. And I think oftentimes the role for think tanks like the Henderson Institute is to help mediate between those two universes. You’ve got lots of noise when all you’re doing is reading the news. You have lots of depth, but a little bit of disconnect from the urgencies of the day when you’re only reading academic literature, someone has to help see how those tie together and what might be the narratives that unify them or the questions that shine a light in both directions. So, it’s very important for me to always make time to read papers. So, I mean, I’ll give you a very concrete example. I read everything David Autor writes. He’s one of the great labor economists at MIT. He’s done amazing stuff on AI. And a lot of my thinking on labor economics of AI has to do with what I’ve learned through his work under long brilliant papers. And so, it’s just important to make sure, as we all know, that there’s time for what’s important, not only what’s urgent, and I think of huge chunks of academic research out there as falling in precisely the category of the important.

The impact of the Henderson Institute’s work

Patrick: I love the way you framed it, because you didn’t say that you read academic papers. You said that you make time for that deep reading. And I think that’s the thing that I think I know I’m guilty of, and I think a lot of us are, is that you just don’t make time for that. I do make time to read the hard copy of the New York Times every day. I think I’m the last print edition subscriber of the New York Times in America, but I do get it on my doorstep every day. So, I know that I have to have it or else my day isn’t complete. I want to bring the conversation back to something that you said at the very, very beginning, which is that you’re not client facing. And yet it seems like throughout this conversation, there have been multiple times when you’ve talked about the way that your research is directly presented to or absorbed by and influenced by BCG’s clients. So, do you think there’s- do you feel like you have a solid measurable, maybe not measurable, but an important impact on the way that your clients actually think about the world?

David: I certainly hope so. *laughs* So, when I say my role is not client facing is perhaps in the insider sense that I’m not part of a project that is executed on behalf of a specific client. Doesn’t mean that I don’t talk to clients, on the contrary, because I’m not in any one project that is committed to a specific client. I get to talk to lots of them at the same time about questions that are of common interest and concern. But yes, the work we do goes straight to clients, just as to your earlier question, clients themselves are a critical north star in designing a research agenda. They’re also, in a certain sense, the terminus ad quem of what we do. The whole point is that we do develop and help shape the way senior executives think about their broader context and their business and the questions and strategy that they’re grappling with, for sure.

Patrick: Fantastic. You are, by the way, the first guest that we’ve had in our four seasons to use the word dialectical and also to drop a Latin phrase into our discussion. So, I didn’t miss it.

David: *laughs* That makes me a professional snob, I suppose.

Patrick: *laughs*

Human skills in the age of AI

All right, so I have one last question before we wrap up. And this has been a fantastic conversation. I really appreciate the time that we’ve spent together. I’ve been thinking about this a lot because AI, when we talk about AI, the first question that comes up outside of the confines of TBR and outside of the confines of the technology space, but when I talk about it with my friends, when I talk about with people outside of this little insulated world, it’s all about what jobs are going to get taken away by AI. And you mentioned the labor economists at MIT and all that. So, I think about how to counter that sort of narrative. And part of it is, well, there are some skills that will never be replaced by AI. So, when you think about that, you think, all right, well, what would be a skill that I would want to master? And maybe it’s playing the bass guitar, maybe it’s speaking 4 languages, maybe it’s the ability to turn yourself invisible. I mean, what is, and if you could think, you know, David, what’s the skill? Give yourself time to master a skill that’s sort of, maybe AI proof is part of it, but more importantly, it’s like something you would really want to have. What’s that skill?

David: This is going to sound very abstract to you, but I think sense-making is something we won’t, for the foreseeable future, be able to or want to delegate. And this relates to your earlier question as well, you know, is it the technology’s fault or is it the human’s fault? And when I was saying that humans set the ends for which they use technologies as instruments. The reason why I think that’s a very important fact to keep in mind is that technology helps us solve problems. It doesn’t actually define the problems. What counts as a problem worth solving is on us. And I don’t mean that as a burden. I mean that as, you know, it’s a wonderful thing and it’s as it should be. And so, when I say sense-making, I mean defining that for which the technology is useful, that for which it is not, that for we want to use it, that for which we won’t want to use it. Now, there’s a side of the response that, you know, just could turn to, you know, almost cause disease and phenomena of that sort. Whereas, you know, whereby we know that whichever distinctively human skills are not mastered by AI will thereby become more valuable, more economic bottlenecks command a greater share of spend in the economy. That’s all true, but I think the more fundamental question is, does it make sense to think of AI as a technology that sets its own ends in terms of problems to be solved in the economy? I don’t think so, because I don’t think degrees of autonomy for the execution of tasks really get to the point of saying, well, this is a task worth executing in the first place. I think that will remain strictly and a profoundly important human activity for as long as I can project out my sketchy vision of the future.

Patrick: That’s fantastic. We were just today, I was talking with one of my colleagues about exactly what you just described, which is the way we were coming at it was, why is AI being applied to solve some problems and not other problems? And we thought about many of the use cases that AI is being put to now that are such low stakes. And maybe it’s because they are low stakes that more are being applied there. When there are other use cases that are much more higher stakes that AI seems to be ignoring, or the people who are developing AI solutions seem to be ignoring.

David: Yeah, absolutely. I think that’s right. And add a layer that it’s not just about what’s technologically feasible or possible. I think it’s easy to mistake that which is technologically possible for that which will happen or should happen. And technology may be able to do many things. And for a whole host of reasons in specific contexts, you might decide, again, with good sense, that it shouldn’t be used for that purpose. Right? A piece of technology for example, may not have the requisite type of accountability that a certain type of service ought to have in a certain conception of your value proposition. And so that means that whether a GPT could do what person A or B is doing is kind of not the real question in that kind of case, it’s, well, GPT is not the sort of entity that can be held to account. And that possibility of accountability is essential to the valuable proposition in this instance. And so, the person being there serves a valuable purpose, an important one, independently of whether kind of a neutral description of the task would lend itself to automation. I just think that that sometimes obscures more than it illuminates when you think about the application of technology in real life cases in all sorts of contexts.

Patrick: And as soon as you bring up accountability, accountability by definition includes some sort of legal structure that can hold someone accountable. And right now, you cannot sue a robot. You cannot sue a bot. You need to have a person. So, until that, until we flip that switch, which maybe we- maybe we shouldn’t, you know.

David: *laughs* But it’s not just legal. It’s not just legal, Patrick. Think about just interpersonal dynamics in, I’ll speak, but what I know, the professional services environment. When you’re working with a client, the role of trust, the role of conversation, the importance of being able to persuade someone and being persuaded in turn, these are all, they might seem soft and fluffy components of the value proposition. Sure, that’s because we often don’t have to spell them out because there has been no alternative to the human delivery of, you know, the insight, the strategy and whatnot. But once you have a non-human alternative for the delivery of exactly that content, you start realizing that there were these other features that are just as important to the full package, to the whole value proposition, that are not nearly as easily replaceable, and that’s not a function of technological capabilities. It’s a function of the kind of entity that a piece of technology is, namely, not a human. And that alone becomes significant.

Patrick: Right.

David: So even before you get to the law, it’s already, I think, a very relevant factor in many contexts, certainly in the services space of the economy.

Patrick: 100% agree, and I think part of why we both agree is because we are in the services sector of the economy, so we need that to be true.

David: *laughs*

Patrick: Sometimes what you think is true is what you need to be true, so.

David: Hopefully we’re both true and beneficiaries of the truth, but not because there’s a causal link between those two.

Final thoughts

Patrick: Right, And I’m not going to ask whether or not philosophy is pursuit of the truth, but I will ask you, just last thing, is there anything that you want to let people know they should go check out and read, anything you want to call out, stuff that you published recently? Like where can someone go after they listen to this to get more of your insights?

David: Yes, of course. I mean, anyone who’s interested in the type of work I’ve been describing across a variety of topics, it would be great for you to check out bcghendersoninstitute.com or bcg.com, either of those, and you’ll find lots of the research we produce. A lot of my work over the last few months has been about the geopolitics of technology and AI in particular, and thinking about how AI changes the way we think about power relations in the global stage and what can we expect. And it’s a very, very relevant topic, of course, at the moment, and one where, if anyone cares to share their feedback, I’d very much welcome it.

Patrick: Well, as a former diplomat who now, for some reason, spends all this time talking about technology, I’ll read it and I’ll give you some feedback because believe me, I’ve got thoughts when it comes to geopolitics. I’ve got thoughts.

David: I look forward- I look forward to that, Patrick.

Patrick: David, thank you so much for coming on this podcast. This has absolutely been fantastic, and I really appreciate your time.

David: It’s my pleasure. Thank you for inviting me.

Patrick: Tune in next week for another episode of TBR Talks. 

Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Ericsson’s AI Strategy: Business Intelligence at Scale

TBR Talks: Ericsson’s AI Strategy: Business Intelligence at Scale
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
Ericsson’s AI Strategy: Business Intelligence at Scale
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In our Season 4 premiere episode Elizabeth Roberts, global head of Information Management at Ericsson, joins “TBR Talks” host Patrick Heffernan to share insights into what Ericsson is doing to leverage AI tools for internal knowledge management at the world’s leading telecom vendor.

With over 3,000 regular users, each of whom support different business groups, executives and field leaders, Ericsson’s Business Intelligence Center (BIC) has become a powerful use case of AI internally. Elizabeth shares the challenges with AI adoption, change management and the never-ending need for quick and correct intelligent answers to business questions.

Episode highlights:

• How roles have changed because of technology

• Changes and accelerations in company culture

• Ericsson’s new AI tool: Ask BIC

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

Ericsson’s AI Strategy: Business Intelligence at Scale

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about Ericsson’s AI strategy and new AI assistant, with Elizabeth Roberts, Global Head of Information Management at Ericsson. When the Ericsson team released the tool to the full organization, the name was established as “Ask BIC” to keep the team branding consistent, but in this conversation, it was referred to as Erica. Welcome to season 4 of TBR Talks. Please enjoy my chat with Elizabeth.

How roles have changed because of technology 

Elizabeth, thank you so much for coming on this podcast, I really appreciate it. We have known each other for over a decade now in our respective jobs, at Ericsson for you and TBR for me. I just, for everyone listening, could you just maybe sort of walk through what is your title? What is your actual role at Ericsson? I just know you as Elizabeth from Ericsson, but I’m sure others at Ericsson actually know you by title so, what is it?

Elizabeth Roberts, Global Head of Information Management at Ericsson: So, my external title is Global Head of Information Management, which is a nice, fancy, fluffy title. Internally, I’m known as the head of BIC, Business Intelligence Center. And that actually defines my role better, which is more of the responsibility of taking care of all of the external research and getting it into one portal where all the users internally can access it.

Patrick: And about how many users a month, say, access BIC?

Elizabeth: We have about 3,000 that are fairly consistent monthly users. 

Patrick: Okay.

Elizabeth: We have about 300 that use it almost daily. So not a bad amount for, you know, a company of 100,000 people.

Patrick: Yeah, that’s fantastic. And I mean, responding to being responsible to 3,000 users a month, that’s not a small task. I imagine you get a lot of compliments and complaints, right?

Elizabeth: A lot of complaints more than compliments, but that’s okay. We learn from a lot of the complaints. So, it makes things better.

Patrick: Excellent. I want to ask you just sort of, because you’ve been there a while at Ericsson and your job maybe has evolved a bit and changed a bit, but really talk about some of the changes in the last couple years, either from a technology perspective or from a responsibilities within an Ericsson perspective. And technology has changed so much in the last couple years, I’m curious if there are things that when you look back and you think about, okay, my job five years ago was not this because of a piece of technology, or my job five years ago was not this because of new responsibilities. I wonder which has changed more for you?

Elizabeth: I’d say responsibilities, but the responsibilities came about as a result of technology. You know, Google is an amazing thing, you know, when we talk about a search engine, it really honestly and truly has changed how research is done. And so, the technology behind how people search for information has changed, which means how I go about answering questions has changed. And I don’t actually have to answer nearly as many questions as I used to five years ago. That technology is available there to make it easier for end users. So, I spend a lot more of my time actually doing more things contract-wise, things along the lines of dealing with compliance and legal and things like that to make sure that we have rights to use the information. And just ways of making information easier to find for people, because while it’s easier to search, you know, natural language search isn’t as great as we’d all like it to be. I wish it could all be just as easy as saying, where can I find X? And the answer would come right back to me, but it’s still not there yet. We’re getting closer.

Changes and accelerations in company culture

Patrick: And how much has the culture within Ericsson changed? And I know that’s a really loaded question, but in the time that we’ve known each other, the workplace has definitely changed. I mean, from a technology perspective, as you mentioned, that sort of search has been increasingly better and better refined. We had, AI has become such a huge part of our daily lives. But also we went through a pandemic, we went through a whole work from home surge, and now it’s changed, and now we’re heading back in the other direction. And I’m wondering, as a technology company, how much has the, not just the technology, but also the culture within Ericsson changed?

Elizabeth: The culture within Ericsson has changed quite a bit. I think the pandemic actually, like most other companies, forced us to become faster at certain things. And in fact, my laptop became 5G enabled last week. 

Patrick: Wow, alright.

Elizabeth: So, I don’t have to connect to Wi-Fi anymore. I could be anywhere, which is an amazing thing. So, in that aspect, I think it’s going to continue to change. I think the biggest cultural change, honestly, within Ericsson is related to compliance. I think we’re a lot more conscious now of what can and can’t be done in certain things. And some of that’s come about because of forced circumstances. And some of it’s come about just because of how fast technology has changed. You know, we used to have the huge standards that said, well, this is how things are done and you had to go through them. And now you don’t have time to spend, you know, 8/10, 9/12 months writing a standard to get to how something should be done in technology. You just kind of say, okay, well, how do we do this, and how do we get it done fast for the customer? So.

Patrick: Right. Yeah, that is, I mean, and for a, especially for an established, a well-established technology company making that kind of cultural change to speed up, to accelerate, to make changes faster, that can be really hard.

Elizabeth: Yeah, it can.

Patrick: And your role as, sort of in some ways the chief information officer, you could say, how, is it- do you feel like you’re part of helping with that acceleration?

Elizabeth: I think so, because I find myself more and more often trying to find answers to questions that there’s no research for. You know, we’re starting to- before it would be, okay, how do we find this answer? And it was fairly easy to find established information because we were, you know, technology wasn’t changing as quickly. And now we’re at- we have people asking questions where there is no research created. There is nothing that’s there. It’s going to have to be created. And so, it’s a matter of, well, where do we go to try and start to put this together?

Finding answers to unanswerable questions 

Patrick: And is that where you just, you’re relying on the trusted resources you’ve had and you’re sort of cobbling together a few different trusted views? Or how are you- that’s crazy to me that you’re getting questions that have no answers to them, and you’re tasked with finding them out. So, what are you doing exactly? Where are you going?

Elizabeth: We just keep asking the question over and over again in different ways and talking to analysts and talking to the firms we work with and talking to people like you, Patrick, where, you know, you might say something that then sparks a different way of looking at the answer to the question, or maybe there’s something that’s said that, oh, we hadn’t thought about that. You know, if you look at the RIC market, so radio, intelligent radio, RAN controller, there was nothing there. But in order to try and figure out how to do something to create a forecast, well, somebody said, well, why haven’t you looked at SMS and the growth of SMS? I mean, it’s kind of the same thing. Well, then suddenly you realize, you know, I’ve been going about this backwards. I’ve been trying to find information on something that doesn’t exist when I should have been trying to find information on something that did exist that I could then draw a parallel to, to create some sort of, you know, beginning of a forecast so that we can look at, you know, how is this going to trend, how is this going to change? And I think that’s where AI is really going to come into play in the future is being able to take things that, as you start to ask questions about the unknown, can it help you find those known parameters to come up with, well, ways to start trying to find an answer to the unknown?

Patrick: Yeah, so let’s talk about that. I mean, in five years from now, do you think a lot of these questions are going to be easier to answer because the artificial intelligence is going to be better? Or where do you, where do you see, how do you see your job? How do you see those challenges being different five years from now?

Elizabeth: I honestly don’t see my job being that much different, to be really honest. I think the need for what I actually call antiquated skills, which is that ability to doggedly search, to try and find an answer to their problem and a puzzle, is not going to go away. AI will make it faster, for sure. But it’s, you know, you’re still going to have to have somebody who can think about a problem in multiple different ways because an AI can only think about the problem the way you write the question. 

Patrick: Right.

Elizabeth: It’s not going to be able to take that question and think about it 16 different ways and go, okay, well, let’s look at it from this direction now. There’s still going to have to be somebody who does that and tells the AI to look at it differently.

Patrick: Right. So, it’s that sort of persistence and judgment that you’re going to have to continually bring to the table, right?

Elizabeth: Correct. Yes.

Ericsson’s new AI tool: Ask BIC

Patrick: Yeah. But I know that you’ve got a new tool, a new colleague, if you will. So-

Elizabeth: Yes, we have an intern now. We call her Erica.

Patrick: Tell me more about that.

Elizabeth: So, Erica is an AI-driven research assistant. We refer to her as an intern basically because she’s still learning. You know, she’s good at answering qualitative questions, like most AI. The problem is quantitative. There’s not really an LLM out on the market that I’ve found, if somebody knows of it, I’d love to know, that can handle numbers and, you know, great big spreadsheets and things like that. That, you know, you and I spend our days living in.

Patrick: Exactly.

Elizabeth: So, until there’s an LLM that can do that, analysts aren’t going to go away because they can handle the numbers. But no, Erica’s been great for answering, you know, some of the more simple, I hate to say more simple, but it’s more simple questions. You know, what are the AI use cases in telecom? You know, she can produce a really nice report to start that answer, but then somebody once they’ve looked at that can delve deeper into, okay, well, what are the front-end and the back-end use cases? You know, can you break that down for me? So, in that aspect, it’s great. The thing that makes Erica different from other things out in the world, AI wise, is she only looks at the resources we tell her to look at. So, she only has about 13 providers that she can read. And we went through a lot of work with those providers to get clearance and permission and the ability in our contracts to use that information in a large language model, because a lot of research providers obviously don’t want to have their research used in an open model where it could suddenly become, you know, common knowledge and things like that. But Erica’s closed, she’s a walled garden, as we used to say in the telecom. And, you know, it’s been interesting. It was a part of my job I never thought I’d learn to do, but I enjoy it.

Patrick: That’s awesome. And so, I’m curious whether internally whether the use case for Erica is more sales enablement, more competitive intelligence, more market intelligence? Is there, do you see it, do you see Erica leaning in any one particular direction in terms of how she gets used?

Elizabeth: We actually have a lot of use from the strategic side.

Patrick: Okay.

Elizabeth: So more of those developing insights. Yes, there’s still the traditional, you know, produce a SWOT analysis on this company in this particular, you know, product area, or give me a comparison of competitor X to us in this service, but we’re seeing a lot more of it from the perspective of tell me about insert a topic here and how it’s going to impact us in the future.

Patrick: Yeah, and I guess, and it makes sense, and if that’s where it’s being used now, that you want to restrict the number of inputs. You want to, like you said, keep it only to the trusted providers that you’re- you believe in their data, you believe in their analysis, you believe in their opinions, and you want to make sure that that’s captured there, but not just the whole world. So that makes a ton of sense.

Elizabeth: It does. And then the other thing we love about what Erica does is she’s a great intern in the fact that she cites her sources. So, everything she comes back with, she can tell you exactly where it came from. So, if you have a question about whether or not it’s right, you can actually go look at the original report and see where that quote that she’s pulled out has come from.

Patrick: So, she’s not come back and said, I made all this up myself? That hasn’t been one of her responses?

Elizabeth: No, in fact, if she doesn’t know an answer, she’ll come back and tell you, I’m sorry, there’s not enough research for me to provide you an answer. 

Patrick: Wow.

Elizabeth: I had a hallucination finally the other day. I was doing some work on one of our competitors and she came back, and she told me she couldn’t find information on Nike. 

