With or without chaos, 2020 will be a turning point
TBR’s 2020 predictions for the IT services vendors and management consultancies we cover center on a potential external disruptive force, ongoing internal changes, and a market shift that will happen regardless. If a global economic slowdown occurs in 2020, changes to the consulting business model will accelerate. Either way, the term digital as we know it will disappear.
While TBR is not forecasting a recession, either globally or in specific markets, like the U.S., we have had extensive discussions with leaders at IT services vendors and consultancies who have been preparing their teams and their clients for that possibility. As a result, these firms are at an advantage and have been cementing their relationships with clients worried about funding what they’ve been told are necessary digital transformations. In contrast, other IT services vendors have been projecting growth without preparing their own people or finances for a substantial slowdown in IT buying.
At the same time, consultancies have been struggling with significant shifts in how they build capabilities along with selecting services and how to deliver them. As we move into 2020, a well-established resistance to selling software — or be in the products business, in general — will give way to the inevitable rise of software licensing and “as a Service” models, as well as solutions bundling and clearly defined product sets that consultancies now package and deliver. While these products are not completely stand-alone and remain subject to internal debate over the specifics of commercial arrangements, the clear result will be a shift in the consulting model from people to people-enhanced-by-products. And a global economic slowdown would force consultancies and IT services vendors to automate themselves further and adopt new business models, accelerating these changes.
Whether a recession strikes or consultancies evolve quickly or more slowly, TBR expects 2020 will mark the first time an IT services vendor or consultancy declares “digital” has outlived its usefulness as a delineation between various elements of technology and business. Everything will be digital, making a digital designation obsolete. For TBR’s purpose — understanding professional services vendors’ strategies and how they make money — the shift from digital as a label will impact how vendors report their earnings, how they describe their investments, and what kinds of alliances they create across the broader technology ecosystem. In the short term, most vendors will continue reporting, marketing, investing in and adhering to digital. In the longer term, the term is dead.
- A correction or recession will stall digital transformations and slow growth for IT services vendors and consultancies
- Consultancies will sell more products and will emphasize and invest more in that part of their business
- ‘Digital’ will disappear
Register for TBR’s 2020 Services Predictions webinar, The end of ‘digital,’ Jan. 22, 2020.
Technology Business Research 2020 Predictions is a special series examining market trends and business changes in key markets. Covered segments include telecom, cloud & software, devices & commercial IoT, data center, and services.