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Cloud ERP picking up speed: How vendors are capitalizing on vast opportunity

It’s clear now that ERP solutions, which are key to solving business problems, are fair game for cloud migration. The barriers of performance, security and compliance are all but gone, leaving only the pace of change organizations can muster as the determiner of when ERP workloads can be reimaged with cloud technologies.

 

Join Practice Manager Allan Krans, Senior Analyst Evan Woollacott and Senior Analyst Catie Merrill Thursday, June 16, 2022, for a look at how end customers are using cloud technologies to solve real-world business problems.

 

In this FREE webinar you’ll learn:

  • How barriers to ERP migration have eroded, opening the flood gates to cloud deployments, even in regulated industries
  • How industry customization of cloud technologies is becoming an expectation from customers
  • How platform vendors like Amazon Web Services, Microsoft and Google are encroaching on applications and services markets in the quest for growth

 

Mark your calendars for Thursday, June 16, 2022, at 1 p.m. EDT,
and REGISTER to reserve your space.


Related content:

  1. Hyperscalers’ cloud-based modern network architecture provides strategic advantage over legacy network technologies
  2. Russian aggression will not dampen pandemic-driven cloud demand

 

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Conversion, integration and ecosystems drive SaaS growth

Applications serve as the vessel for cloud’s business value 

Value, in the form of agility, innovation and efficiency, is now the driving force behind customers’ cloud investments. Applications, in the form of SaaS, are the purest vessel for customers to implement and achieve the value they so desperately want in order to improve their businesses. It is for that reason that TBR published our first Cloud and Software Applications Benchmark, tracking the nuances of the applications space from a workload and subworkload perspective.

Customers’ growing reliance on SaaS solutions is shown in the market growth of the 10 vendors covered in the inaugural report — their aggregate revenue increased by 26.4% year-to-year in 3Q21, a rate that has accelerated over the past year. Business Applications workloads, which include ERP solutions, was the fastest-growing segment, with aggregate revenue for the 10 vendors covered increasing by 28.5% year-to-year during 3Q21. The drivers of this expansion are threefold: conversion of existing customers to cloud; the integration of solutions through hybrid deployments; and revenue driven by the ecosystems that are critical to the innovation and go-to-market strategy for SaaS solutions.  

Providers from all backgrounds now look to existing customers as their first growth option 

For both traditional software providers and companies that were born on the cloud, customers with existing traditional software installations have become one of the main drivers of SaaS growth. Traditional software providers did not always see the market this way. In fact, SaaS was a threat to their existing license and maintenance businesses for quite some time. After years of customers voting with their dollars and selecting SaaS-delivered solutions over the traditional license and maintenance delivery model, nearly all applications vendors currently see their existing bases as the first opportunity for growth.

In some ways, this transition has played out on a workload-by-workload basis. Sales and marketing applications, led by CRM, are on the periphery of most enterprise applications suites and were the earliest to see a shift to SaaS over traditional software purchasing. Salesforce (NYSE: CRM) led this trend, converting many existing customers from traditional leading providers like SAP (NYSE: SAP) and Oracle (NYSE: ORCL). The dynamics in CRM served as a warning shot for many traditional providers. Even the most reluctant SaaS providers, like Oracle, are now focused on offering cloud solutions to their existing customers before their competitors can.

The shift in strategy is well timed for traditional providers, as cloud demand in the Business Applications segment is beginning to accelerate. As shown in Figure 1, Business Applications has the lowest cloud revenue mix for the vendors included in TBR’s Cloud and Software Applications Benchmark, making it the largest opportunity for traditional customer conversion.  

Figure 1

Top 3 Predictions for Cloud Applications in 2022

SaaS will see new vendors, bigger workloads and more customization

Consistent growth masks considerable change in SaaS during 2022

The expectations for what cloud can offer customers have shifted, and in no market is that more clear than with cloud applications and SaaS. The financial benefits of cloud, both the lower overall cost and the shift to an operating expense pricing model, were the early attractions as customers moved low-risk applications to the cloud. Now that more mission-critical enterprise applications are being moved, cost is still a consideration for major SaaS purchases, but it is no longer the sole driving factor influencing adoption decisions. The constant stream of innovation, more frequent updates, and ability to align cloud to changing business requirements have taken over as the most attractive elements of SaaS solutions.

That high-level value proposition will persist into 2022, making SaaS the largest cloud market in terms of revenue and one that will continue to grow in the double digits year-to-year. It may sound like the same old story, but a shifting set of trends will drive this growth. First, while large providers like SAP, Oracle and Microsoft remain the mainstays of the market, born-in-the-cloud providers have matured greatly over the past few years, best highlighted by Salesforce whose front-office SaaS portfolio aligned well with the adoption patterns of the enterprise, setting the vendor on a course to eclipse SAP as the largest enterprise application provider in terms of revenue by the end of 2021.