Patrick: Ah, *laughs*

Elizabeth: Now, there’s several letters in that are very similar to Nokia, but it was after, I’ll be honest, it was after I had run multiple different queries in the same kind of conversation. And so, we were kind of at the end of the limits of the research that was available. So, it makes sense to me, but there’s still things like that do kind of occur and I get a good laugh out of it.

Patrick: So, for a moment there, you had me hopeful that I could get some nice new Ericsson kicks one day, you know, like get the logo on the side, look like an Adidas or something. So that wouldn’t be so bad.

Elizabeth: Well, no, actually, it’s Nokia that used to make tires and shoes, so you’ll have to go with them.

Where Ericsson will be in 15 years

Patrick: That’s true. That’s true. Listen, I want to just wrap up with one question. You know, you’ve been doing this job for a while, and Ericsson has been really- has been a kind of company that we always have to keep an eye on because it’s such an important player across the market, such an important player in the ecosystem. And I’m just curious, when you look out sort of 10-15 years from now, where do you see Ericsson? How do you see- you’ve had such a great window into how the company has evolved and changed and grown over the last 15 years. Where does it go in the next 15?

Elizabeth: I think Ericsson will continue to be a leader in back-end telecom technology. 

Patrick: Okay.

Elizabeth: That’s always been our bread and butter. So as the technology changes, as it becomes more software driven, as it honestly becomes more AI driven, I can see Ericsson transitioning to help that move faster and more smoothly so that, you know, there’s not the interruption on the front-end for the operators or for the end consumer. They’ll never see, you know, everything we do and all of that. And that’s okay. You know, as long as the backbone works and runs, that’s what matters.

Patrick: That’s awesome. And that, I mean, we’ve seen, especially in the last five years, you know, the companies that have said, this is what we do well. We’re staying in our lane. We’re going to continue to do it well. Those are the ones that have grown, outpaced the competition. And so, I think that’s just a great strategy going ahead for Ericsson.

Final thoughts

Patrick: All right, I lied. One more question. I know you were recently in New Orleans, a city that I absolutely love because I love to eat. So, I need to know what your favorite foods were. And I say foods because you can’t go to New Orleans and have one favorite thing. So, what did you love the most?

Elizabeth: Well, you know, Patrick, I’m a researcher at heart. So of course I had to do some research. So, I visited multiple places for beignets, I have a ranking system now for beignets. I can tell you where to go for the most- the crunchiest ones, the ones with the most sugar, the ones that are flakiest. So obviously beignets, but gumbo. I mean, you can’t go wrong with gumbo.

Patrick: Yeah.

Elizabeth: And here in Texas, they make gumbo, but they leave the okra out, which just is like, that’s not gumbo.

Patrick: It’s not gumbo, no.

Elizabeth: That’s shrimp soup. *laughs*

Patrick: All right, now I know what I’m making for dinner tonight. So, I got to swing by the Market Basket and see if I can find some okra because yeah, I do love some gumbo. Excellent. Elizabeth, thank you so much. An enormous pleasure. And I’d love to have you come back in about six months or so, because I want to hear how your intern’s doing and whether or not she’s been promoted to a full-time position.

Elizabeth: Sounds good to me. I’d be happy to.

Patrick: Excellent, thank you, Elizabeth. 

Tune in next week for another episode of TBR Talks. Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Hitachi Digital Services: IT/OT Convergence Across the Ecosystem

TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
Hitachi Digital Services: IT/OT Convergence Across the Ecosystem
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Principal Analyst Bozhidar Hristov joins “TBR Talks” host Patrick Heffernan for a discussion on Hitachi Digital Services’ view into Industry 5.0. Looking beyond the marketing spin of Industry 5.0, the pair discuss how Hitachi Digital Services leverages its engineering expertise, industrial know-how and IT capabilities to bring solutions to the market with its partners.

“I think just the way that Hitachi framed its value proposition — I think they coined it as Industry 5.0 and it’s IT plus OT plus AI — is a good way to start thinking about bringing the parties together, and obviously, that’s the part of the messaging, part of the marketing approach. I get that part, but kind of peeling back behind what’s actually — what’s the meaning behind the Industry 5.0, what are Hitachi’s capabilities — it’s really falling back on its legacy expertise and really being part of that engineering cycle,” said Hristov.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Connect with Boz on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

Hitachi Digital Services: IT/OT Convergence Across the Ecosystem

TBR Talks Host Patrick Heffernan: Hi everyone, I’m Patrick Heffernan from Technology Business Research and I’m here with my colleague Boz Hristov for this very special, quick episode because we recently spent time with Hitachi Digital Services, a company that we don’t traditionally cover and we haven’t spent a lot of time with, but we were both intrigued by everything that we heard over a couple of days out in Dallas, I had to remember where we were Boz, Dallas. And so, we’re going to publish a special report on the event, what we call at TBR an Event Perspective, but I wanted to think ahead a little bit to, who ought to be reading this report. Because again, we haven’t spent a lot of time with them, this is new for us and possibly new for our clients and folks who typically read our research. 

So, three things came to mind for me Boz. One, any company that’s working in the IT/OT convergence, any company that’s doing that should be reading this report. Second, the management consultancies that we talk about and talk with very frequently. And then third, the technology partners, particularly the hyperscalers and the ISV’s, again the big global ones that we talk to all the time. So, knowing what you know from the time we spent with Hitachi and thinking about those three different groups, what are some of the reasons why? Let’s start with IT/OT convergence, like, why is that going to be- why is this report going to be helpful for them?

Bozhidar Hristov, TBR Principal Analyst: Yeah, absolutely. I think just the way that Hitachi framed its value proposition, I think they coined it as Industry 5.0 and it’s IT plus OT plus AI, is a good way to start thinking about bringing the parties together and obviously that’s the part of the messaging, part of the marketing approach. I get that part, but kind of peeling back behind what’s actually- what’s the meaning behind the Industry 5.0, what are Hitachi’s capabilities, it’s really falling back on its legacy expertise and really being part of that engineering cycle. Hitachi as a company, as a conglomerate, you know, as a massive conglomerate that has brands in pretty much every facet of the economy, investing in a lot of the physical products and investing understanding into what does it take to be a product engineering company, makes it an easy, you know, easier transition as you’re trying to bring in the OT and speaking the OT language. Now, the IT part becomes, you know, the important element here, as Hitachi Digital Services outside the bigger broader Hitachi has start investing in its IP capabilities and skills training, investing in partner technologies, understanding the implementation side, the services side and so forth, so then obviously comes the AI component that everyone is investing in, and they certainly are not shy of investing as well as having the know how of again the bigger brother Hitachi. So, it’s- I would say the IT/OT is buyer and reader probably OT have more familiarity with Hitachi but bringing the Hitachi Digital Services element to the mix wrapped in AI offerings, you know, certainly will elevate those discussions. So having the DNA, having the background of engineering, knowing the OT side of the house and now bringing in the IT capabilities that they have been expanding and enhancing through experience through the client use cases because it will be of use to understand what else can Hitachi Digital Services do for traditional OT buyer and how they can actually help them to connect better with IT buyers.

Patrick: Yeah, and I I totally agree that the IT plus OT plus AI is just a really smart way to frame what’s happening in the IT/OT conversion space. And then the last thing you said I think is really important when we think about the management consultancies and why should they care? Hitachi Digital Services is not large, so they’re not going to be stealing revenue from anybody, but they are going to win, and they have been winning, consulting engagements with known clients, with existing clients because they’re on the ground, because they have that expertise, because they provide something that a lot of management consultancies can provide, which is the ability to execute, the ability to actually provide the services all the way through, particularly again in the heavy manufacturing or in the spaces where they play, and I guess that’s the other reason why I think it’s important for the management consultancies to consider Hitachi Digital Services because they were very clear that there are certain industries where they have strengths, they have experience, they have the permission to play. And so, for the management consultancies looking to perhaps expand their footprint in automotive, in rail, in transportation, in utilities and energy, in all those areas, they are- they could be a really solid partner for a consultancy to say we can do a lot of this work, but we also can bring in our friends from Hitachi Digital Services.

Boz: Yeah, absolutely. I think- we know some of the major consultancies and IT services peers have already- product engineering has been double bonded to them, looking at the OT as a new buyer persona that can pursue, you know, discussions with certainly many have not shied away. Some of the IT services companies like Accenture and Capgemini and the HCLs of the world certainly have done a little more aggressively, so maybe perceived as more of a competitor to Hitachi in that sense. But then the likes of PwC and Deloitte, they do have, you know, that C-suite relationship that in an attached-with Hitachi can be a little bit more little, with Hitachi Digital Services, can be a bit more partner-like or co-opetitive-like set up than just pure competition.

Patrick: Yeah. And, they speak to the OT buyer in a way that that the management consultancies don’t. So, then the last group is the hyperscalers and the huge ISVs, the Salesforces and ServiceNows of the world and I think there, Hitachi Digital Services is not among the top ten partners for those, you know, for AWS and Microsoft and SAP and the rest. But they’re growing, and they’re growing in a way that I think should be something that those companies keep an eye on and maybe look to say, as we reevaluate our different relationships, as we evaluate our ecosystems, we look to consulting and IT services partners, is this somebody we should be partnering with because of the capabilities they’re bringing, particularly again around IT and the OT buyer and particularly around that convergence, that blending of AI into it. Yes, that they have companies and partners that can do that with them. But this is one that maybe has a unique set of- unique combination of skills and capabilities and current clients, to be honest.

Boz: Yeah, you made an important point. They may not be the number one partner. You may hear a little bit of pushback from Hitachi on that I guess.

Patrick: Maybe.

Boz: But I can put that big Asterix there, that’s in the TBR view of the world. 

Patrick: Yeah. 

Boz: And the way we scale the practices of the large GSIs and looking to the- when we do our data modeling and understanding how- what’s the size of those practices, and how are they changing, but they do have some strong relationships and they’ve been recognized by some of those partners as top partners for a particular domain area and whatnot. But beyond the marketing that Hitachi is looking for why the likes of Amazon or SAP or Oracle should be caring about Hitachi, I mean again they bring in that technology know how, the stack, an understanding of how it all fits together, how it all you know, essentially stitches together. Especially as the worlds, the macro trend, I should say, not the world, but the macro trend in the IT space is moving towards the physical AI.

Patrick: Right.

Boz: So, Hitachi provides a really strong conduit into the physical AI discussion in terms of how they can actually connect, you know, the hyperscalers, they provide the backbone infrastructure, the ISV partners can certainly provide those layers of application modernization and optimization everyone is talking about. But Hitachi actually makes that better connection into that physical AI world that, you know, the OT buyer can actually be able to have a better position with. So, again it’s the physical AI, is kind of the North Star at the moment for most of the vendors that we track, and I think when it comes to the relationship between Hitachi Digital Services and the hyperscalers and ISVs, they can be that accelerating lane essentially, their conduit to get quicker, faster.

Patrick: Right.

Boz: And provide more opportunities to them.

Boz: Oh yeah.

Final thoughts

Patrick: Excellent Boz. Thank you very much, and thanks everybody. I know, a quick sort of quick little in-between seasons episode, but really wanted to get this out there to complement the Special Report we’re putting out. Thank you.

Boz: Thank you.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Disruption Writ Large with Darlene Wilson, Executive & Technology Thought Leader 

TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
Disruption Writ Large with Darlene Wilson, Executive & Technology Thought Leader 
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Technology executive Darlene Wilson joins “TBR Talks” for a discussion on tech disruptions, business model evolutions and life as a technology expert. Darlene is a seasoned technical strategist with over 20 years of leadership experience at companies like Amazon Web Services, Whole Foods Market, and E*TRADE, where she has driven growth through both market- and customer-centric efforts. She is known for building high-performing teams, mentoring emerging leaders, and championing women in tech through roles like co-sponsoring the AWS Women’s Summit and participating in T200. A technology leader and veteran of many disruptions, including “as a Service” to cloud and AI, Darlene talks Amazon Web Services’ entrepreneurial start, the evolution of multivendor alliances and the ever-present consistency of change.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

Disruption Writ Large with Darlene Wilson, Executive & Technology Thought Leader 

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors.

I’m Patrick Heffernan, Principal Analyst and today we’ll be talking about all things technology, including a look back and a look forward with Darlene Wilson, thought leader in the technology space with experience in cloud, IT and digital transformation. Darlene, thank you so much for joining the podcast. 

Darlene Wilson, Technology Industry Thought Leader: Thanks, Patrick. Really excited to be here. 

Patrick: Yeah. It’s a pleasure to have you on. We’ve known each other for a few years now, and I would say we’ve had conversations that have stretched from life and how to live it, to everything you can imagine in technology. 

Darlene: Yup.

How has technology changed over your career 

Patrick: And I think that’s because we both bring very different experiences to the table. So I’m really curious when you look at things right now, when you sort of step back and say, okay, over all the time that you’ve had your different careers and all your time in technology, what have been the biggest changes, not only from the technology perspective, but also the business of technology, how the business of technology has changed over the course of your careers.

Darlene: It’s a great question. And in thinking about this and probably in answering this too, Patrick, I’m going to age both of us and out both of us in an age perspective. 

Patrick: *laughs* 

Darlene: But, you know, thinking back, looking certainly obviously over probably the last ten years of my career if I go back, and we’ll kind of go in reverse chronology here, but if I go back ten years, it’s really the advent of the cloud and everything has been, you know, cloud based and what has changed for a lot of businesses, largely in their journey to move into the cloud, and what prompted that. And again, you know, I’m going to give you a little extension of an appreciation here for, you know, hooking me up on the podcast Acquired, which is great because I did listen to AWS. Even though I had worked there, it was really interesting for me to re-hear the story and really hear it from a different perspective in a lot of depth. And they did a great job talking about how really the cloud and AWS was born, really, and started in the realm of startups. And that was really their target market initially was how do we get startups going really, really quickly and then how they extended it into the enterprise space. And so, for the last ten years, I’ve been sort of living and breathing that with, you know, either through my own applications and working with, you know, what I’ve been doing with certain companies, or even in the consulting space and trying to support some of those enterprise customers, ISV customers, DMB customers, SMB, all the different segments, and to see how they’ve applied that, it’s been really interesting.

But then going back even further than that, you know, it’s interesting to me because I started to think about what I was doing really early on in my career. And again, this is where I’m going to age myself back to the dinosaurs. But, you know, very early on, when I had worked at Dow Jones years ago, and this is back in probably the late 90s, it was really the early stages of the internet. And so, we were installing trading room systems. My job was as a product manager for our institutional and retail trading room systems. And we were installing these systems with on-site servers, point-to-point circuits. You know, all of- everything was very, very, bespoke for every single environment. And then, what I could see though, in this was there was now all of a sudden this, you know, new thing called the internet, but at the time still very static and mostly static HTML content. And people hadn’t quite gotten into the idea, the understanding more broadly, of how the internet was going to change from an application perspective.

And so it was, you know, once we started seeing new applications and, you know, I’ve talked before about Amazon being obviously one of the biggest, earliest adopters in this space, really started to change things. So, watching the evolution of, you know, these on-site servers, you know, very specific into the internet and then how that grew into what has become cloud computing and then watching companies and businesses go through their own transition in the cloud space has been really fascinating. And, what’s probably most interesting is, you know, watching large scale enterprises go through this, you know, adoption journey. But then some of the smaller businesses as well. And then watching the digitally native businesses grow out of, you know, straight up tech computing, the independent software vendors. Anyway, it’s just it’s been a fascinating evolution. But to watch now where we’re at in the cloud journey, I think is the most fascinating. And seeing what’s happening with companies in that space. 

Patrick: So, part of where we’re at in the cloud journey, to look at it from sort of the business side of the technology, is that cloud is now often- the cloud bill is often now the biggest piece of the budget for IT.

Darlene: Yes.

Patrick: And so I’m glad you brought up the Acquired episode on AWS and the startup part of it, because that was not the case, nor was that really the promise of cloud. 

Darlene: Right, right.

Cloud spend and the IT budget

Patrick: And yet that’s where we’ve ended up. So, when you look back, when you think back, in your mind was there sort of a strategic imperative that it was going to get there no matter what, that cloud was going to kind of consume so much of IT the budget? Or is it just that’s what happened organically, accidentally, not by any design?

Darlene: It’s a great question. It’s a challenging question. I think it was probably going to get there, you know, in terms of- what AWS had come up with was so revolutionary. And they were, you know, and they talk about that in the Acquired episode of being so far ahead of the curve, you know, just, you know, so much so that it’s still, you have Microsoft and Google still trying to catch up even though they’ve closed the gap. But what’s interesting about that, I think has been, you know, was that early adopters, that they talked also too about largely it was public sector that actually adopted it second beyond, you know, anything like the startups before the enterprises. And I thought that was sort of interesting. 

Patrick: Right

Darlene: Because that’s a massive trust factor. 

Patrick: Right.

Darlene: And, you know, but certainly I think, you know, certainly colleges, universities, the public sector who started to see the need for that elastic compute capability was- and largely storage as well. So, I think Amazon was really in the right place. I think it was inevitable more than anything. It was just a question of time. I mean, and, you know, you could see it going, you could see what was happening. I think the flywheel effect of starting in that startup space for that rapid, rapid adoption and rapid new technology and the fail fast and everything that you were able to do on, you know, even in these early just with the straight up, you know, compute, database, and storage. And that’s really what they started with. It was so basic, you know, and then CloudFront from a distribution network perspective as well. So, I think it was inevitable that we were going to go there. Because it was just a question of when everybody else was going to catch up. 

Patrick: Right. Exactly, exactly. And you’re right. I mean, they have caught up in a lot of different ways, but AWS still sort of sets a standard for how to- particularly how to run a cloud business. I’m curious, so you’ve had a few different spots in your journey, in your career. 

Darlene: *laughs* Yeah. 

How has partnership and alliance strategy changed

Patrick: And what that gives you is a way to look at the changing nature of the ecosystem in terms of partners and alliances. So, we talk about it a lot at TBR because we get a lot of questions about how do I partner better with this company, how do I create a three-party alliance? So I’m curious what you’ve seen, especially in recent years, with the way that companies across the technology ecosystem, from the consultancies and the IT services companies and the hyperscalers and the software vendors, and I guess even the OEM providers, how are they partnering differently than what you saw early on in your careers? 

Darlene: So, and you could do a multi-hour session just on talking about that for sure. 

Patrick: *laughs* 

Darlene: But, you know, thinking about this, and this is something I’ve been thinking about a lot in terms of, you know, during my last role, you know, and even it started to sort of develop in my time at AWS, too, and it’s the whole philosophy of Occam’s razor. Which is this, you know, the simplest solution is often the best solution. 

Patrick: Right.

Darlene: And one of the things that I think has, you know, when you think about, you know, certainly the different variations of partners that you have, you know, you’ve got the larger GSIs and consultancies who are focusing on the larger scale enterprise business. You know, you’ve got sort of the regional local players, and here in the US, you know, Slalom, Presidio, some of those very targeted- and then you’ve got ones that are, you know, I’ve got a number of friends and former colleagues who have started up their own businesses, which are very small boutique firms. Which is really interesting and focusing on, you know, very specific areas of expertise rather than trying to be broad and generalist and be all things to all people. What I’ve found particularly, you know, in a couple of areas is, it depends on which market you’re looking at. But, you know, because the enterprise space, when you’re dealing with these large scale businesses, but even, I think, down into the SMB space, it’s really coming at your clients and starting from a consultancy perspective of what’s the value you’re bringing to that customer, and helping connect the dots for those customers and for those businesses between what they’re trying to do in their business and how that meets their technology strategy. And I know there’s a number of studies out there that talk about the fact that, you know, two thirds of CIOs won’t meet their goals in any given year because their technology strategy doesn’t align with the business strategy. And what I’ve found is the easiest way to connect the dots and the most impactful way to actually really have an influence on your clients and, you know, become a trusted advisor is to be able to connect those dots between here’s what your business is trying to do, here’s how your technology strategy works for your business. And, you know, to me, this is- I’ve said this over, and I’m sure you’ve heard me say it in presentations before too Patrick, is technology exists to solve business problems. That’s really what it is. It’s there to solve business problems. I mean, it can solve personal, but in this case-

Patrick: Right, right.

Darlene: Certainly, it’s solving business challenges. But we often get so caught up in the technology for technology’s sake and the new, you know, okay, for a while it was Kubernetes. And now we’re talking about AI. And AI is a great example because there’s this boil the ocean approach that a lot of businesses are sort of seeing. They’re seeing so many possibilities. They don’t know where to start. And that’s where you get back into the Occam’s razor-

Patrick: Right

Darlene: Which is sometimes the simplest answer is the best answer. And so how do you break it down to simplify that.

There is a lot of discussion around AI, and it’s a challenging topic these days. And I just recently finished a fantastic book called The Coming Wave by Mustafa Suleyman, and I’m probably mispronouncing the name, but the book really talks about the transformational impact that AI is going to have on business, society, culture as a whole. And I would highly recommend that anybody who is interested in AI in general, but any business that’s looking to determine how to bring it in from a business process perspective or business product perspective, or just even wanting to understand more. It’s a great, great, great read. And I think it should be mandatory reading just because I think it’s so informative and it’s actually very well done. And it’s a very interesting read, but certainly highly relevant for the AI topic and one that opened my eyes tremendously. So highly recommend it to any of your listeners as well.

Patrick: I want to get back to AI in a minute. 

Darlene: Yeah.

How to connect the dots from product to what it does for your client

Patrick: But there’s one piece of what you said that we’ve consistently seen to be such a huge challenge. It’s often more than just a company being fixated on technology for technology’s sake. It’s often the case that a company is really good at technology. And so, they have their product, they have their solution. They’re extraordinarily good at explaining how it works and what it does. But it’s harder for them to do that, okay, this is how it works and what it does for you in your business environment. 

Darlene: Exactly.

Patrick: So, how do you, and I know you have experience on this, so how do you help companies that are technology minded and technology focused and maybe even, you know, to the nth degree, how do you get them to think that way? Because it’s not just the buyers, it’s not just the CIO that has to think about using technology to solve a business problem. It’s also the technology provider that has to have that mindset going in, so how do you do that?

Darlene: So, one of the ways, and it’s one of the things actually, frankly, I had to learn myself as part of my own growth in my own career as I switched from, you know, leading a team of cloud platform engineers and being super hyper focused on what we were doing to support, it was a shared services team, so how was I supporting my teams. How was I supporting, you know, what the entire organization was trying to do. And when I moved away from that and moved into a role at AWS in professional services and started basically, what I really started to do was to really understand my customer’s industry and understand their business. And this is what I found so- that a lot of, you know, a lot of organizations, a lot of individuals within organizations struggle with, is they don’t know their customer to understand- and we all assume, like to your point, we all assume that our customers that we walk into already have that idea of, well, this is my business, this is my technology strategy, and to your point that they can explain how that technology really actually adds value for you.

Patrick: Right.

Darlene: So, what I found is, and there’s a great book out there that I recently finished called The Trusted Advisor, which is, you know, a phenomenal book, which talks about how to become or shift in mindset from a vendor to a partner, and how do you become a partner. And really, that’s shifting. And I’m sure in your business, you see this all the time too, how do you become a trusted advisor in terms of the knowledge you’re sharing, that expertise. So, what I’ve done is started by breaking it down again, back to the Occam’s razor it’s all very simple, is we tend to overcomplicate it. But I think if you can come in and look at it and say, here’s what’s happening in your industry. You know at the highest level.

Here’s what’s happening in your industry, so how do you fit into your industry now? Now here’s what’s happening in your business. And you can look at it both from a business perspective, a market perspective, a technology perspective. But I’ve found that coming in with some ideas and presenting ideas back to those clients, rather than coming in and sort of with a blank sheet of paper and saying, tell me your five pain points, and then kind of trying to go back, go in and be a little bit creative about it. Not overly arrogant to suggest that you know more about their business than them but really try and understand what they’re doing before you walk in and spend that time with them, because they’re looking at you for that expertise. And then largely in some of these, you know, the various partners and the partner organizations, you know, and again, if I go back to my you can take the girl out of Amazon, but you can’t take the Amazon out of the girl, is Andy Jassy used to say famously, and it’s something that’s just burned into my psyche and being right now is, “there’s no compression algorithm for experience.” And so, any business that goes to a partner and is looking for information, even coming to TBR is looking for, you know, looking for that expertise and that experience and so while there’s no compression algorithm for it, that’s what we are able to provide. That’s what you’re able to provide. And so, coming in as and starting with that level of, you know, credibility, and then being able to build on it, which is here’s what we’re seeing with other customers in your space. What we’ve seen that’s worked well, what’s not worked well, shared that, but then gone out and really done your homework and understand what’s happening within the industry as a whole, it makes a huge difference. And so, for me, it was really looking at and it was- I’ve never, when I was at AWS in the professional services, technically, I was in the sales organization of professional services. I never felt like I was selling. I was solutioning for my customers. And then we’d have a commercial discussion about how much that was going to cost to solve that particular challenge. But we would come in and co-build the solution and co-define that solution.

Patrick: That’s fascinating. And I think what we’re seeing now with, to get back to the alliance’s discussion-

Darlene: Yeah.

Patrick: Is a lot of companies shifting their mindset from, I’m going to be a vendor to I’m going to be a partner. 

Darlene: Exactly.

Patrick: And making sure that they understand what it is that they’re- whether it’s the technology or the services or whatever or the software partner, what they’re actually going through as well. And so, coming to the table, not just with here’s what I need to sell you, but coming to the table with, I understand from a consulting kind of mindset what’s going on in your industry-

Darlene: Yes.

Patrick: And being aligned, at least, around sales, around IP, around knowledge management, all that stuff. 

AI and GenAI as a compression algorithm for experience

So, I do want to challenge you on one thing and it ties nicely to AI. I get it, there’s no compression algorithm for experience, except maybe AI-

Darlene: Yes.

Patrick: It’s possible that that that could be what, it is that algorithm. So, I think of the two of us, we’re, you know, we’re not going to be doing this for forever. But in the near term, we are going to see AI change things. So do you think that there’s, because I asked you at the beginning, you know, the biggest change and you mentioned cloud. 

Darlene: Yeah.

Patrick: If we had this conversation in 15 years, both of us will be long retired thankfully. 

Darlene: Yes.

Patrick: But if we had this conversation in 15 years.

Darlene: Let’s hope so.

Patrick: Yes, knock on wood, so would we be saying AI?

Darlene: I think so, because I think AI right now is pervasive, it’s transformative, it’s impacting everything. And it doesn’t- because it’s not just impacting businesses and how they’re operating. It’s impacting individuals in such a profound way. And, you know, it’s one of those things where the cloud largely kind of really focused more on the business aspect of it. You know, even though you could say you’ve got, like, sort of personal cloud computing, things like that. But I don’t think the cloud has really become as pervasive in the personal, individual space, you know, as AI has. And I would agree with you. And I think- the interesting thing I think for the AI is, because the possibilities are endless, I mean, when you think about that, the challenge that most businesses have right now, and I’m sure you’ve seen this in your interactions with companies too, is where do you start and what is going to bring the most value? And you know, that’s one of the challenges. The second challenge is of course, data, you know, schema, disparate data sources, all of that because AI’s only as good as the data you have. And so many companies are running on legacy data systems, things like that. That’s a big challenge.

So certainly yes, Patrick, totally agree that AI is going to have a massive impact, and is going to provide that experience. I think, though, for the foreseeable future. The way I saw it from a services perspective and a services industry perspective is the consultants are that experience. And we’re still going to need, for the time being, consultants to help bring that experience, to help orchestrate the best path forward. Is it going to be that we can accelerate that work through the use of AI? Absolutely, no question about it. And will AI eventually be able to orchestrate and define that path and self-develop? I’m sure we’re going to get to that place. But for the time being, it is the consultants that are able, and the services companies that are hired to come in and help with these particular projects. They are that experience, that they are how you achieve that compression algorithm, rather than going and trying to find 20 people you hire on your own and hope that they have the right experience and bring them together and hope that it works. That’s to me how I always positioned it with my customers was we are that experience, and we are what brings and helps condense that compression algorithm for you. 

But yeah, I think I agree with you. I think that’s going to be the- AI is the game changer because it’s in everything we’re doing and it’s phenomenal, you know, and even just listening to what’s happening, you know, as I was sharing prior in the digital media space and how it’s changing just our experiences with media and all of that is, yeah, it’s- but in the end, what’s so interesting is it all comes down to how are we saving people time. 

Patrick: Right. 

Darlene: And that’s the Occam’s razor for me on that, is anything you do with AI that saves somebody time is going to be a winning combination. 

Patrick: So- And I think the real next step. It’s not just the saving time. It’s the having something to do with that time that you saved. Because I’ve heard for years how automation and analytics and all is going to free people up to do higher value tasks. And my cynical response to that is always, you know, I don’t always say it out loud, but my cynical response is, why aren’t you doing those tasks now?

Darlene: Yeah.

Patrick: You know, if they’re higher value, go do them and figure out another way. You know, let the automation, let anything, take care of the lesser value tasks. And I think we’re at the same kind of position with AI where, like you said, anything that can free up time and then you have to know what you’re going to spend that time on. And that’s what may be one of the bigger challenges to that return on investment on AI is, is understanding where not just you saved money and you save time, but then you invested that saved money and time into something more valuable. 

Darlene: Right. No, you’re absolutely right. And that’s where I think, to your point, AI is going to sort of, and there’s been a lot of articles and a lot of pieces written about this and a lot of discussion about it is, are people going to lose jobs over AI? And you say it’s going to shift, you know, it’s the economy is going to shift. Much like if we go back and look at Amazon, you know, the discussion is like 60% of Amazon’s business right now marketplace is external third-party markets. So, they’ve created a whole new marketplace a whole new channel. And what it’s done is, people say, well, then people have lost jobs. You say, well, but to some degree you can look at it and say, it’s changed the small town, you know, Main Street. Main Street is now serviced. It’s now restaurants, it’s dry cleaners. It’s nail salons. It’s all of the service based industry as opposed to a hardware store or, you know, things like that. So, it’s the product side of it. And that’s where I think AI is sort of going to also shift things as well, is it’s going to be a skill set, and it’s going to be a lot around thought leadership in how you can actually now more effectively leverage AI across your business and coming up with new models and things like that. So, it’s a shift in the industry as a whole.

Patrick: So that-

Darlene: It’s going to be fascinating. 

Patrick: The English majors and the history majors are going to do well. You know, they’re going to be in a good position to tell a good story and understand what it all means. 

Darlene: *laughs* Yup.

Upcoming website launch

Patrick: So, two last things I want to touch on. I know, you’ve got a website you’re about to launch, 

Darlene: Yes.

Patrick: Which will be probably by the time we air this. So just tell us about that. What is it going to be. What’s it going to do. What’s it for?

Darlene: Oh, I appreciate you asking that, Patrick. I’m really excited about launching this website. And, as you know, I’m on a bit of a sabbatical right now, but I do think there’s an opportunity and I’ve had some interest from a number of different individuals, companies, even analysts, about coming in and talking with them based on some of the experience that I’ve had, fractional type leadership roles, things like that. And so it seemed very helpful and beneficial for me to launch a website talking about my own capabilities and being able to promote a little bit of my own experience, and then also being able to communicate my thought process in that I really like to try and connect the business with the technology and look at technology and how it exists to drive those business outcomes. But then also how to help simplify this for a lot of companies, without having to go to larger, you know, services companies and businesses to be able to do this, just to do it on an independent basis.

And I’m really excited about it. So, I’m also going to be blogging and writing about some ideas. All the books that I’ve been reading and listening to as I’m spending copious amounts of time while running and on my bike and doing other things. And so, I’m really excited about being able to share this out and hopefully being able to work with different companies and different businesses in either a smaller or larger capacity to help them on their journeys as well.

Patrick: That’s fantastic. And that really gets at the whole trusted advisor. 

Darlene: Yeah.

Patrick: Because the only reason why anyone listens to a simple or a boiled down, simple answer to a complex problem is if they trust that you actually understand the complex problem underneath it.

Darlene: Yes.

Patrick: If you can take that complex problem, understand it, and then give them the essence, the simple answer, then you’re truly that trusted advisor. So yeah. 

Darlene: Yeah.

Portland to Portland 

Patrick: Excellent. Well, now I have to ask you, you’ve got to tell us about Portland to Portland. I’m telling you, we are, we’re sitting in the studio in Hampton, New Hampshire. There’s no way you don’t go somewhere through Massachusetts or New Hampshire to get to Maine. So, we’re going to be out there with signs on the side of the road. But tell us about it.

Darlene: I’m so excited for that. And I do need to go and look at the detailed map so I can give you the exact days and I’ll be looking out for those signs too. So, the very short version is about probably a little less than a year ago, I was looking for a very nice, leisurely weekend bike road trip my husband and I could do, maybe through Napa. Something kind of casual. I love to cycle. I just, I, you know, I’ve been a cyclist for a while, and triathlete. I run and swim as well, but I thought it would be kind of fun to get away. Do something different as a little vacation. Stumbled upon Trek Travels Portland to Portland, cross-country supported bike ride and I found it in May of last year. And for three months I kept it to myself. But every single day I thought about it and almost every day I went back and looked at the website and finally I said to my husband, because it’s 3,800 miles from Portland, Oregon, to Portland, Maine. 3,800 miles 48 days. So, you’re, you know, riding on average 70 to 80 miles a day. And, I thought, well, this is sort of an interesting idea, except, you know, at the time I was working and I’m, you know, I also have a husband and a dog. And I was like, how do you just pick up and leave for 48 days and go ride your bike across the country? And so, I said to my husband, I said, I found this, I’m interested. And he said, sign up. We’ll figure it out later. And-

Patrick: That’s fantastic.

Darlene: You know, and I think Richard Branson is famous for saying, you know, if somebody asks you if you could do something, just say yes and then go figure it out later. And that’s sort of what I’ve done. So anyway, my time has been largely, in my sabbatical right now has been my part time job, has been basically training and readying myself for this massive undertaking. And I’m very excited about it. And I’ll also be blogging about that, too. So-

Patrick: Fantastic.

Darlene: It’ll be interesting.

Patrick: And when does it start?

Darlene: It starts August 21st.

Patrick: Wow.

Darlene: And on August 21st we will dip- there’s 18, somewhere between 18 and 22 of us, we will dip our wheels into the Pacific Ocean, and then we will ride until October 6th. And we will dip our wheels into the Atlantic Ocean and we will be done. And we will have done 3,800 miles across the U.S. 

Patrick: That is absolutely fantastic. Really looking forward to hearing that. Seeing all the pictures and all that.

Darlene: Thank you.

Final thoughts

Patrick: It’s going to be great. Excellent. And it’s just- it’s inspirational for me to hear you say something like, I’m just going to go do it and I’ll figure it out later. That’s just great, and you’re not inspiring me to do another triathlon. I’ve done those.

Darlene: *laughs*

Patrick: I’m done with those for now, but who knows? Maybe again. 

Darlene: Yeah.

Patrick: Darlene, thank you so much for coming on the podcast. Been so much fun.

Darlene: Thank you.

Patrick: We’re going to go ahead and book you for probably December so you can, after you’ve recovered from your ride, and you can tell us how it was and we can talk about everything we got right and wrong today on our whole chat about technology.

Darlene: That sounds great. Thanks for having me, Patrick. Been a lot of fun, I appreciate it.

Patrick: Thanks so much.

We’ll be taking a break over the summer and will be back with season 4 of TBR Talks in a few months. In the meantime, send us your key intelligence questions on business strategy, ecosystems and management through the form in the show notes below. Visit TBRI.com to learn how we help tech companies large and small answer these questions with the research, data and analysis my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, principal analyst at TBR, thanks for joining us and see you next season!

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

EY’s People Advisory Services: Diving Into a Critical Service Line

TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
EY’s People Advisory Services: Diving Into a Critical Service Line
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In this episode, titled “EY’s People Advisory Services: Diving Into a Critical Service Line,” Senior Analyst Kelly Lesiczka and Principal Analyst Boz Hristov share insights into EY’s People Advisory Services after their meeting with senior leadership and partners during a recent showcase of the service line.

Additionally, Kelly, Boz and “TBR Talks” host Patrick Heffernan discuss how EY manages the critical aspect of people advisory in digital transformation within its partner model, how enterprise needs have changed post-pandemic, and how people advisory engagements fit within EY’s larger framework of services offerings.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn:

Connect with Kelly on LinkedIn

Connect with Boz on LinkedIn⁠⁠⁠⁠⁠⁠⁠

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

EY’s People Advisory Services: Diving Into a Critical Service Line

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about Big Four firm EY’s People Advisory Services, with Boz Hristov, Principal Analyst for TBR’s Digital Transformation practice and Kelly Lesiczka, Senior Analyst for TBR’s Professional Services practice. 

EY’s People Advisory Services updates

So, this week on the podcast, we’re doing something a little bit different. I’m joined by Kelly Lesiczka and Boz Hristov who recently spent some time with EY’s People Advisory Services practice. The firm was doing a little bit of a roadshow in Boston and so they went down and sat down with them for a briefing. Normally we would take this and we would turn it into a special report. We’d put it out there for everybody to read. We thought this time because we have this podcast, we’d turn into an episode and we just chat about it. We often say that we know more than we put on paper, so maybe that more that we know is going to come out in this episode. So, Kelly, I’ll ask you first, maybe just describe what exactly it was and what you sat through and what you did with EY.

Kelly Lesiczka, TBR Senior Analyst: Yeah. So, we got to meet up with a few other leaders from Chicago, and they were from not too far from us, which is great, but they were able to talk to us about some updates within their People Advisory Services. So, a lot of talk about their CHRO study, which had just come out so it was interesting to see the impact of how technology is influencing the role of HR and how it’s changing more into experience driven, it’s also more up to a change to say, like they used the terminology “change is a muscle” which I think is a good way to phrase it. It has an ongoing change they need to keep updating. And so it was good to hear some of the changes that are happening from that perspective and how companies are looking at the value of people and how to best use their, really, their best asset through technology or even through different platforms and how to align them better with their business, how their business is moving and what new needs they have.

Patrick: And we’ve spoken in the past quite a bit with EY’s People Advisory Services practice. So, is there anything that struck you as surprisingly new this time or was it sort of the steady evolution of EY’s People Advisory Services practice? That’s a really loaded question early on, but I’ll go ahead and ask.

Kelly: Yeah. No, I like it, though. I think a big piece of it is definitely the experience driven, I think you probably agree, I think that was more of- it came through a bit more I think than we’ve seen in the past from People Advisory. I think overall in the market, it kind of fell off for a little while. But I think people are starting to see the value in people, especially equipping them with different pieces of technology. Look at how agentic AI is taking off, really teaching their people how to use those tools is really a strong- there was another thing I wanted to say-

Patrick: Yeah. No, well we’ll come back to agentic AI. Boz, your sort of initial reaction to this session with EY.

Bozhidar Hristov, TBR Principal Analyst: Yeah. We saw, at least we heard I should say, and we saw some of the examples that they shared with us, what EY aspires to be as a firm. There was some very strong examples of that. What I mean by that is we know Big Four, they always struggle with the fragmentation of the member firm structure, but the People Advisory Services since they started making that pivot towards being a lot more globally organized as a practice, and so, they had- they shared with us that they had 33 separate systems and approaches and frameworks you want to call it across the various member firms across the globe when it comes to people advisory. Now it’s down to one.

Patrick: Okay.