The success of Salesforce and other cloud pure plays like Workday has been recognized by a growing ecosystem of nontraditional ISVs that are entering the market to capitalize on the opportunity. Systems integrators, small managed services partners, and cloud platform providers will all package solutions that are sold as SaaS to end customers. Second, the larger, mission-critical services in the ERP category of workloads will see increased adoption. That shift carries significant dollar investments not only in the SaaS offerings being purchased but also in the associated services and technologies that support those environments. Third, the need for customization based on the business process, existing technology, and vertical industry increases the value of broad ecosystems that extend the core SaaS offerings.

This dynamic is supported by TBR’s 1H21 Cloud Applications Customer Research, which found that the value of ISV ecosystems was not just in filling gaps in vendors’ portfolios but also, more critically, in increasing the stickiness of vendors’ offerings within clients’ environments. This dynamic will result in PaaS capabilities becoming a key differentiator for vendors in the overall public cloud market. So while growth will continue in SaaS, it will mask big changes occurring in the market during the coming year.

2022 Cloud Applications Predictions

  • The SaaS opportunity attracts all kinds of new participants
  • Cloud delivery for mission-critical applications inches closer to mainstream
  • Customization becomes the standard for cloud applications

Learn more in our webinar 2022 Predictions: Cloud

Send me a free copy of TBR’s Top 3 Predictions for Cloud Applications in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

PwC Products: Not your father’s PwC

“Us disrupting ourselves” — PwC Digital’s journey to 2020

“In contrast to peers such as EY, which held an entire analyst conference focused on, and organized around, its technology consulting capabilities, PwC structured each of its client stories around the central business challenge, with the technology solution presented as only part of the successful outcome. PwC placed considerably more emphasis on how it worked with clients’ C-Suite and line employees to identify and resolve key pain points and organizational issues, rather than leading with silver-bullet technology solutions that addressed clients’ specific RFPs.” TBR analysis, October 2018

While PwC Products fully coalesced into being over the last 12 to 18 months, the firm’s technology evolution started at least 10 years ago, with the Hallandale Experience Center perhaps the most critical catalyst in changing the firm’s overall approach to embedding technology into every engagement. Importantly, embedding technology did not mean, as noted above, focusing first on technology, even as the firm developed fully formed solutions. As PwC leaders reminded TBR, the firm developed the DoubleJump Health platform more than three years ago, building experience with a subscription-based software business model. In the last year, PwC enhanced collaboration among the eight digital factories and labs across the firm and took careful stock of the assets the firm had already developed and deployed with clients.

While previously PwC developed bespoke solutions within an industry or service line, with little collaboration across the firm, the recent shift included consolidation of the independent assets that had potential and a scrubbing of these old assets through a digital process pipeline. By putting the solutions through a rigorous vetting process with the goal, as explained by PwC, of determining which assets would meet consistency and quality standards as well as “make an impact,” the firm created a model for product innovation that could be implemented across all of PwC. As one PwC leader noted, “The assets were there. PwC Digital’s job was to put them together.” In addition to process, the firm also needed creativity and a willingness to disrupt itself, something TBR commented on in April 2019: “A PwC leader once challenged TBR to explain why the consulting business model seemed immune to the disruptions changing every other industry. The answer, and the disruption, are within his own building, and consultancies and IT services vendors not seeing it risk falling substantially behind.”

PwC Products: The $500M business built on BXT

“Is PwC now a software company or a technology-enabled consultancy with a global distribution channel for assets and managed services? We’re watching and waiting to see.” TBR analysis, October 2018

We have our answer. PwC is a business solution provider, and some of those solutions include products — tangible, defined assets that allow the firm to be, as the PwC leaders noted, “better, faster, and cheaper for clients.” Some of those assets will remain within the firm, scalable but deployed only to increase speed or efficiency in certain engagements. Some assets will remain with the client, paid for in full, through licensing or by subscription.