Boz: So, that’s a massive change because that first and foremost requires a massive internal buy in and consensus across the member firms. So, it’s, you know, it’s sometimes it’s harder, oftentimes it’s harder to sell internally within those firms than externally, right. So, making that recognition that they need to, you know, acknowledge the standardization and consistency across the member firms is a very, very first prerequisite I would say for the firm to think about going to market because as we know, change management is hard. So, applying change management to themselves, so, thinking about through that lens is an important factor. Also, it’s, you know, how they’re doing it as well along the way. I mean, they brought up, they are re-skilling over 2000 consultants, you know, as a part of that, and that re-skilling is mandatory. So, they’re not just putting on paper saying, we have one methodology now. They actually have people putting people to work and understanding and providing the training necessary to understand how, you know, that new framework is set up and what it all means and all the tools that are available to them along the way. Especially as change management, People Advisory Services is no longer a standalone kind of an offering source, meaning those consultants that usually and typically attach with a technology consultant or operations consultant, whoever it might be, in a larger transformation project, right? So, this is a key element that recognizes from the get go that regardless, there will be a change management, depending- the skill may vary obviously, but that’s a big first step and doing it consistently across, no matter if you are doing business with EY in the US versus, you know, the Netherlands or Australia, you are, you know, experiencing the same kind of methodology approach.

Patrick: So, people advisory services and change management, generally to your point, is typically part of a larger deal, part of a transformation, part of migration, whatever. 

Boz: Yeah.

How People Advisory Services is positioned

Patrick: Did you get a sense at all that for the folks leading people advisory services at EY, that they see it eventually becoming something that would be the beginning of an engagement, not- it’s something that they could go out and sell and get new clients? Or is it always going to be part of why you should come work with us, is because we have this very robust People Advisory Services practice.

Boz: I will give the consulting answer but it depends you know.

Patrick: I walked into that so.

Boz: You walked into it, yes, you did. And I’m just thinking about that. To enforce that we’re part of that and being, you know, not just being a standalone leading with, always depends on how the company also takes the next step will be incentivizing and measuring success. What does measuring success look like, of a large transformation program? And everyone that is involved in that large transformation program gets measured the same way. Instead of saying, oh, the people advisory consultants are getting measured on ABC and then SAP consultants get measured on DEF, you know. So, if those incentives are aligned, the behavior will change and the approach will change and the approach will likely work along the way because you have the messaging, you have the framework, you’re going to market as a whole, as a firm. And you know, you’re not just trying to meet your own quota for the year, but you’re actually trying to drive towards the same outcome to make the client happy. So, that’s- I think we know from EY and from the other Big Four, there’s always been kind of that push to, as a, kind of a common KPI, so to speak, where service lines per client is kind of the common denominator. But we know from there, things start to water down a little bit and change depending on where you sit at the table, at what scale is your practice, and how things may, you know, vary and especially when it comes down to working across borders with member firms that may not be originating where the deal is structured from and shared services and sharing pools of profit and per partner and we’re kind of going down the rabbit hole here, but these are the challenges that could make a program that on paper looks really strong, actually very successful.

Patrick: Right. It’s been a 10-year conversation with EY about service lines per engagement and especially when they’re looking at globally, not just in individual countries. So, it sounds like that conversation is going to keep going.

Boz: I think so. I think so, but I think it’s because change management could serve, people advisory could serve as the, pun intended here, but as a catalyst of change, you know of the organization internally as well-

Patrick: Yup.

Boz: And applying a lot of those frameworks to themselves, which I believe they have started doing that already, could help them to identify. We know that they went through the Everest exercise. 

Patrick: Right, yup.

Boz: And I’m sure, we know that they learned there’s some lessons learned, best practices, what works, what doesn’t along the way, but continue in that direction, in that spirit of like one EY, I think it’s gonna take some time, but it’s- they’re making the right steps.

Patrick: Yeah. And then, so Kelly, you brought up AI. What were some of the conversation- what was the conversation about how they’re applying either agentic AI or GenAI or just AI generally into this People Advisory Services now.

Kelly: I can’t say for how they’re doing it specifically for their people, but one of the things they called out was their avatar that they’re using called Meg internally to try to equip people with more knowledge and it talks to them and helps them teach. So, I think it helps recreate kind of an in-person learning even when you can’t necessarily have that. But I think that’s just one of the many ways that they’re trying to encourage the use of AI because you really do need to know how to use it to move forward 

Patrick: Right.

Kelly: And go on in different ways. So, I think that was one of the things. Just- I want to just add one quick thing to what Boz was saying. I think one of the discussions we had with them was also around the shift from time and materials over to more value outcomes and how clients are really looking more for that. They want to actually see the value of the services that they’re getting and that could even be seen through AI if they’re able to use these tools and services, it’s something that they’ll be able to- I think it’s difficult to try to measure. There’s so much data out there. You could throw a dartboard at anything and you can use that. 

Shifting pricing models

Kelly: And go on in different ways. So, I think that was one of the things. Just- I want to just add one quick thing to what Boz was saying. I think one of the discussions we had with them was also around the shift from time and materials over to more value outcomes and how clients are really looking more for that. They want to actually see the value of the services that they’re getting and that could even be seen through AI if they’re able to use these tools and services, it’s something that they’ll be able to- I think it’s difficult to try to measure. There’s so much data out there. You could throw a dartboard at anything and you can use that. 

Patrick: Hmm.

Kelly: But I think the way that they’re shifting more into the value of what’s actually being produced and if they’re actually getting what they’re looking for, I think the risk on both sides of EY and the client is also growing through that too.

Patrick: That’s fascinating because the- for so long, change management has been the first thing cut, you know, when you sort are like we need to trim down this engagement, we need to, you know, the clients not going to pay this much. We need to cut something, let’s cut change management and what you’re saying is that if EY can get good at selling change management as a- on an outcome base rather than a time materials base that that might help propel their People Advisory Services practice.

Kelly: Yeah, I think, I think it definitely could. I think it showcases a lot of the value and I think the willingness on the client side to reap the benefit, it also shows that they actually want to execute on the change, because I think one of the main things they always say with transformation is how unsuccessful it is if you don’t have people on board.

Patrick: Right.

Kelly: And so to having skin in the game on both sides and actually the desire to transform just showcases the value of People Advisory Services for your organization in general.

The partner ecosystem and growth opportunities

Patrick: Right. So, all right, so Boz mentioned the internal- selling it internally, you’re talking about the relationship with the client, but then there’s that third relationship of the partner. So, did they speak to what it looks like for their partner ecosystem with respect to what they’re doing in People Advisory Services?

Boz: Yeah, I think that’s an opportunity for EY to grow even more when it comes to People Advisory and to take advantage of the framework that they have set up especially that as we talked a moment ago, People Advisory change management is becoming more and more part of the large transformation process. That’s where really the value is. And I recognize it from the beginning that there will be a change management point being at the forefront of the discussions. I think it’s critical. I mean they have a whole framework around being modular and scalable that the solutions that have developed, the technology solutions that have developed around the network experience, it’s really, you know, it’s a way to think about it that it’s not one-size-fits-all, right, way and that’s where it’s important to bring in the partners to not one-size-fits-all right. There’s a big transformation but depending on the persona, you can make better alignment, better adjustments. So, I think that’s an opportunity for them to have more partner discussions along the way, to understand the partner view and understand maybe there’s some, you know, new areas that you know the technology may or may not have recognized for development. Thinking about large SAP transformation programs or anything that’s, you know, with Salesforce or any of the other of their big partners, you know, Nvidia, or Dell or Microsoft, there’s so much potential there that they’re all part of big transformation problem, so, there’s, I think there’s room for growth when it comes to the partner dimension of EY.

Patrick: Yeah, and it’s a thing that they’ve gotten very good at sort of determining who their strategic partners are, who they’re going to play with. 

Boz: Yeah.

Patrick: But that step of ensuring that those partners understand every single component of EY and like and how they can play in any one engagement. 

Human resources opportunities

So, nobody listening to this can see it, but you’re both sitting here with notebooks that you’ve actually written on pen and paper, which is sort of the opposite of technology, but that’s okay. And I’m wondering if we could and I’ll give you a minute to sort of dig in, but is there a nugget or two out of your notebook that you sort of wrote down and you got, you know, like I know when I’m taking notes at an event, I’m always like underlining and putting little stars next to something. So, I’m curious if there’s anything out of those notebooks that sort of has got your attention now, Kelly, you want to go first?

Kelly: Yeah, I can go first, I think the main thing for me is that HR, the transformation is needed and the recognition within it is needed. I feel like it’s often a thing that people just think you can outsource, so it kind of gets tossed to the side. But I think the way that EY has approached it and they discussed in their study, it- there really is so much more to it and actually making sure that your talent base is aligned with what you actually need as a company and how you can move forward. And I think acknowledging that change without the organization updating your service lines or what type of client you’re pursuing, I think you also have to take a look at your talent and make sure that they’re aligned more closely with the tools that they need, so using AI internally, you’re using all these different optimization tools, but then also just if they’re aligned with the same priorities that the client is or as your company is, as it progresses with these new areas.

Patrick: Right.

Kelly: I think that was the main thing for me that underpinned by just ongoing change is just it’s perpetual really, you have to keep going.

Patrick: Right, and I think about we’ve talked about this before too, like the role of the Chief Human Resources officer in the last 5-6 years has been crazy because they had to deal with the pandemic and suddenly they had to organize everybody remotely and then coming out of the pandemic, we had the whole like, quite quitting stuff that was going on. 

Boz: Yeah.

Patrick: We had lots of spin outs, lots of, you know, people going off on their own. Then we had all those firings that were happening across the technology space, sort of a blanket let’s just cut 10%. So, I imagine Chief Human Resource Officers have had a rough 5 or 6 years. So, getting all the help they can get from an EY, is- that’s a great.

Kelly: Yeah

Patrick: There’s a huge use case there. 

EY’s approach and mindset

Boz, is there something in your notebook that is like screaming at you right now?

Boz: I’m looking at it and I’m just thinking to kind of build up, there’s a couple of things actually that I’m- I think they’re interconnected. There was a comment, one of the executives we spoke to brought up how change was a commodity, now it’s a value, right? And thinking through that, lens about going back to the discussion about applying it as a value driver as about understanding who’s your change agent within the organization and now how do you actually help your clients? That’s the mindset EY is coming from and that’s the mindset they’re bringing to their clients as well because, you know, not- just because you play golf with somebody, doesn’t mean that that’s the best person, you know, you wanna task with doing that change management work. 

Patrick: Right.

Boz: And so, using the right tools, using the right approach, looking at it through that lens, it’s important. And to do that EY is taking two steps. Approach one is the mindset that what I have here is EY wants project architects. They don’t want salespeople. So, architecting it from that point of view, supporting that value creation is important, but also collaborating and tapping into EY’s wavespaces. Which we know it’s a huge asset for them, we know it’s a big part of their- how they go to market from an innovation standpoint and having that recognition that change management is a value, I think it’s how all of that discussion can occur and does occur at the wavespaces, and they’re not just there to showcase, but actually to demonstrate actually how it impacts organizations, because often those large transformation programs, you know, start at wavespaces, right, with discussions at wavespaces and then continue into the phases. So, kind of making that 90-degree shift in the mindset of EY’s approach both from the framework and the methodologies and the processes in place, but also how they approach the opportunities that change management can drive and tapping into the power of their most disciplinary model. I think it’s an important aspect.

Patrick: And we know from experience that the wavespaces can be used not only for the client to better understand everything that EY brings, but for EY itself to understand. So, if you’re a supply chain guy or an SAP guy, and you go to a wavespace and People Advisory Services shows up for the engagement, now you can more clearly articulate EY’s value 

Boz: Absolutely.

Patrick: In the entirety of the engagement, not just in your little sort of piece of it. 

Last takeaways: AI implications and global methodology 

Any last takeaways from the event? Anything you’re going to look for like 5-6 months from now or a year from now when it comes to People Advisory Services or EY as a whole? Let’s throw it out there, or the Big Four as a whole. Let’s make it as broad as possible. What’s your big take away for the Big Four or EY or People Advisory Services?

Boz: Well, I think to me it’s, I would say the broader kind of professional services space including EY and the rest of the Big Four and diving back to the People Advisory and the change management is what’s happening with AI and agentic AI, and how those companies make the pivot and the shift to recognize, but also adjust, to the implications of their own operations and the business model with the big- couple of big factors. One is on the people side, right, on the human element inside of the pyramid being impacted potentially, but also on the commercial model, right? So, those are connected obviously. So, I think it will be curious to see how much of the learnings and the experience that People Advisory Services can do to the client, actually they apply to themselves because we often forget that those organizations that, like EY and others are professional services and most of their clients are in the B2B sector, right.

Patrick: Right.

Boz: Manufacturing, aerospace, retail, etc. So, there’s a little bit of a different nuance to bringing your, you know, kind of like, you know, advising your clients to yourself, because there’s a different goods and services that your clients offer than yourself. So that’s where it might be a little bit more of a challenge, but it’s an opportunity because if they can apply it to the professional services I think it might be much easier to then apply to more of a tangible kind of a B2B industry client sector.

Patrick: And in a minimum you’ve got experience at scale and that’s-

Boz: Yes, absolutely. 

Patrick: What the clients are probably looking for.

Boz: Yeah, absolutely.

Patrick: So yeah, Kelly, how about you?

Kelly: I think for me, the biggest take away is around the theme of global and how they’re doing something so massive across organization, consolidating down to one main methodology. And I think the necessity to be more global is definitely coming through. I think other firms have tried to do it, but it can be very difficult to bridge together all of the different member firms and even across some of the professional services companies that are more heavily rooted in certain countries, it’s definitely difficult to create that global theme management tactic. I definitely think it’s a necessary thing, and I think it’s ever more present now, especially as companies overall, and this is something that EY had said, was that how they’re trying to be more proactive over reactive. And I think having that global mindset definitely enables you to be more proactive and you’re not just reacting because you’re so segmented. You have that one better view that shows more into what’s going on.

Final thoughts

Patrick: That’s perfect. And that’s exactly what we’re going to talk about in season 4 of this podcast is the Big Four firms and how global are they really, and what is it that- what are the advantages that- do they get from not being globally run and what are the advantages they’re trying to get to or the opportunities they’re trying to get to by becoming more consolidated globally, I think that’ll be our fall 2025 discussion. Does that sound good? 

Boz: Excellent. Yeah, looking forward to it.

Kelly: Sounds good.

Patrick: All right. Thank you so much both of you for being here. And will we get a written report from this? Doesn’t matter we did this, we did this podcast, it was perfect. Thank you.

Boz: Thank you.

Kelly: Thank you.

Patrick: Next week in our Season 3 finale, I’ll be speaking with Darlene Wilson, a thought leader in the technology space about all things technology, including a look back and a look forward. Don’t forget to send us your key intelligence questions on business strategy, ecosystems and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies large and small answer these questions with the research, data and analysis my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

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Diving Deeper into Global Systems Integrator Ecosystems: Geographic, Industry and Credentialing Data by Technology Partner

TBR Talks - Diving Deeper into Global Systems Integrator Ecosystems: Geographic, Industry and Credentialing Data by Technology Partner
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
Diving Deeper into Global Systems Integrator Ecosystems: Geographic, Industry and Credentialing Data by Technology Partner
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Principal Analyst Boz Hristov and Analyst Alex Demeule join “TBR Talks” for an exclusive look at TBR’s Ecosystem Reports, which detail how the top global systems integrators’ (GSIs) most important technology partners — Amazon Web Services, Azure, Google Cloud Platform, SAP, Oracle, Workday, ServiceNow, Salesforce, Adobe — collaborate with integrators and consultancies. How many certified, trained staff do these practices bring to their partnerships within the most influential GSIs? How do they address migration and modernization efforts? How are they deploying AI solutions? TBR has been answering these critical questions for years, and Boz and Alex are excited to announce that upcoming publications will include the addition of geographic data cuts for Americas, EMEA and APAC. (Industry vertical cuts on the horizon as well!) Additionally, the trio will discuss the possibility of more analysis on partner perception of working with one another as well as the addition of more research on ISVs such as HubSpot

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Diving Deeper into Global Systems Integrator Ecosystems: Geographic, Industry and Credentialing Data by Technology Partner

TBR Talks Host Patrick Heffernan: ome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. 

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about TBR’s family of ecosystem research with Boz Hristov, Principal Analyst for TBR’s Digital Transformation practice and Alex Demeule, Analyst for TBR’s Cloud and Software practice. 

Boz and Alex, great to have you guys back on the podcast.

Alex Demeule, TBR Analyst: Good to be here.

Bozhidar Hristov, TBR Principal Analyst: Hey, good to be here. Thanks for having us.

New ecosystem analysis

Patrick: Excellent. Yeah. So, I want to talk about our ecosystem research, our ecosystem intelligence reports, which we’re in year three now of doing these. And it’s been a blend, a combination, a merging of work that we do in the cloud and software space and work that we do in the IT services and consulting space. Basically we look at each of the companies that we cover in detail in those spaces, but now for the last few years, we’ve been combining those two research streams and saying what are the relationships between these companies like and what can we learn about the ecosystem that they’re working in by understanding those relationships. And this has proved to be enormously valuable to our clients because all of them depend on their ecosystems in order to grow, and I want to wrap up when we get to the end to talk about how we see that kind of changing. But if you could maybe just walk us through right now what are we looking at that’s new in the ecosystem research? And I mean just to say at the beginning, we do have ecosystem research around the hyperscalers, we have it around some ISVs, and so maybe you can tell us where we are now and where we’re kind of, what’s new, maybe what’s coming next.

Boz: Sure, happy to. So, as you mentioned, you know the research spans across the consultancies and the global systems integrators, intersections with the hyperscalers as well as the ISV community. So, the streams of reports that we’ve been producing in the last three years have been focused on the infrastructure side, as I said, you know, and the application side. So, the application side of the house is what we are expanding in terms of coverage. So we’re about to launch our ServiceNow Ecosystem report, which looks at the intersection of ServiceNow’s relationship with 10 of the largest GSIs and consultancies, which is a very similar report to what we have for the likes of the SAP Oracle and Workday, Adobe and Salesforce on the application site, as well as the hyperscalers, the AWS, Google Cloud, and Microsoft Azure. So, that report is a brand new one coming up shortly and it’s really just the combination of a lot of conversations we have had with both sides of the house, both technology and services providers. And looking through the lens of the role of ServiceNow as it augments its own value proposition and enhances its partner strategy along the way, portfolio, technology portfolio, commercial models, sales promotions and so forth. You know, knowledge is happening in the short manner as we are recording this podcast. So, I’m sure we’re going to hear more updates on ServiceNow as well as its partners from Partner Day. So that’s coming up. 

So that’s the big new report that’s coming up. But we also are in the field right now with the next iteration of our Voice of the Partner report. So, the Voice of the Partner, as it suggests, looks at the intersection and the relationship between three groups of vendors, the OEM providers, the cloud and software providers, as well as the services providers, and really trying to answer the big question, what are partners missing of each other. And again we are going for the second iteration of that report, that should be publishing in the next three to four weeks as well, like late May, early June.

Patrick: Okay.

Boz: Essentially, last but not least we are adding additional data cuts, as I mentioned you know we have the Cloud Ecosystem report that looks at the hyperscaler’s relationship with the GSIs and consultancies. So that was the first set of reports that we launched 3 years ago and now we have reached kind of a point where we have gathered enough data, where we are going to model additional data essentially on our own and expend that proprietary methodology looking through the geo specific cuts. So, we’re breaking down the- let’s take for example Accenture’s AWS revenue and headcount by geography, right, we’ll do the same thing for the other three practice areas as well as across all the 11 providers there in the report. So, we’re starting to add additional data cuts in that report. So ServiceNow, additional data cuts, and Voice of the Partner, if I had to sum it up.

New analysis being added

Patrick: Excellent. And Alex, so now we have ServiceNow, SAP Oracle Workday, right, and then Adobe and Salesforce. So, we’ve got six. In your view, coming from the cloud and software side of the house are those the most important and who might be coming next?

Alex: Well, the big one that’s coming next for the cloud practice and you’re talking about Voice of the Partner is the Cloud Voice of the Partner. That report that Boz started, you know, we looked at that from the cloud practice and just such great insights coming from, you know, what’s differentiating these vendors within the ecosystem and how is the ecosystem looking at its peers and being opinionated about how they collaborate and with whom they’re collaborating with. So, we really want to double tap on the cloud angle around this Voice of the Partner report, so, coming out with a dedicated cloud report in the coming months, I believe that’s going to be a 2Q25 report for us, sort of towards the middle of the year. So that’s something that people can expect to see, a big new report coming out of the cloud practice.

Patrick: Do you anticipate within a year or so that we’ll be, or less, that we’ll be adding another ISV to that that mix along with Adobe and Salesforce and Workday and all the rest? Is there anybody else, I guess I’m asking that you’re like, I wish we had the ecosystem report for these guys.

Alex: There’s a lot of great companies that probably should be included in these reports. I think picking one is sometimes sort of the challenge that comes to my mind. You know, HubSpot is a fast grower. 

Patrick: Right.

Alex: When I look at the Cloud Applications Benchmark and their relationship to Salesforce, you know looking at how they compete, you know their name, that could be included within the Adobe and Salesforce Ecosystem report just because I think that they’re growing really well right now. And I think that their role in the market is going to continue to, you know, be very competitive.

Patrick: Right. And I could see coming at it Boz, from the services point, you might say, here are the companies that have chosen or are working with HubSpot in a very strategic way. So maybe highlighting them just from the services perspective.

Could the management consultancy’s labor pyramids collapse?

Alex, you said differentiation and that always sort of is a trigger for me, when you think about how these ecosystem reports are used, is that one of the most important use cases is like it allows you to see not just the staffing or the, you know, the dedicated resources and the acquisitions or the, you know, the investments that are being made, but how you can actually tell the difference between Accenture’s Azure practice and Deloitte’s Azure practice? Is that what sort of comes out in these reports?

Alex: Yeah, I would say so. And you know one of the things I mean, I’m always thinking about it from sort of the cloud angle, being in the cloud practice. 

Patrick: Right.

Alex: So, you know when we talk to these services vendors, like the word I just used opinionated, and so that opinionation is going to be based in what they see as differentiation by the vendors and sort of how they are executing on their product strategy and sort of what the road map looks like and sort of how that is positioned in the broader cloud opportunity, whether it’s you know, core enterprise migrations, or something more emerging like AI. So, you know, getting to the root of, you know, how these cloud vendors are being viewed by the services professionals and how that is influencing where the services professionals are investing their money, that’s really what I like to think about a lot.

Patrick: Okay. And then Boz from your perspective, the same kind of question.

Boz: Yeah, differentiation is like you said, it’s a trigger word for sure. And I think from a services side, one question we’ve been trying to get a better understanding of is how well services providers and their cloud and software counterparts think about each other meaning- and how well they know each other, I should say is probably is better way to phrase it, is, you know, that knowledge management and ensuring that SAP can tell, you know, the EY story as good as EY can tell their own story. So, I think that’s the kind of, the big question that I think no one has cracked the code on that particular challenge yet from just- from what we’re gathering sentiments and the Voice of the Partner, you know, surveys and just ongoing conversations. There are some bits and pieces and efforts in certain practice areas that we see some vendors being a little bit closer aligned and think ServiceNow actually, now that we’re doing the research around it, we see them, some of the partners being better positioned themselves within each other and between each other meaning, you know, there’s like three to four industry offerings for example for specific industries, right, versus, we can be ServiceNow’s partner across 19 industries, right? So that kind of starts to suggest you know the calibration of expectations and better alignment between the two parties, so that then when the sales process, when the go to market motions get fine-tuned, there’s a little bit more better alignment to that, which can actually essentially service the customer you know through the- to the best way possible. But I think that’s the differentiation for me is about how well partners can tell each others’ story.

Patrick: We just had a conversation recently with a client that was talking about how they’re trying to shift their own brand in the marketplace and how, you know, they’re trying to get more into, honestly into the consulting side of things. They’re trying to do, you know, higher value kind of work, which is great. And one of the things that we advised was listen, having your partners tell that story is going to be more powerful than you trying to go out and tell your story. Because nobody sort of, not nobody, but it’s harder to market, you know, believe that we’re different as opposed to having somebody like a, you know, a hyperscaler come in and say, hey, these guys are different. 

GenAI and pricing models

So, I want to pivot a little bit to, you know, what is it you don’t know? Like you guys are obviously experts, you know everything, but there’s gotta be stuff, there’s still questions you don’t know the answers to. So, when you think about the ecosystem and ecosystem intelligence, and I know from a competitive intelligence perspective, we’re really good at saying these are the key intelligence questions we’re going after. What are the key intelligence questions within the ecosystem intelligence space, that despite 3 years of looking at ecosystem intelligence reports, you’re still going after, you’re still trying to solve? Boz, you want to go first?

Boz: Yeah, sure. I mean, I think that the biggest opportunity for everyone that I think we’re trying to also untangle is around the commercial construct, an opportunity that we are starting to see being amplified and accelerated with discussions around GenAI. What I mean by that is so the GenAI focus and the push around, you know, we can sell you, you know, you can use the technology to increase productivity, to improve your kind of like operations etcetera, etcetera. So that is putting a different pressure on the services vendors. Meaning that now they’re on the hook for delivering essentially those outcomes. So- and historically, services companies, that’s what they know for, consultancies, they pride themselves on being able to talk about the business language, the business outcomes and trying to be a little bit more, you know, kind of a line of business and industry wrapper around the technology discussion. Now the challenge that we see and we’re trying to understand is how prepared are the software and the cloud providers to change their pricing models to become more of an outcome-based focus. We don’t know of any, we’re not aware at least, I don’t think- I spoke with many people around in the ecosystem, any single ISV provider or cloud provider that currently is prepared to charge on outcome-based for this piece of software, right.

Patrick: Yeah.

Boz: Now, one can argue that, you know, this is the job of the consultancies, right? But that puts pressure on the consultancies to ensure that the relationship is aligned and you know, we know about the consumption model. So, you can say, oh, there’s a consumption, they consume XY and get paid that way and the outcome is driven by the consumption, etcetera, etcetera. You can kind of massage the message that way. But I think the challenge is that, you know, the expectation is evolving, and I think that maybe it’s something that it’s three years, five years down the road, whatever time it takes for GenAI to start to really pick up steam in terms of making a difference on the financial side. I mean, now it’s got plenty of steam on the hype side from a GenAI perspective, but in terms of like the monetization of the technology, are there software providers out there, either current, that currently in the market space or up and coming, they’re really going to catch the Salesforce and the Workday of the world in the blind spot where they actually will be prepared to actually come out in the public and say we are going to- we’re changing the business model. 

Patrick: Yeah.

Boz: We’re changing the way we’re going to charge and that’s going to make everyone’s job different. Now that’s going to create opportunities for new partnerships because McKinsey can look around and say we always talk about outcomes. You’re selling on outcomes, your piece of software. Now we can make a joint- 

Patrick: So, we’re aligned. 

Boz: We’re aligned. So, I’m trying to draw some comparisons to 20+ years ago when, you know, Salesforce and Workday came around and disrupted traditional ISV models. The big change was, yeah, sure, the technology architecture was different from modular to agile. Yada, yada. But actually the big change was about how those companies are monetizing the IP, right. And the cloud was about business model change. So, is the next wave of business model change for ISV’s going to become more an outcome-based, and that’s something we’re trying to understand. It is, I will understand that especially if you become publicly traded company messaging to Wall Street and whatnot that’s a completely different, that changes the narrative.

Patrick: Right.

Boz: But as you know the, you know, this has to change, the professional services companies are gradually evolving and they’re trying to change you know how they’re thinking about their commercial models as well and trying to think how much GenAI is disrupting their business model and from a being times and material to more fixed price or outcome-based?

Patrick: Right.

Boz: So, this is kind of the big questions we’re trying to, you know, go after and see how the ecosystem will evolve as the outcome-based pricing model changes across the board.

Patrick: Right, Alex. He just laid down a lot of landmines for you to kind of walk around, or maybe step on. Because I think the challenge that Boz just presented was to the companies that you cover, can they actually change their business models and their commercial models, or does it need to go the other way, that the IT services companies need to learn how to be more, I don’t want to say commoditized but learn how to sell at a subscription or retainer kind of model.

Boz: Yeah, that’s the flip side, yeah.

Patrick: So, what do you think Alex?

Alex: I mean, as far as commercialization goes, you know the consumption method has definitely proven to be the, you know, the go-to as far as AI is concerned. There is one software vendor that is doing outcome-based pricing that I’ve come across. I think it was Zendesk.

Patrick: Okay.

Alex: I think Zendesk is doing outcome-based pricing. I really should be double checking that.

Boz: We they sell it directly or sell it with partners?

Alex: I have to double check on that and get back to you,

Boz: Okay, just curious.

Alex: But it’s rare. It’s definitely-

Patrick: Yeah.

Alex: It’s definitely not something that we’re seeing broadly, broadly adopted. And like one of the other things that that caught my ear while Boz was talking was just this idea of these- where are these AI first vendors going to look at, we know that they are, they’re probably being built right now. You know, they probably exist out there. They probably haven’t risen in terms of like the spotlight that all the major incumbents still have. But at the end of the day, Salesforce, which was this massive disruptor back in its time, is now the incumbent, 

Patrick: Right.

Alex: And now it’s going to be the target of disruption and you know, getting to- like bringing back to this idea of like the opinionated service provider. Getting their opinion on, you know, a Salesforce is much simpler than understanding what they’re looking at as far as these up and coming AI first companies. 

Patrick: Right.

Alex: And so it’s going to be a constant challenge for us to be intellectually agile to, you know, hear and figure out sort of what they’re looking at and being able to keep up with them. Because it’s not something that’s necessarily being projected outward, they’re much more vocal around those major, those really large incumbent and those partnerships.

Patrick: Right.

Alex: But understanding who they are placing early bets in and these like AI native companies, that’s something that’s going to be challenging and an outstanding question.

What comes next: Companies, questions and data cuts

Patrick: So, when you think- so, Alex, put yourself in the same seat in a year from now. What are some of the questions you think you’re going to be answering then or is it different from what you just said or, and maybe even what are some of the companies since you mentioned these sort of the up and comers, what are some of the companies that you imagine a year from now we’ve got in the ecosystem intelligence reports mix? I keep asking you for specific companies. 

Alex: I know. *laughs*

Patrick: And it’s not fair, but you know, putting you on the spot.

Alex: I know it. You know this isn’t a good example, but one that I do think is a name that everyone’s familiar with, OpenAI. 

Patrick: Yeah.

Alex: You know, Satya Nadella had a podcast that was pretty widely dispersed where he said OpenAI is not a model company anymore. They are a product company.

Patrick: Right. 

Alex: ChatGPT is the product, you know. ChatGPT is a product, it’s a great product and all a lot of these model companies have done a really good job of productizing their investments already. You know, Anthropic has done a good job with it. Perplexity, there’s a lot of these tools that are, you know, sort of, were born sort of in the consumer because, you know, it was sort of these online platforms that anyone could go access — but look at PwC: Like PwC was one of the first companies to go out and make it an enterprise-wide tool and be a reseller and a service provider delivering ChatGPT to the enterprise. 

Patrick: Right

Alex: So, you know even these well-known AI model providers, you know, those are names that now that they’re turning these product companies, could become more relevant to us as that goes.

Patrick: Yeah, and then Boz, from your perspective, I know a year from now you could say, okay, we’ve got ServiceNow we’re looking at 10 IT services companies and consultancies. So, a year from now you can say we can look at ServiceNow and 20. That’s the easy answer, give me the hard answer which is, you know, what are the other kinds of things you think are going to be different a year from now.

Boz: Yeah, the expansion of the partnerships absolutely. And I think what I just started, I think it’s kind of like got my, you know, attention as well as I’m thinking about that coverage expansion is, you know, drawing parallels to the way cloud first came around, right? And everyone was building cloud trained personnel.

Patrick: Right.

Boz: You know they had a big announcement. Now we’re seeing everyone is training GenAI, AI training, data and AI practices are expanding, certain goals, yada, yada. So, naturally the next evolution will be how many people you have vertically around OpenAI, around Anthropic’s Claude, around Gemini. You know all these pieces now, when you develop a community are you are you focused on, you know, having model trained personnel, that is part of, you know, the joint go to market efforts, or it’s for more your own proprietary kind or partner enabled, you know, accelerators. So that’s kind of the thing that’s just a natural evolution of the discussion because AI essentially becomes the new cloud discussion from a business layer perspective and how companies organize. So that makes perfect sense, what he’s discussing that it’s going to be about a year from now or two years from now in terms of like, started building out the same way we’ve been building out the cloud practices and the ISV practices for those SIs. But I can see that being naturally kind of the next wave of, you know, the ecosystem intelligence reports moving forward and understanding. 

Patrick: Right.

Boz: I think that’s where really the big commercial model, pricing model will come into play of how those companies will be the key focal point discussion. In terms of the current coverage and thinking about what next, I think naturally the questions we usually get from clients are around the industry vertical intersection. So, I mentioned we’re starting with the geographic expansion of the Cloud Ecosystem report. Naturally, we’re going to build into similar kind of data cuts within the existing other reports within that on the application side. 

Patrick: Right.

Boz: So that geo breakouts are the natural one. And then the next one will be to start adding the industry vertical. You know understanding, okay, can we give us, you know, the top six, top eight industry verticals by practice area by partner, you know. So, essentially again thinking, let’s say Capgemini this time with Microsoft, what are Capgemini and Microsoft’s top six or top eight verticals? 

Patrick: Right.

Boz: And obviously the bundle of all will be like the- another intersection of industry by geo, but that’s something that we could do, it just take so much more of the research and the- but it’s certainly it’s on the road map, the internal road maps, but it’s certainly something that you know just will take a little more time.

Multi-party alliances

Patrick: So, let me paint a picture that’s going to be either wildly optimistic or just insane. Or both. So right now, if you took all 200 companies that TBR covers and justice put them in a big matrix, we can fill in a lot of those squares, like the relationship between, you know, Microsoft and Deloitte, the relationship between KPMG and SAP. You know, we can fill those boxes in with data, with analysis. 

Boz: Yeah. 

Patrick: What we have now, we’re now expanding to say, you know, let’s look at that by geo. Let’s look at that by service line. Okay, that’s a two by two where you’re filling in all those boxes. Now let’s take the next step and say what about multi-party alliances? Let’s put together the SAP, EY and Infosys relationship. 

Boz: Yeah.

Patrick: How does that look? Can you imagine- how soon are we going to be able to say here’s the three-dimensional, four-dimensional view of the ecosystem?

Boz: I think it’s certainly in the near future, right? But I think what starting point before that prerequisite as you said it, made me think about another set of conversations we’ve been having about the expansion of the portfolios around workloads. 

Patrick: Ah.

Boz: So, I think this is kind of where we started thinking about the multi-party alliances and understanding, take for example Microsoft Stack, right, Microsoft Azure, and understanding what’s the composition of workloads? SAP, Oracle, Salesforce, whatever ISV you can just put and then start there thinking about from that and then cut across, or put across I should say, vertically against the stack the other GSI, right? 

Patrick: Okay.

Boz: So then start thinking from through that angle. So that’s the, you know, understanding the workload distribution across hyperscalers, I think because the hyperscalers are essentially the backbone-

Patrick: They’re the backbone of

Boz: Of all this work all right.

Patrick: Sure, yeah.

Boz: So, you need to start from there and then really understand how it stacks up and then understand who are, which are the channel partners that drive the most of that workload from the GSI and the consulting perspective.

Patrick: Yeah, okay. That makes a lot of sense. So, we’d be looking at, we’d be looking at the multi-party alliances not by which of the companies are forming together to solve a particular problem, but saying this particular problem exists as addressed by this workload. So, within that within, I keep trying to draw, as though people can see this. I’m like using my hands like-

Boz: Yeah, we’re, drawing, yes.

Patrick: But, in that stack of this particular workload. 

Boz: Yeah.

Patrick: Different percentages of that work is being driven by different companies and how those pieces all fit together, 

Boz: Yeah.

Patrick: determine like what that multi-party ecosystem alliance is.

Boz: And the biggest question will be is that, are those workloads being driven by the hyperscaler directly, direct sales of the hyperscaler, or the GSI?

Patrick: Or somebody else.

Boz: Right, that’s the- or the direct sale of the ISV provider. So how- who actually is the leading, who’s the orchestrator, who’s the management you know and that stuff.

Patrick: And then there’s the companies coming in underneath and saying you’re doing this inefficiently. Here’s where we can, you know, provide fin-ops and make it work better for you. So, there’s that too.

Boz: Yeah, that too, plus there’s one group, one more group of vendors that we have not touched upon that’s in the Voice of the Partner, is the OEM providers. The infrastructure providers, they’re as critical as the hyperscalers and everybody else in the ecosystem, right.

Patrick: Right. 

Boz: So, we need to account for their implications and know sometimes you know, oh yeah, if it’s an infrastructure provider, you know, it’s a kind of a given, right? 

Patrick: Right.

Boz: No, they also do look through that workload, especially when you take the AI discussion we just had a moment ago and thinking about the workloads on-prem versus in the cloud, right? How do they then think about their partners and who actually thinks about it through that lens as well, because that adds another dimension in the ecosystem reports.

Where will workloads live

Patrick: Alex, it sounds like it’s a lot more work for you, is what it sounds like, because you’re coming at it from the workloads 

Alex: Yeah.

Patrick: That’s your, that’s your space. 

Alex: Yeah, right. Yeah. I mean, where the workloads are going? Yeah, that’s something that we spend a lot of time with, especially in our customer research and trying to understand, you know, we had this big wave of cloud repatriation, which I look at, you know. How you can take costs out of your IT procurement and whether that is something that is going to be a long term headwind to cloud growth. I- we tend to be of the mind that, you know, the cloud is still the final destination for a lot of these workloads. But when you bring in AI and you start talking about latency requirements and security requirements, it definitely shakes up- it shakes up the puzzle, and there’s definitely gives and takes, and it’s going to be probably determined around, you know, the specific use cases that the customer is focusing on, you know. When we talk about like a manufacturing or a health care where there’s more OT angles, you know, and latency becomes mission critical, then yeah, we think more about on-premise AI deployment. But I still think that with how much data and the innovation that people get access to when they deploy in the cloud, there’s still going to be a large chunk of the pie that ends up that ends up there.

Patrick: Yeah. Yeah, I think you’re right. And that repatriation story was kind of a spike early on with GenAI when there was the when the-

Alex: Yeah.

Patrick: The excitement over what it could do was met by the bill that came with it, and then it’s like well, so we can- what can we repatriate. 

Final thoughts

Awesome discussion. This was really good. We covered a ton of ground. I’m really glad we’ve got these reports coming out in the near term and what I think we should do is in the next- in season 4 of the podcast, we’ll sit down again, because by then you’ll have the Voice of the Partner reports out. We’ll have the latest ecosystem reports out and we will have had feedback from our clients on what really resonated and what kind of questions they had after that. So, let’s plan on chatting again. Boz, Alex. Thank you very much.

Boz: Thank you. 

Alex: Thank you.

Patrick: Next week I’ll be speaking with Boz Hristov and Kelly Lesiczka about Big Four firm EY’s people advisory services. Don’t forget to send us your key intelligence questions on business strategy, ecosystems and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies large and small answer these questions with the research data and analysis my guests bring to this conversation every week. 

Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR, thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

Global Trade Concerns: What’s Driving Labor Force Rationalization?

TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
Global Trade Concerns: What’s Driving Labor Force Rationalization?
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In this episode of “TBR Talks,” Principal Analyst Boz Hristov and Senior Analyst Kelly Lesiczka join Patrick for a discussion on the challenges occurring amid reductions in force and labor rationalization across the global tech marketplace.

The pair, who specialize in digital transformation, ecosystems and management consulting research, also look at the trends and predictions TBR’s teams noted in 2023 and continue to observe in 2025 regarding anticipated reduction in and optimization of the labor pyramid within professional services and IT services vendors.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn:

Connect with Kelly on LinkedIn

Connect with Boz on LinkedIn⁠⁠⁠⁠⁠⁠⁠

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

Global Trade Concerns: What’s Driving Labor Force Rationalization?

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors.

I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about the potential labor pyramid collapse with Boz Hristov, Principal Analyst for TBR’s Digital Transformation practice, and Kelly Lesiczka, Senior Analyst for TBR’s Professional Services practice.

Kelly and Boz, welcome back to the TBR Talks podcast. Great to see you both.

Bozhidar Hristov, TBR Principal Analyst: You as well. 

Shifted thinking around the potential labor pyramid collapse

Patrick: What we want to talk about today is something we’ve been talking about for two years now, which once generative AI became the biggest story of 2023 early on, and once we started to understand how the companies that we cover. So, the IT services companies and the consultancies, once we thought about how they were going to adopt generative AI and some of the use cases that they would use internally, we started imagining a collapse of the traditional labor pyramid. That is, rather than having to hire lots of people at an entry level and use an apprentice model in the consulting world and just use a sort of up and out model in the IT services world. And have those people eventually get whittled down to that top of the pyramid. Instead, the sort of two sides of the pyramid would evaporate, because you could use generative AI to do so much of that entry level kind of work. That was our thinking in 2023, and I would say we still are thinking in 2024 now, early mid 2025, what are we thinking? Are we seeing that coming to bear or is it something different. Boz, I’ll let you go first. 

Boz: Sure. I think you use a very interesting word, imagine, right. When it came to what we were anticipating that may be happening in the world of professional services, professional IT services. So, the ebbs and flows of the headcount distribution for all the IT service and professional services vendors, is not a new phenomenon. We saw a lot of those, and all that anticipation and back in, 5 or 7 years ago when RPA first came around and obviously the AI and the GenAI has put a little bit more of a pressure and it’s pressure testing the employee pyramids of many of the IT services and consultancies. But I think before any of that can happen, I think what many of those vendors have been experiencing in the last 24 to 30 months, has been they came off the high hiring and recruiting after the pandemic. Right. So, everyone pretty much up there, recruiting and increasing their headcount, 25%/30%. The demand, though, started to cool off much sooner, much faster than, you know, than anyone was anticipating. So, what we saw in late 2023 and through 2024 was a decline in headcount. And that was actually- we track the headcount distribution as part of our Global Delivery Benchmark. And this benchmark has been going on for over the last 15+ years. And that was the first time we saw the companies that were within the benchmark, the average headcount contracting, which kind of gave an indication. Okay, is this the moment, an inflection point in time when vendors will actually look into their business models and try to look into their headcount a little bit through a different lens? And so, trying to answer the question was are those companies reducing the headcount as a result of AI because they’re starting to feel the pressure of AI, or because the demand was slowing down. Our initial indication and estimates are suggesting that the decline in headcount was largely because of slower demand, less of AI. If we had to put a number behind, probably no more than 10% to 15% of the headcount decline was a result of AI pressure. The other 80%/85%+ was as a result of slower demand and vendors just being, you know, over hiring. Now fast forward into 2025, we start to see in the late in the 3Q and the 4Q in 2024, actually, which is the numbers have been reported in the first quarter into 2025, vendors are starting to hire back again which suggests again, that that anticipation and imagination in terms of like where those companies labor pyramids are maybe going to look like, was just a temporary blip. For most vendors, some vendors are still kind of in that adjustment mode, and they’re trying to think about what it all means to them moving forward. I think the net new additions in the late 2024, early 2025 are largely because there was an uptick in signings in early 2024, in large and mega deals for a lot of the IT outsourcing companies and as we know, those types of contracts, typically the revenue recognition cycle takes a little bit longer than the traditional consulting model. So, there’s been that kind of a delay in hiring. But certainly, when there’s a start to hiring back again. Now, will they hire at the same pace as they were doing in 2021, 2022, 2023? Probably not. They are very careful. They are very strategic in terms of who they hire, and how they’re hiring, in terms of the scale of it. Acquisitions still remain a piece of the puzzle, allowing vendors to get the more on-demand skills as well as capture new business that way along the way. So, bottom line, the decline has rebounded. And I think, certainly will pressure test again. You know, those company’s business models moving forward because now we’re starting to see actually, AI and GenAI kind of picking up. So, we’ll start to see how much that will impact actually their hiring plans and into late 2025 and 2026. 

Patrick: So, Kelly, I’ll come to you on the management consultancies. But first, a couple clarifications, Boz. 

Boz: Yeah.

Patrick: So, when you talked about the headcount decline, what was striking about it was the growth was still happening for those- revenue growth was still happening. So, there was a real disconnect there between the two, right?

Boz: Initially there was, that was the anticipation when they were hiring at such a pace. But the demand started to slow down, the demand for consulting work,

Patrick: Right.

Boz: I should say that to be more specific. The demand for consulting work really cooled off, and the demand for consulting work, which needs like an immediate excuse to be deployed for ad hoc projects, kind of cooled off. And those companies had really over-hired essentially because there was such a high demand for consulting in the 2021, 2022 period. So, it’s starting in 2022, 2024. You know, the demand for consulting cooled off, largely because AI started to come around. 

Patrick: Right.

Boz: So, there was that, you know, pivotal discussion between the demand for consulting versus demand for IT outsourcing services. 

Could the collapse still happen?

Patrick: So, you made a point though, that the AI adoption is accelerating now. So, is it possible that our read, our analysis of what was happening in 2023 and the collapsing of the pyramid that we were predicting was simply two years too soon? 

Boz: It is possible. It is possible, you know, what is the first phrase a dead cat bounce, you know, from a headcount perspective. 

Patrick: Yeah.

Boz: Yeah. So, we could be experiencing some of that. And I think some of the vendors, they’re a little bit more- the less tech heavy, the less offshore heavy, I should say. They might be a little better positioned. Just thinking about, you know, how they’re thinking and positioning their portfolio. But then again, I don’t think most of the vendors will say no to IT outsourcing work, regardless of how much demand AI is in, and yes demand for AI is picking up. But the actual revenue, the actual dollars, the hard dollars, are much smaller in terms of the award size than traditional IT outsourcing.

Patrick: Right. And so, then the margins are not as good because you-

Boz: I would say margins are on par right now with the traditional IT services and they’re no- they’re not bigger. So, you have a smaller scale awards with the same margin. So, you need to kind of start thinking about different ways and whether you, you know, deploy and mobilize your resources. What actually you make good profit.

Could the management consultancy’s labor pyramids collapse?

Patrick: Right. So, Kelly, from your perspective, looking at a lot of the management consultancies, do you think there’s going to be that collapse of the pyramid and that maybe we’re just two years ahead of ourselves on this? And I’m thinking in particular about the Big Four firms and the McKinsey, Bain and BCG that really do have that apprenticeship model where they need to hire lots of people at an early part in their career, so they can either build them up to be a partner level or find somewhere else for them to go. But with AI, can you sort of eliminate all those, not all, some of those entry level positions? 

Kelly Lesiczka, TBR Senior Analyst: Yeah, I think it really depends on how the companies are approaching. I think we saw a lot of, at least among the strategy firms, a lot more attention to who- what type of competition they had of talent. So what people were actually working on, the type of projects that they were doing, I think we saw a lot more, I guess attention from a lot of the higher ups on what projects were being worked on. I know McKinsey definitely had a stronger eye on what projects they were engaging with. Not just a lot of the same project, but it was more of a selective process. And I think that’s also been reflected within the talent. So, what type of talent do you need? And I think they’ve had to shift more towards technology, which has been more difficult from the traditional, more old school models coming from like a BCG, for example. I think it was more difficult for them to shift into technology to begin with and integrating those skills with their existing consulting. So, I think that was kind of a big shift for them. And I think that’s something we’ll continue to see is how they’re doing it. You know, where it was so, like within disparate pieces before, I think it’ll be more challenging for them to have a more comprehensive, and I don’t want to use the word holistic, but to bring it all together. 

Patrick: Right.

Looking at the India-centric vendors

Kelly: I think the India-centric vendors, I know you asked about consulting, but I think they’re worth noting, too, it’s just how they’ve looked at hiring and how that’s shifted. I mean, think about how many more people they have based within the US as opposed to contracted. If you were to look at those numbers from five years ago, it’s much different. So, I think just seeing how all of these vendors are hiring, who they’re hiring and where they’re hiring is definitely different from where it was five years ago, even a year ago. It’s not quite the same type of people. Not even for the same positions. I think those have kind of changed a bit more. Some of it is probably bolstered by AI, but I wouldn’t say AI is taking over. I think it’s more adjusting the roles a little bit and giving them more resources in a sense, as to how they can do their job and what more they can do using those tools. 

Patrick: Right. And it’s fascinating, too, because if I understood you right, around the management consultancies like there’s greater emphasis now on ensuring that they’re hiring the right people and making sure they’re taking on the right projects. And we always thought of, I have always thought of consulting, the basic business model is you hire smart people and throw them on a problem. You could also say it used to be in terms of data, you just gather all the data you possibly can. And I think AI, and generative AI in particular, forces you to actually care about what data you’re getting. And maybe it’s forcing the consultancies to care even more about which kinds of people they’re recruiting and which kind of people they’re promoting, because it’s no longer just, get smart people and throw them at a problem and the smartest ones stick around.

Specific approaches that will succeed

So, speaking of specific companies now, Boz I’ll come back to you. Are there- are certain companies that in your coverage or that your focused on as an adjacency, like a Microsoft or an SAP, that you think given the generative AI age we’re in and where we think things are heading now that you would sort of say these are the companies that are sort of in the best position to take advantage of what’s changing in the market in 2025?

Boz: I can’t just single out a company or a few of those. I think it’s about how companies approach overall and from a culture perspective, from a training perspective, from a portfolio perspective, and pricing, commercial, and partnerships, alliance partners perspective, because those are all these pieces that are evolving at different speeds, right? And we’re starting to see some companies being a little bit more stuck in the, you know, the old ways of like, let’s just make sure we capture as much business as possible, you know, on the traditional way. Others are a little bit more aggressive in terms of like adopting AI for internal use and deploying and trying to deploy to customers and experimenting with new commercial and partner models, others, third groups that are really trying to upend, you know, traditional like, outsourcing services and, you know, we’re actually starting to hear kind of on the edges of companies that are trying to disrupt the larger vendors as well, more mid-size companies that really have a little bit less risk, associated with this disruption, internal disruption perspective then external. So, it all boils down to culture, vision of the leadership, really the risk profile and the risk management that those companies are willing to take on. Public versus private companies. That is also a factor when it comes down to the changes in the preparation. There’s certainly a lot of fear among all companies of like what could happen and, you know, and we can- we see it in the market across many of the IT vendors, not just in the services side, but on the tech side, on the software side, on the infrastructure side. One day they make a big, bold, investment announcement, the next day they scale down or scale, they- employ levels. So, there’s like this ongoing adjustment. 

My cynical view, if I could share it for a moment, is that if the demand starts to rebound, the- more of the discretionary spent and whatnot, I would say probably 8% of the companies that may be thinking about that will be disrupted, they’ll probably start deploying resources to hire again to capture that demand. And, while they may not forget entirely for AI and GenAI, that immediate impact, they may kind of put it a little bit on the side burner, not on the back burner but the side burner, and trying to continue to experiment because you have to remember the enterprises too, the buyers, are also not just pouring money into AI and GenAI. So those companies, actually they have a chance to control the narrative of the scale and the adoption which can also impact their, you know, how they think about their employee pyramid. So, data services business, so, it’s all about people. But, you know, that’s something that, you know, they will need to think a little bit more strategically as they think about the evolution of their commercial models and develop different career paths, different pyramids or other forms, shapes of, you know.

Patrick: Right

Boz: That they may have to think about, you know, the scale of their workforce but again, culture and risk tolerance are the big factors right now.

Patrick: Right. And we’re such a long way from where we were two years ago, where you just said, you know, the enterprises are now pouring money into AI. And yet a couple of years ago, every announcement was a billion, 2 billion, 3 billion, into AI initiatives. 

Specific companies that will succeed 

Kelly, are there any companies that stand up for you when you think about who or which companies have the right pieces in place for what’s happening in the market? 

Kelly: I think EY is probably a good example in this case. I think how they were over the past few years with their investments that encompassed their own employees and their partnerships and their portfolios. I think the approach they had positioned them a little bit better to have a stronger platform around AI. I know they have the EY AI platform, and I think just the way that they’ve approached integrating it within their employee base but then also how they’re creating more tools, not necessarily larger platforms, because I do think we’ve seen more of an acceptance across, from vendors and their clients on, you need to find a way to work with AI to avoid as Boz was talking about, being disrupted. So, I think making it more of a piecemeal approach. So approaching AI in a smaller way, not necessarily a whole wide scale change, but just simply starting to use like the Outlook tools or the Google Cloud. Using all those little tools that are smaller on the smaller scale as opposed to a widespread embedding this down below, it’s more- and again, you’re building the skills around AI as well. Which you have to start somewhere. You have to have those skills. 

Patrick: Right. And to- yeah. And the folds in nicely with Boz’s point about adoption is slow. And so, if you’re building up those skills, using it in small pieces, you’re getting the kind of expertise and knowledge that will be applicable.

Fujitsu and Deloitte

I want to wrap up by asking you about two particular companies, Fujitsu and Deloitte. And the reason that those two are on my mind in particular, is because when we’re talking about the staffing pyramid and the business model, there are fewer companies that have sort of played with that more than Deloitte over the last few years. And the way that they’re part of the Big Four, but they’re very much like Accenture. So, they have always pushed the, sort of, the limits of what’s possible in the consultancy Big Four model, versus the IT services company model. And then Fujitsu because I know about a year ago this time, we were meeting with them. They were telling us all about amalgamated AI, and they seem to have one of the better, more comprehensive, broader AI stories. And so, while everyone else was chasing the GenAI, you know, the flashing lights, they seem to be a lot more focused on, well, AI is a lot of things. It’s not just this one GenAI kind of thing. So, I wonder if you could each speak for a moment. Obviously, Kelly, you cover Fujitsu, Boz you covered Deloitte. So, I wonder if we could just wrap up with just a couple thoughts on where you see those two companies going in 2025. Boz, again, I’ll start with you.

Boz: Yeah. As you mentioned, I mean, Deloitte has certainly stretched the limits of their business model, including their resource pyramid, as they have started to look and feel and do business more like Accenture than McKinsey although they are a Big Four, essentially. Investing a lot more heavily into offshore resources. Building, like their outsourcing, they call the Deloitte Operate business as well as a key strategic initiative. So, in terms of where do we see Deloitte, how do I think about Deloitte moving forward? I would say Deloitte, at least for the foreseeable future like the next 12 to 18 months/24 months, I don’t expect Deloitte resource management strategy to change much. I would suspect them to double down more on the offshore nearshore resources for their consulting and IT services, given the strategic imperative around Deloitte Operate. And the need for supporting and capturing that many services business, and potentially use that as a door opener for consulting, kind of like that back door consulting opening and can use their stickiness with their clients and trying to increase the presence and have the different conversation as they’ve been on client site doing their managed services for a year or two and then identify new opportunities to bring in their consultants. So, that’s what I think is going to happen. Or now it might be some other as we know they’re going through a major, you know, realignment of the service lines. And that has started about a year ago and going through- should be wrapping up by the end of this fiscal year on May 31st. So I would expect to see more calibration on their audit side as a result of using AI. If we’re to see a company that has more of an impact and on the commercial side on the commercial model and just the business model overall, I would say the audit and assurance that part of the business is much more ripe for disruption at scale because of the way the technology works in the audit clients preparation and whatnot. I suspect, you know, Deloitte will continue to use more labor-based arbitrage for their IT services out of the house and consulting side than the audit side. Just by the nature of the way they’ve been evolving their portfolio and the long-term goal of Deloitte Operate to be on client side.

Patrick: Right. I hate to say this, Boz, but I think everything we’ve heard from Deloitte and from KPMG and PwC and EY, we’re going to have to have a podcast episode about audit before the end of this year.

Boz: Yup.

Patrick: Which is going to be painful. 

So, Kelly Fujitsu- so, it’s not that- I was thinking as Boz was talking about consulting, it’s not just the AI story from Fujitsu that’s interesting. It’s the Uvance story where they’re trying to build up this consultancy practice a little bit more significantly than they have in the past. I mean, how do you how do you look at Fujitsu now? Where do you think you see them at the end of the year? 

Kelly: I think Fujitsu is definitely a company to keep an eye on. I think a lot of times they’re overlooked because they’re so heavily based within Japan.

Patrick: Right

Kelly: I think a lot of companies don’t really think of them as a threat.  Over the past few years, they’ve definitely created stronger sightlines between, you’d call them satellite locations, however you want to do it, in the Americas and in EMEA. And even in Australia and New Zealand, they’ve been on quite the acquisition streak. So, I think they’ve definitely strengthened their overseas presence. Not really comparable to its peers, but I think it’s definitely better than it was. And the way that it’s connected with, Japan in general. 

Patrick: Right

Kelly: But I think it’s also reflected in a lot of their investments. Just thinking about consulting, a company that was very tech focused in their approach to consulting, they knew you can’t just become a consultant. And so, the way that they’ve been doing it, bringing in different consulting firms, through acquisitions, but also hiring and training, I think they’ve done a good way of building it up from zero as opposed to just running forth with it. They’ve done- the way that they’ve approached integrating it throughout and keeping it separate. Even with how they do their earnings, the way that they’re positioning it within the firm is still separate, which I think definitely gives them a leg up. But it is coming from a technology perspective as well. I think their investment in quantum, which has- it’s been more forthcoming in the past ten-ish years.

Patrick: Right. 

Kelly: I think that’s something we didn’t see from a lot of the other IT services vendors; was how strong of a base they had in quantum. And granted quantum is in a different position than AI, but I think it definitely helped them have more of that technical knowledge and a lot more of the capabilities for its AI, and the amalgamated AI.

Patrick: Right, right. So, I think what’s going on with, and I’m glad you brought up quantum, because I think what’s going on with Fujitsu, with Atos, with IBM around quantum, that’s a season four episode that we’re going to have to do in order to talk about quantum.

Final thoughts

So, I want to end by just asking you a question you’re not prepared for. Both of you are experienced travelers for both business and for pleasure, for family trips. I’m curious. Tell me a place you’ve not yet been to that you really want to go? Not for work, but for like a family trip or a fun trip. One place- and it can’t be, you know, Hampton, New Hampshire and Newbury, Massachusetts or anywhere else. It has to be somewhere a little bit exotic, I think. Or maybe you have a good reason to want to go to Ames, Iowa. But tell me, where is it that you want to go? Boz, I’ll start with you. 

Boz: I’ll go with three places. 

Patrick: Three places? 

Boz: Yeah.

Patrick: Okay.

Boz: Alaska. Argentina. Australia. 

Patrick: Okay. All the A’s, just going to go right through the alphabet.

Boz: Yeah.

Patrick: Alaska, Argentina and Australia. Yeah. Okay. All right. Kelly?

Kelly: I didn’t think of Alaska before you said it, but I definitely do want to go to Alaska. And I feel like the other one is Scotland. I’ve never been but I love how it’s- there’s the animals everywhere. It’s so peaceful. I’ve heard idyllic is a nice way to describe it. 

Patrick: Of Scotland. And they have good whiskey so. 

Kelly: *laughs* Yes, they do. 

Patrick: Yes, they do. Excellent. Thank you two very much. We will chat again soon. 

Boz: All right. Thank you.

Patrick: Next week I’ll be speaking with TBR Principal Analyst Boz Hristov and Analyst Alex Demeule about TBR’s family of ecosystem research. Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies large and small answer these questions with the research, data and analysis my guests bring to this conversation every week.

Once again, I’m your host Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

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IT Consulting & Strategy Consulting Drive KPMG’s Growth: KPMG Global Analyst Day Debrief with TBR Senior Analyst Kelly Lesiczka

TBR Talks: IT Consulting & Strategy Consulting Drive KPMG's Growth
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
IT Consulting & Strategy Consulting Drive KPMG’s Growth: KPMG Global Analyst Day Debrief with TBR Senior Analyst Kelly Lesiczka
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Senior Analyst Kelly Lesiczka joins “TBR Talks” host Patrick Heffernan for top takeaways from the KPMG Global Analyst Day 2025 event. In “IT Consulting & Strategy Consulting Drive KPMG’s Growth,” the pair review KPMG’s strategy, including its emphasis on IT and Strategy Consulting, within the context of the firm’s legacy Tax & Audit business model, as well as its position as client zero in implementing and adoption AI across its global operation.

Kelly and Patrick also look at broader trends and analysis she is seeing in TBR’s research on the management consulting space.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Connect with Kelly on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

IT Consulting & Strategy Consulting Drive KPMG’s Growth: KPMG Global Analyst Day Debrief with TBR Senior Analyst Kelly Lesiczka

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors.

Kelly Lesiczka, welcome back to the podcast. 

Kelly Lesiczka, TBR Senior Analyst: Thank you.

Patrick: Season 3 now. I know it isn’t that kind of amazing. 

Kelly: Yeah, it’s a long time. 

Initial thoughts on KPMG Global Analyst Day

Patrick: Yeah, we’re cranking through them. So, we did have a chat with our colleagues Boz and Catie and Alex about the big event that we went to at KPMG’s Lakehouse down in Orlando. You were there as well. You also got to experience the incredible 18-hole mini golf course. 

Kelly: *laughs*

Patrick: But other than how impressive the mini golf was, what else did you take away from the event? A couple days long. It was a big one. What did you take away from it? 

Kelly: I think it was a good two days. It definitely was structured very well. I really appreciate that AI was isolated to one day, or not necessarily isolated, but it had its own dedicated day because it gave them a chance to really talk about other things that are going on in the firm and really walk through that. 

I think one of the stronger messages that I heard was definitely around how they’re trying to be customer zero and really before they’re pushing around AI and bringing a lot of those technologies and new services to their clients, they’re making sure that they know, they can- they understand them. They’re people can move forward with them. I think that was definitely a strong message that was further echoed through the KPMG Velocity platform. That was the internal one. I think that was just a stronger message that they had that further resonated the value for us that that was their new strategy and something that they’re following. 

Patrick: I think too, one thing that struck me about that is that when they talked about customer zero, the emphasis was not on just the technology, which is I think what we hear a lot, like we applied this technology to ourselves. It was also on the change management part, like we went through this change management ourselves. 

Kelly: Right.

Themes from client stories

Patrick: They also had some good client stories. I don’t know, without saying any of the client names, were there any that sort of, really resonated with you? 

Kelly: Yeah, I think, there were a few. I think they all kind of followed their own journey, but I think they all came back to the same idea, around KPMG really understanding the whole problem and not just pushing with the certain solution, but they helped them to evolve along a certain trajectory, kind of. So, they helped them create plans and move along. And I think in a few of them we got to see hints of the Ignition Center, which was also really cool. 

Patrick: Right.

Kelly: And to see how they’re impacting their clients’ own employees and how they approach situations, how they’re able to solve problems. So, I think that was really cool because you can think like, oh, you just come into a session, you can brainstorm yourself, but it’s different when you’re pulled out of your own environment and put with all these different things that are designed to inspire you or to help promote thinking and around areas you didn’t even think of before.

KPMG’s global presence

Patrick: Speaking of people from every region. I know it’d be hard to name a country that wasn’t represented at the KPMG event. Except for France. I don’t think there was anyone from France. It’s the one country that- and I shouldn’t say that because maybe somebody was. But do you think that said something about the firm as a whole?

Kelly: Yeah, I definitely think so. I think I interacted with a lot of people from Australia, just coincidentally, and a lot of people from the U.K., but they all move around a lot, too. And it sounds like a lot of them have relocated too. So, it definitely says a lot about the firm, about how they really do operate more globally than perhaps some of their other peers, for sure, as they’re able to bring those people together and also put them in all these different spots.

Patrick: Right.

Kelly: Not just where they originated. 

Patrick: And then if we sort of expand from KPMG itself to the larger management consulting space. So, you’ve been running the management consulting benchmark for a while now. You’ve been looking at PwC and EY and McKinsey and BCG for years. So, I’m curious what you think is sort of- what have been some of the bigger longitudinal changes in management consulting over the last few years and I know one thing that that in thinking about the discussion we were going to have, I know we used to say that technology permeates all of consulting, and that was something sort of, kind of new, five, six, seven, eight, 10 years ago. With GenAI, it’s sort of like that just, you know, that just sort of went right through the roof. You don’t even need to say it anymore, but are there are other sort of longitudinal trends that you think have changed the way you think about management consulting from where you were ten years ago to where you are now. 

Kelly: Yeah, I think strategy consulting is an example. We’ve seen a lot of changes there as it kind of tapered off a bit, but I think with using technology, we’ll definitely see a stronger push, I think, around on how you actually use this. Now that we’re moving past just the operational phase of how do we create more efficiency, it’s now how do we actually use this to change our business model? Something that was echoed that we heard a lot over the past few years is how not just clients, but like, our vendors’ clients, they understand that they have to change their business model in order to be successful or they’re just not going to be relevant. And that was something we heard on and on again. And so, I think strategy is a big piece of that. So, how do you change your strategy to align with either technology or either tax benefits. Like how do you make the most of your geographic strategy. So, I think there are a lot of different pieces that we’ll probably see come together, how you actually look at the entire organization and not just one piece of it, for sure. 

And then, managed services, I think definitely we’ve seen push a lot more. The names have kind of changed a little bit from what they originated to, but I think a lot of the consultancies are seeing the value within managed services and the benefit for them that they need to really push more in this area and really grow it because there is demand for it. It’s just finding the right balance, whether it be around tax. And then even with the audit side too, what you can do in terms of audit with managed services.

Patrick: Right, right and then back to KPMG for a minute, the audit example that they showed

Kelly: Yeah.

Patrick: It was quite impressive. And true too, that managed services now has become a way to find new consulting opportunities or sort of it’s no longer the old play of you, you know, you do the strategy consulting and then the operations consulting to lead to an implementation to then do a managed services. Now it’ll come right back around with new opportunities. And I think it’s PwC that talks about business model reinvention. And they’ve actually been talking about it for like a year and a half now. And I think, to me I heard a lot of echoes of that at the KPMG event. 

Kelly: Yeah.

Patrick: I think KPMG talked about transaction to transformation.

Kelly: Yes. Yeah

Patrick: Which for them interestingly is the transaction is not like the KPMG and the client. It’s the client making an acquisition or a merger or divestiture or whatever. That’s the transaction, which then KPMG helps with that. And then they help with the transformation of the business as well. 

Kelly: Yeah. 

Patrick: And that kind of advising, that kind of consulting never goes away, right? 

Kelly: No. And I think it’s, we saw a bit of a surge year or so ago, and now it’s definitely coming back to how we’re seeing, because people are trying to figure out what they need to do with their business, what makes the most sense in terms of offloading some of those areas that just aren’t relevant for them anymore. And then they’re able to focus on areas that they want to pursue anywhere around technology or, just higher value services. So, I think that’s definitely a good area for them to be in. 

Management consulting in the next year

Patrick: So, what’s coming for the next year or so in management consulting, what do you anticipate going into the next- the benchmarks for this year? Because we’ll have one coming up in a couple of months, and then we’ll have one in December as well. 

Kelly: I don’t think we’ll see as great of investments as we have in the past in terms of the technology investments like EY was really forthcoming with a lot of those larger tech investments. I don’t think we’ll see quite that scale of investment anymore. I think it’s more focusing on that internal side. Like at the beginning of the pandemic, a lot of the focus was on people and then it was- now it’s more back to business as usual, but I think we’ll see a lot more emphasis on the people. Even just looking at some of the IT services vendors, over this past quarter, the focus on training and really even within the firm and then also outside of the firm, either for somebody or with universities, I think seeing a lot more focus on the people is definitely something we’ll see. Because you need to be able to use these AI tools, to some extent in how rapidly it’s changing the viability of the platforms in terms of adoption. I know for GenAI, we’ve heard from mostly the India-centric vendors that the cost to adopt them is a lot lower now, so I think having those skills is definitely something that they’re going to have to kind of push towards, for sure.

Patrick: Right.

Threats to the traditional management consultancies

Do you think we’ll see- well so we’ve talked about this for years like the idea that the traditional management consultancies, so McKinsey, Bain, BCG, the Big Four firms, Accenture for a while, IBM for a while, Capgemini, you know, in bits and pieces. So those companies have traditionally done management consulting. And we’ve always talked about the threat from the India-centrics or you know the DXCs or the NTTs of the world. Do you think, is that threat ever going to materialize into something real? Are we going to see like a, even a Fujitsu, which is has launched Uvance and has like a consulting practice, do you think we’ll see a challenge to the management consultancies from those firms or no? 

Kelly: I think the challenge comes more from other consultancies. Just in terms of looking at the composition of revenue from strategy versus Big Four versus the solutions. So the solutions that IT services, I think, might be worth watching, but I feel like a lot of the other vendors, the IT services ones that are building consulting, it’s more focused. I don’t think it’s quite comparable to the scale or capabilities of the main consultants that we watch. Just thinking about like EY and PwC and that tax, it’s something that those IT services vendors could never really look to compete with. 

Patrick: Right.

Kelly: I think they’d have to do something quite large in scale and more aggressive, which would shift their whole strategy. And I’m not sure how well it would go over with their clients anyways.

It’s always something, I think, to keep in mind and watch your peers and what they’re investing in. But I don’t really think the consulting is that directly aligned. It’s, I think it’s more strategic to partner with them as opposed to think of them as a competitor. It’s more of what can we do that’ll be good. I know, I think it was PwC and DXC a long, long time ago, but thinking of- and I know that didn’t really pan out to too much, but I think that kind of structure actually does make sense in theory on what DXC would bring and what PwC would bring, like bring that consulting with those capabilities. 

Patrick: Right. So, supposedly EY and Infosys have that kind of relationship now.

Kelly: Yeah.

Dream partnership pairing

Patrick: So, knowing the companies that you know and your coverage of management consulting, your coverage of IT services companies, what would be your like ideal pairing? Like not EY and Infosys, that already exists. But pick another you know, pick one of the Big Four or one of the management consultancies. 

Kelly: Yeah.

Patrick: Is it McKinsey and HCLTech?

Kelly: *laughs*

Patrick: Is it? Yeah. I know you laugh when I say that, but I mean, what would be an ideal pairing? 

Kelly: I do think HCL was at least one, I mean maybe with PwC or even KPMG, I think. I think the engineering that they bring, and a lot of their other technical expertise is definitely stronger than some of its peers.

Patrick: Right. 

Kelly: And that’s something that a lot of the consultancies we’re seeing now are really trying to ramp up. Like PwC for example, I think they had a few engineering acquisitions. So, I think that pairing with that to see what, because HCL’s had it for years and years and they’ve constantly been building it out with more acquisitions. A lot of it’s manufacturing kind of, but just thinking about it in general, the engineering and how they’ve built it out for so many years, showing that heritage and I think working with it definitely can show you what you can actually do with it.

Patrick: Right.

Kelly: And it can help with products or something. 

Patrick: And there’s no threat of HCLTech trying to build a consulting practice in any way of a threat to a PwC. Like a PwC/TCS wouldn’t work because TCS has way too much scale and size and could potentially sort of use the opportunity, use the inroads to do their own consulting work. But HCLTech, I can imagine that. Yeah. Yeah. So, all right, so in Season 4 we’ll have another chat and we’ll see whether or not that prediction came true.

Final thoughts

One last question. Back to KPMG. Back to the analyst event at Lakehouse. The same question I asked Boz and Catie and Alex, what was the best part of the event?

Kelly: That’s a good question. I feel like the one-on-ones were really helpful, and I hate to say social hour, because it’s hard to value an event on social hour, but I think the conversations had with a lot of the KPMG people, as you pointed out, they came from all over the place, from all over the world. And so, I think having those conversations with them to get their perspectives on everything within the firm and plus all those external factors that are impacting the firm, was actually really helpful. And then it feeds back into the event and it brings into a new light when you have the value, and then seeing them up on stage too was always nice because they were like, oh, this is what we’re going to talk about. And then listening to them, actually go through that and it’s like, no, like that actually does make sense. And they definitely echoed that overall message and they always came back to it, which was very valuable. 

Patrick: Well, that first night was very casual. There was no set dinner. And we ended up chatting with so many KPMG people.

Kelly: Oh yeah, yeah. Right. 

Patrick: It was just a much more casual setting. And so, I would say that really set the tone for the whole event, where all the KPMG people were just so open and constantly, I mean, talkative, you know? 

Kelly: Yeah.

Patrick: And not in a bad way at all. In a very good way. 

Kelly: No, they’re very happy to share, like what they do. And they were very passionate about what they’re doing. You could definitely tell with who they brought.

Patrick: Didn’t you get a hole in one on at least one of the —

Kelly: I did. Yeah.

Patrick: Yeah. There you go. So that was not the highlight?

Kelly: No *laughs*

Patrick: I thought it would be. 

Kelly: Yeah. *laughs*

Patrick: Excellent. All right, Kelly, thank you so much. We’ll talk again very soon. 

Kelly: Sounds good.

Patrick: Next week I’ll be speaking with TBR Principal Analyst Boz Hristov and Senior Analyst Kelly Lesiczka, about the potential labor pyramid collapse. Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies large and small answer these questions with the research, data and analysis my guests bring to this conversation every week.

Once again, I’m your host Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

KPMG Global Analyst Day 2025: Evolving Complex Ecosystems to Solve Enterprise Transformation

TBR Talks: Evolving Complex Ecosystems to Solve Enterprise Transformation
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
KPMG Global Analyst Day 2025: Evolving Complex Ecosystems to Solve Enterprise Transformation
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Principal Analyst Bozhidar Hristov, Senior Analyst Catie Merrill and Analyst Alex Demeule join “TBR Talks” to share key takeaways top announcements from KPMG’s Global Analyst Day 2025, held in February at KPMG’s global training facility, Lakehouse.

The group also discusses strategies of the leading advisory firm as well as multipartner ecosystem management and co-investment across declared and committed partners, generative AI and data government as a key differentiator, and more.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Connect with Boz on LinkedIn

Connect with Catie on LinkedIn

Connect with Alex on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

KPMG Global Analyst Day 2025: Evolving Complex Ecosystems to Solve Enterprise Transformation

TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms, where we talk business model disruption in the broad technology ecosystem, from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors and chip manufacturers to value added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors. I’m Patrick Heffernan, Principal Analyst, and today we’ll be talking about KPMG’s Global Analyst Day at Lakehouse with Boz Hristov, Principal Analyst for TBR’s Digital Transformation Practice, Catie Merrill, Senior Analyst for TBR’s Cloud and Software practice, and Alex Demeule, Analyst for TBR’s Cloud and Software practice.

Boz, Catie and Alex, thank you for coming back to the podcast. Season three, very exciting, and I think the first time we’ve done one with four people in the room that I can recall. So, you guys are breaking some new ground here. The four of us, plus our colleague Kelly Lesiczka, were all at KPMG Lakehouse recently for a global analyst summit, which was enormous fun. A couple days, had a really good time. Played little, little mini golf, which was good. Alex, congratulations, won by one stroke. One stroke over me, I’m not going to say how many strokes you had over Catie and Kelly, but anyway. 

What I thought we would do today is a little bit different. We’ve done sort of event perspectives, and we’re still going to publish an event perspective on this. I’m sure it’s out there already, but what I wanted to do was just capture some of the quotes that I heard and wrote down and get your reactions to them. So, these are, as you know, when I sit there at these events I to just write down verbatim what somebody said when it hits me as being pretty important. I’m not going to say who said this quote. I’m just going to read the quote, and then I’m going to ask you guys to all react to it. 

Many-to-many ecosystem relationships

This first one is about- one of the ecosystem leaders talked about the more than just 1-to-1 alliances, but the many-to-many relationships. And what he said was “we need to show up understanding how these many-to-many relationships work, not working them out ad hoc at clients.” Boz, I’ll make you go first. What do you make of that? 

Bozhidar Hristov, TBR Principal Analyst: I would say this resonates a lot with what first of all, we’ve been talking about for the last 18 months, 24 months now, and actually became very loud and clear in the last iteration of our Voice of the Partner report that we published last summer. So, I think it’s all about trust and preparation and investment in skilled resources, strength resources, knowledge management. You know, kind of thinking about that, the ecosystem is growing, and it’s growing in a different way, meaning that you are not just a two-dimensional partner with this- you still are. But you need to think about the implications of the IT architecture of the client. You have the infrastructure, you have the SaaS layer, you have the PaaS layer, you have the data layer. So, all of these are different vendors that you typically interact with on a one-on-one basis. But as clients consolidate their vendor rosters, as clients look to optimize their existing IT spend, they are also looking to optimize and consolidate their suppliers, right? So, for vendors, they need to be very sharp when they show to the client about who are they partnering best with across the IT stack, understanding the client’s IT architecture. So, the notion of like multi-party alliance is exactly that, demonstrating that trust in preparation with joint investments and really trying to get the most out of for the client essentially because clients already have at least three or more vendors that they are interacting with, you know, on the strategy side, on the implementation side, on the managed services side, and then plus a technology vendor or two. So often clients interact with at least, you know, half a dozen vendors. So, as an IT services provider, as a consultancy and trying to position itself as an orchestrator of that ecosystem, you need to make sure you know which vendors are on site and what’s your relationship with those vendors and how deep you can go with them before you even get to the client. 

Patrick: So, you’re coming at that from the consultancy, from the KPMG mindset. Catie, how did that resonate with you when you think about it from the software or cloud mindset. 

Catie Merrill, TBR Senior Analyst: Sure. So, I think, well to answer your question on the quote, I think it was a testament that KPMG recognized that the opportunity and the money is flowing through the ecosystem. And early on they mentioned building the firm of the future. And of course there’s a lot of moving pieces to that. But one of them that they really hit home was the alliance partners, the tech alliance partners, specifically those seven SaaS and PaaS vendors and maybe you have a different opinion, but I think from some of the peers. Maybe we haven’t seen that kind of emphasis, or at least to the same degree. So that was very compelling. And on the tri-party alliance structure, you know, a recognition that to Boz’s point, to be an orchestrator of the ISVs that may themselves not have the right partnership or go to market with each other. So, you know, KPMG’s role coming in and connecting that with, you know, the system of record in the back end, the actual platform that you’re building on and then the front office. So, all those pieces coming together using that to actually deliver a client outcome. 

Patrick: Yeah. And Alex, did you see it similarly? Your coverage is similar to Catie’s, how did that resonate with you? 

Alex Demeule, TBR Analyst: Yeah, I think very similarly. You know, the technology ecosystems that have been forming for years and are still forming today as we go into new, different emerging technology areas. Technology ecosystems do matter. There is differentiation there. Sometimes it’s the case where, you know, everyone’s working with everyone, but that’s not always the case. There are instances where there’s favoritism to a certain extent. There’s competitive pressures that lead to that favoritism. And we see integrations in technology ecosystems form sort of around these constraints. And so, as a services firm, understanding that landscape and understanding where that differentiation actually exists versus a more, you know, ubiquitous approach. It’s very important and it’s getting more important.

Patrick: Yeah. And I think for me, one of the things that jumped out was this idea of showing up at the client. And so that implies that you- the preparation that goes into it includes understanding that it’s not just like every other ecosystem, understanding that, you know, it is okay to pick those six or seven you’re going to work with, and then Boz, to your point, like it is about who shows up as the orchestrator who shows up as the one that can wrangle all those technology partners together.

Learning with alliance partners

All right. So, let’s go to another quote and we’re going to stick with alliance partners here. So, the quote was “our alliance partners are learning with us,” either leaning or learning, my notes are not always easy for me to read and it’s my own handwriting, I’ll say leaning “are leaning with us, and understanding solutions must be industry specific.” So, Catie, from your perspective, that is something we that the hyperscalers and the software vendors look to their services and their consultancies for. But is that industry specific where the whole ecosystem is going? 

Catie: I think to some extent, yes. I know years ago we covered the trend of industry cloud, and now that’s really morphed into industry AI and I can tell you just on the cloud buyer perspective, industry cloud was really kind of dismissed as like marketing hype. And they didn’t see a lot of value in a quote unquote out of the box industry cloud solution. So, I think in that sense, the value that, you know, a KPMG can provide from that industry perspective, that’s obviously important. I think, you know, it really depends on the vendor. If you look at like a Google Cloud, you know, leading with healthcare and some of their customizations around Vertex. And, you know, KPMG has a big investment in their Google Cloud practice going, versus some other vendors, AWS and maybe some others a little bit more horizontal led. So, I think it really depends on the vendor, but I think we definitely see that level of customization and nuance heading that way.

Patrick: Okay. And Alex, this I think was your first KPMG event, right? 

Alex: It was.

Patrick: It was, so for you is that industry emphasis by KPMG, does that sort of resonate with you when you think about-  

Alex: Oh yeah.

Patrick: Okay.

Alex: Yeah, absolutely. And like, as Catie just mentioned, with sort of this shift between industry cloud to industry AI, you know, I- because, like, she’s exactly right. You know, we hear around, like, we’re just sort of- it’s more marketing hype than anything else. You know now I’m trying to think about sort of reaction to like industry AI and maybe it’s too early to say whether or not it’ll have that sort of criticism. I feel like, my gut is that it won’t have that criticism because I feel like the power and the- just the data aspect and having domain specific data being in pre-training models on that data, to me it seems like it’s going to be something that is a differentiator and is something that is going to be adding value. I think that right now, maybe it’s too soon to tell, but there’s a lot of money going towards that direction, a lot vendors focusing on building those industry models. So, it’s something that there’s a lot of focus in. And I guess time will tell whether or not that focus ends up being more marketing hype or real differentiating value. 

Patrick: But if it’s going to be real differentiating value, a firm like KPMG, that is already having those industry discussions with their partners-

Alex: Absolutely

Patrick: has an advantage. Boz, this was not your first KPMG event-

Boz: No.

Patrick: not by a long shot. Your thoughts on that quote? 

Boz: I was just listening to what Catie and Alex were talking about and I’m just thinking about, to Alex’s point about those small language models, right. So, there’s definitely an opportunity. I think there has always been an opportunity for vendors to apply their industry knowledge to their clients, because clients live in the industry. Right. And having this industry specific data will be so important to drive a more targeted discussion and more outcomes-based discussions. And obviously it’s easier to talk to existing clients because they know you, they know the industry. But I think there’s the bulk shift, you know, in the cohort of the technology vendors to think about the industry through a different way, as they build the solutions, as they partner. Obviously, the consultancies like KPMG, bring that layer of specialization, and know it, but aligning from the get-go, from the development of a solution, small language model otherwise. I, you know, with the technology partner, thinking about the industry first, I think it would be so important because it could be- it’s going to be the on the partner-based platform. When you go to split the accelerator with the industry wrapper, or it’s going to be a specific custom model development with industry knowledge with the client data. So, having those industry conversations with the technology partners, I think will be really important from the beginning rather than just being a one blanket statement and say we have XYZ, you know, industry models. Right? You need to be very strategic about how you develop, how you sell it and how you manage it with clients. 

Patrick: And if I remember right, there were a few industry specific leaders there, healthcare in particular, at the event, but it would be curious to see a year from now when they do their next analyst summit are there, based on this discussion we’re having now about the importance of industry to their technology partners, will there be more KPMG industry leaders emphasizing the importance of industry, going forward? 

Being client zero

So, all right, two more quotes. This one, Alex I’ll start with you. The quote was “we are passionate about being client zero,” what we often call customer zero. But what do you make of that, passionate about being client zero?

Alex: I think that it’s like the exact stance to take right now. And I think that the big example we always talk about, GenAI, you know, what they’re doing to build in-house GenAI capabilities. You know, when we talk about Velocity and Clara, like stuff that’s core to their business, that’s just something that you can point to in the efficiencies that they can kind of get within their own operations. It’s really the approach that needs to be taken. And, you know, as we just talked about change management and I think maybe we’ll be talking about it more. As you’re setting up a strategy behind GenAI change management, if you’ve already gone through that process internally, you’re so much better prepared to go to the client and say, this is how we got our employees engaging with this internally built tool. This is how we did it. And being able to kind of have those best practices dialed from experience, I think makes a world of difference. 

Patrick: Yeah. And we’re going to get to change management in the second. But you mentioned Clara and I think I was shocked Boz when I told him after the event that the KPMG Clara, the audit platform demo breakout was my favorite. I really kind of- I dug what they were talking about when it comes to audit, which I have never, ever said in my life. So, Boz what’s your thought on the “passionate about being client zero?” 

Boz: Scale. I mean, KPMG, obviously they have a large client base. But the majority of their business comes from large enterprises, right? Obviously they have some mid-size clients as well. The different segments in different countries, jurisdictions, regions, yada yada. But I think because KPMG is a large firm, applying being customer zero, being passionate about it. It’s about understanding how you can apply a technology like that at scale, right? And translating that back to the clients. So, you know that the most important clients are mostly equal to your size. 

Patrick: Yeah. 

Boz: Talking about scale, you need to be able to have that application and be like more of a apples-to-apples comparison. So for me, being passionate about being customer zero is about scale, demonstrating scale, and ability to manage risk at scale. 

Patrick: Yeah, that’s fascinating. I hadn’t thought of it that way. All right. Catie, your thoughts on being passionate about client zero? 

Catie: Yeah. Just to follow in, you know, Boz and Alex, I think it’s more just a necessity, but I will say it’s very aligned too with the tech partners doing client zero and implementing their own tech and communicating, you know, value either quantitatively or qualitatively to the clients around GenAI. So, having the partners, it’s another way for the partners to align on delivering the GenAI value to the client. 

Patrick: Right. And for the tech partner, scale is everything. So that feeds right into what you’re saying Boz. And also, we’ve had so many conversations about when it comes to GenAI, how hard the leap is from a proof of concept to scale and for KPMG to be able to say, you know, we’re coming in with scale proven because we’re client zero.

Boz: Yeah.

Patrick: So that’s pretty fascinating. 

Change management

All right. The last one is in fact change management. And the quote is “the road to value is paved with human behavior and change.” I almost jumped out of my seat when she said this because- to just yell amen, amen, amen. Of course it is. And as we have said for a decade now, the technology is never the problem. The humans are the problem. And change management as you said earlier is really a critical part of this. So, Boz I’ll go back to you to start, “the road to value is paved with human behavior and change.” Obviously, you know what I think about that. How did that quote resonate with you?

Boz: Well, I think if you go back to the previous quotes about the passion of being customer zero, applying change management to itself I think it’s important. But, you know, and that’s another part of the lessons and how you can actually connect with the clients about change management, right. Change management is a core service offering for KPMG and most of the other consultancies that we track here at TBR. But I think we also heard very strong examples of use cases while on site at the event about how KPMG did the change management alongside their clients. So, I think it is probably the hardest of all services any IT services company can do. And not that the companies are incapable of doing it, it’s about how you measure the success of a change management program. 

Patrick: Right.

Boz: So that’s the biggest thing. And it’s a good problem to have because you can always come back and continue the change management. It’s like a digital transformation, change management is never ending essentially. So, it’s a good way to think about it. But it also starts with the recognition, that is to your point, it’s not the technology it’s the people that’s the problem. 

Patrick: Yeah.

Boz: I think we talked earlier in a different conversation about how with AI, just to continue on that technology, any technology, but the AI specifically right now, GenAI is presenting such a hesitation of all employees and almost feels like it’s sometimes enterprise employees may be sabotaging the adoption. And, you know, it’s hard, you know, because they may be seeing that as a threat to their existing, you know, positions. So, change management, it’s a prerequisite, but it’s also just kind of a necessary evil that has to happen. And without it, you know, no technology will survive, Right? 

Patrick: Yeah. So, Catie, KPMG said the road to value is paved with basically change management. Boz just described change management as a necessary evil. So, on the road to value, is there a necessary- how did it resonate with you? What did you think when you heard that?

Catie: Just when I heard that, I mean, we talked to enterprise cloud customers, and I have so many quotes where they’ve actually said like, change management is the hardest part. So, it’s definitely something that we’ve actually seen firsthand in our research. So that’s really the first thing that hit me. And I know there were a lot of customer stories at the event where they talked about where KPMG came in and actually implemented a change management group. Either, you know, after kind of that technology modernization and kind of before the data piece. So, you know, we have a lot of those examples, and just kind of going forward and looking for where AI plays into all this specifically agentic AI and kind of the different types of, you know, the collaborator agents that work with the human and are more context aware and kind of how that will play and more the creative problem solving aspect of it. So, yeah, those are- that’s my thought on that. 

Patrick: Excellent, excellent. All right. And Alex, what do you think when you hear than. 

Alex: Yeah, I mean I feel like I just have to reiterate what my colleagues have already said because I think they hit the nail on the head. You know, the customer breakout for CVS, the Sherwin Williams CFO, like this idea of legacy employees entrenched in old ways making it hard to progress with these transformational efforts. You know, it’s always a recurring theme. And those two didn’t even involve AI. So, it’s something that’s important with all IT projects. And I do think that with AI, it takes a step up in importance because of the magnitude of the change that it can have on an employee’s day-to-day life. If we continue to go down this path of where we think we’re going. So, it’s something that is going to be very hard, and that’s to be at the user level, and it’s going to be something that has to be tackled by a bunch of different ways. Whether that be at the technology layer. You know, I’ve talked about this with others about, you know, abstracting agents away. And so how are you managing orchestrating agents with as few prompts as possible? So, the end person, the human engaging with these agents, they’re interacting with the agents as little as possible. And that is sort of the technology side of it, teaching the user how to prompt accurately, precisely so that the tool can do what the employee wants it to do. It’s a new area that pretty much everybody’s coming at with a beginners mindset, you know, we’re prompt newbies at this point. Like maybe some of us have taken more courses than others. But, you know, across the economy, it is a beginner mindset when it comes to GenAI and interacting and using GenAI. And that has to be something that’s handled with training and technology consideration. 

Patrick: Yeah. And that gets really into the human behavior part of that quote. And I think one thing we heard about during one of the sessions was a transformation that had gone on where they intentionally didn’t use the word transformation. They actually came up with a name for the project. I think it was Leapfrog or something like that, where they talked about- so they didn’t have to use the word transformation, which fits right in with sort of the human behavior part. You want to do this change, but you don’t want to call it change management. You don’t want to call it digital transformation. You want to call it something else. 

Final thoughts

So, as always, when we do these wrap-ups from an event that we attend, we always have to talk about either the most fun part of it, the best part, in this case, about Lakehouse as a facility, or the best food. So, I’ll let you guys choose what you want to say, whether there was something that you really loved about Lakehouse., Boz, you’ve been a couple times now, Catie you’ve been a couple times, too, right? Or was this- this is the first time, too, all right. So, what you loved about Lakehouse, or what food you loved or just overall, what was the most fun part of the experience? Boz you’re the most experienced one, so you have to go first.

Boz: Well, unfortunately, I couldn’t spend the entire time there, so that was kind of like my personal kind of like, “oh, I should’ve” you know, “I could have. I should have,” you know, if I could, I mean, I’m sure I’d spend more time, but what I really enjoy out of, like obviously the facility is fantastic, you know, but I really like how, you know, KPMG, gives us a chance to browse around, you know, the gift shop and pick up some swag. So, I definitely appreciate that. You know-

Patrick: As you’re sitting here in your swag.

Boz: As I’m sitting here in one of my swags that I have picked up, you know, from KPMG. So, yeah. So definitely appreciative about that. 

Patrick: Nice. Catie, how about you. What was the best part, or the best whatever.

Catie: Yeah. The facility obviously. Great. I was very surprised. I mean, you guys told me how big it was before going in there, but I was very surprised at, you know, the magnitude of the facility and all the amenities. I enjoyed using the gym and playing golf with you guys. So, yeah, it was, all around a great experience.

Patrick: Playing golf, but it was mini golf, So it wasn’t-

Catie: But mini golf. 

Patrick: Gotta make it so- We don’t want anyone to mistake that we went to Lakehouse and played nine real holes. Alex?

Alex: For me was the networking with KPMG folk. You know, I like, this is my first KPMG Lakehouse Analyst Day and I’ve been on, you know, Teams calls with a lot of these folks but I’ve never met them in person. And so being able to meet them in person and, you know, get their takes on some of the same questions, I’m thinking of, that was really good. I felt like I walked away feeling like I made some good connections. And, I really enjoyed, you know, talking to them as people and learning about their personal lives a little bit, too. 

Patrick: Yeah. 

Alex: A lot of really good people over there. 

Patrick: Yeah, a lot of really good people. And I’ll say, because this is the podcast that I do all the time, I get to say three things that I loved. One, the one-on-ones, everybody showed up for those one-on-ones, like so tuned in to who we are, like what we care about. Obviously I met a number of them before, but they were, I mean, those one-on-ones were like, let’s go. There was no trying to extract any information. They were just coming right at us with, you know, this is what we think and asking those questions. So that was really good. Another thing I really liked was when one of the KPMG leaders told me that they had read Boz’s most recent piece about the legal acquisition they made. Which was great that they had read it. And then they were like, I don’t know why you even wrote that. It didn’t even matter anyway. So, it’s very dismissive of your piece which I thought was very funny. And then I loved the first night sitting around, having drinks, with it was to your point, Alex talking with Kevin, one of the people that was there, but just sitting around with the KPMG- it was so relaxed. And I also love the fact that I had the Barolo, and by the end of the night, pretty much everybody was having the Barolo. I think we drained all their bottles there of that particular wine. So, it was enormous fun. So, any other last words on the KPMG event before we wrap?

Boz: Looking forward to the next one.

Alex: Yeah. I can’t wait to go back.

Boz: Hopefully I can make it the entire time.

Alex: I love 80-degree heat in the winter. 

Patrick: Yeah, true. Leaving Massachusetts for, the warmth of Orlando was nice a couple of weeks ago, so, excellent. Boz. Catie. Alex, thank you very much. 

Alex: Thank you.

Patrick: Next week I’ll be speaking with TBR Senior Analyst Kelly Lesiczka about her takeaways from KPMG’s Global Analyst Day and all things Management Consulting. Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies large and small answer these questions with the research, data and analysis my guests bring to this conversation every week.

Once again, I’m your host Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.

TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms

Join TBR Principal Analyst Patrick Heffernan weekly for conversations on disruptions in the broader technology ecosystem and answers to key intelligence questions TBR analysts hear from executives and business unit leaders among top IT professional services firms, IT vendors, and telecom vendors and operators.

“TBR Talks” is available on all major podcast platforms. Subscribe today!

The Big 5: Key Intelligence Questions from the Big Four

TBR Talks: The Big 5: Key Intelligence Questions from the Big Four
TBR Talks: Decoding Strategies and Ecosystems of the Globe's Top Tech Firms
The Big 5: Key Intelligence Questions from the Big Four
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Who gets the best talent? Who decides what’s next? Who does the selling? How does everyone know what everyone else is doing? And what role will managed services play?

Despite their digital transformations over the years, TBR is still hearing these five questions from the Big Four — KPMG, EY, PwC and Deloitte — and in this episode of “TBR Talks,” we leverage our recent publications on the firms to address these questions on internal operational challenges of the Big Four consulting firms. From how they decide on talent allocation to selling, regional management and revenue attribution and visibility across often opaque regional management hierarchies, we’re diving in, in this episode.

Listen and learn with TBR Talks!

Submit your Key Intelligence Questions for Patrick and his guests

Connect with Patrick on LinkedIn

Learn more about TBR at ⁠⁠⁠⁠⁠https://tbri.com/⁠⁠⁠⁠

TBR Talks is produced by Technology Business Research, Inc.

Edited by Haley Demers

Music by Burty Sounds via Pixabay

Art by Amanda Hamilton Sy

The Big 5: Key Intelligence Questions from the Big Four

TBR Talks Host Patrick Heffernan: This is Patrick Heffernan, Principal Analyst at Technology Business Research. And we’re doing a special episode of the podcast today because we released a blog a couple of weeks ago, and we have been getting a lot of questions about it. It’s about the Big Four firms, that’s Deloitte, EY, KPMG and PwC, and the five questions that they constantly struggle with. So, even as we have seen these firms evolving in recent years and really going through some different organizational/structural changes, digitally transforming themselves, they still struggle with five basic questions. And those are; who gets the best talent, decides what’s next, who sells, how everyone in the firm knows what everyone else is doing, and then, of course, what role will managed services play. 

And when we talk about who gets the best talent, what we really mean is who decides how they deploy the limited resources they have, the limited talent resources that they have, to clients literally around the world. And when you’re staffing an engagement, who gets to decide who brings which talent to which clients? Managing these competing demands for resources requires exceptional leadership. And as we’ve seen through the years, sometimes it means upending the organizational structure to better suit a new way of deciding who gets the best talent. 

That second question, of who decides what’s next? That’s probably been the biggest challenge over the last few years, as all of these firms, member firms that they are with partners that own them, have to at some point make decisions about their own investments, about what technologies, about what offerings, about what capabilities they’re going to invest in. And so, at some point, a group of partners in each firm has to make a business case. They have to pull together resources. They have to convince the firm to bet on something new. Being late to the market, late to the way things are changing, late to the way that their clients’ questions are getting answered, that hurts them. So, of course, does the fear of being too entrenched in selling what you’re selling today to be able to sell what you need to sell tomorrow. 

And speaking of selling, who actually does the selling? These are Big Four firms that traditionally have the partners leading on selling their capabilities, on selling to their clients. But technology has permeated everything, even the consulting space. So, technology has become more and more difficult to understand, more and more difficult to sell. So, the question then becomes who actually does sell what the firms can do? Who decides which partners are actually selling to clients? And just for example, software, which a lot of these firms have begun selling off and on in different ways over the years, it’s fundamentally different to sell software than it is to sell services. So, expanding a firm’s capability around software leads to the question who’s going to sell it? 

And then speaking of questions within the firm, there’s how does everyone know what everyone else in the firm is doing? Today all the Big Four firms are leveraging AI enabled platforms to enhance internal knowledge management and will likely see significant improvements in that. But the challenges will persist as new offerings, capabilities, use cases, learnings, people constantly refresh and the pool of knowledge which needs to be shared for the Big Four firms to be able to bring their entire selves to a client. I would just note on this pretty much every company we’ve ever spoken with at length struggles with knowledge management. 

And then the last part is really maybe unique for the Big Four firms. And that’s the role that managed services is going to play. And when we say managed services, we don’t mean just IT implementation. We mean actually long term, large scale managed services around a particular technology. And in TBR’s view, the role of managed services may prove to be the biggest differentiator among these Big Four firms that are very much alike, over the next five years, even as managing talent in a generative AI and an artificial intelligence world, and keeping pace with partners technologies is going to be a challenge for Big Four leadership. 

Final thoughts

So, what does all that mean as a whole? Really if you’re a client, there are other questions that matter more. If you’re a client of a Big Four firm, you need to be asking whether those firms can solve your problem. Do you trust them. You know, those are the basic things. But if you’re a technology partner in the Big Four ecosystem, these questions are really critical to understanding where your alliance partner is headed, where the Big Four firms that you’re partnering with are going next. And do you really understand what they’re bringing to the table and what differentiates them from other Big Four firms and the other IT services companies? And then, of course, if you’re running a Big Four firm, you’re addressing these questions is going to determine your internal organization’s structure. It’s going to determine your strategy for the next five years. So, take a look at that blog and please send us feedback. Let us know what you think. Thanks.

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