Centricity of technology and talent: Atos keeps growing in North America

New Artificial Intelligence Lab in Texas will facilitate Atos’ collaborative innovation work with clients

On Oct. 3 Atos held a ceremony for the launch of its new Artificial Intelligence (AI) Lab in partnership with Google Cloud (Nasdaq: GOOGL). The Atos AI Lab, so far the largest of Atos’ labs, is located on the first floor of Atos’ office building in Irving, Texas, and joins a global network of labs, the rest of which are located in London, Paris, Frankfurt and Munich. The lab will work with clients in North America to build clients’ understanding around AI and define use cases for data analytics and machine learning with the goal of improving their business performance. Collaborating with Atos and Google, clients will be able to jointly develop solutions that are specific to their business and industry needs. TBR noted that the lab is a very bright, flexible and laid-back environment that enables ideation and creative thinking by combining digital experience and design thinking methodology. Another thing that stood out during our discussions with Atos’ North America leadership team is that North America is becoming a region for the company’s innovation. Atos is instilling a culture of innovation, entrepreneurship and creative thinking in North America and creating intellectual property that is brought back to Europe to be utilized with clients in Atos’ main geography. Because these kinds of collaborative centers play an important role in vendors’, including Atos’, ability to groom talent and leadership, the proper messaging about specific technology capabilities, such as around Google, will help Atos stay abreast of the next wave of partnership models. According to TBR’s Digital Transformation Insights Report: Cross Vendor, published in September 2019, partnerships will also evolve in the long term, as in their current form, the technology diminishes differentiation among all parties. This evolution could create siloed, federated-like model enterprises, which bring a different set of challenges. However, with the expectations coming from the advent of open data standards amplified through blockchain, TBR anticipates such hurdles will be easy to overcome.

Establishing a talent base will improve Atos’ ability to generate IP in North America

Early in the event, Walsh spoke of the “centricity of technology and talent” summarizing Atos’ view of itself, its clients and its ecosystem — a sentiment echoed repeatedly by Atos executives throughout the day. In TBR’s view, Atos recognizes that its strength lies not in strategy consulting but instead in staying centered on technology while trying to help clients solve business problems. Atos also recognizes that talent, not technology, will differentiate consultancies and IT services vendors from each other as everyone pursues digital transformation. On multiple occasions during the event, as both part of the formal presentations and in side-bar discussions, Atos executives stressed the company’s commitment to training, reskilling, developing and retaining top talent across all of its lines of business (and geographies, although most of the event centered on North America). Wagner’s description of purpose-built, SAP-centric teams around consulting, Google Cloud Platform and the CTO was as much about the talent Atos needed to recruit and develop as it was about the organizational changes Atos needed to make and the SAP capabilities it needed to acquire.

In all, the Texas event confirmed to TBR that Atos’ strategy and execution in North America have shifted into a substantially higher gear, as the company accelerates its push to bring U.S.-led initiatives to the front of this very European company. One small indication: According to Walsh, Atos North America now generates more IP to share with Atos Europe than Europe develops to send to the U.S. TBR does not expect Atos’ U.S. headquarters in Irving to replace Atos’ global headquarters near Paris any time soon, but the gravitational pull of success will make the next few years interesting for Atos. 

Supporting its strategy to expand in North America, France-based digital transformation company Atos held its second annual North America industry analyst event at its North America headquarters in Irving, Texas. The event took place in Atos’ Business Technology Innovation Center (BTIC), which is part of a network of nine BTICs that Atos uses as a platform for hands-on innovation with customers and partners. Using a balanced mix of presentations, innovation showcases set up at the BTIC, one-on-one sessions, and North America client examples — one of which, a public sector organization, was presented live on stage — Atos showed the industry analyst community that its expansion in the region is accelerating. Atos is using acquisitions, such as that of Syntel, to expand its portfolio and resources, improve its service delivery model, and drive profitable growth in North America.

Blockchain in the context of digital transformation: A slow-moving, inevitable revolution

In fast-approaching fourth industrial revolution, bureaucratic labor will become as nonessential as manual labor became to the agrarian economy with the advent of the combustion engine. Blockchain technology will enable smart contracts throughout our economy and will be the red thread stitching together multi-enterprise business networks for frictionless commerce that will greatly reduce demand for bureaucratic labor. As one management consulting partner put it, “If you are not at the point of consumption or at the point of creation, then your job will disappear.”

In TBR’s latest Digital Transformation Insights Report: Emerging Technology, Senior Analyst Boz Hristov and Principal Analyst Geoff Woollacott describe in detail how blockchain technology sits firmly in the hype phase today and, in little more than a decade, has reasonably distinguished itself from cryptocurrency even as blockchain underpins that digital reality. Solving the coopetition paradox, revolving around establishing common governance and standards across competitive and cross-industry ecosystems, is the biggest challenge, yet offers the long-tail opportunity for vendors.

Additional assessments publishing this week from our analyst teams

IBM Services remains challenged by its internal portfolio and resource transformation, such as in traditional infrastructure management and technology support, and reported a fourth consecutive quarter of revenue decline in 2Q19. Pockets of revenue growth in constant currency in business and technology transformation areas, such as consulting, application management and cloud, indicate IBM Services’ portfolio transformation to higher-value services is working. While profitability will remain IBM Services’ core priority in 2H19, the company’s work with clients around advising, moving, building and managing next-generation technology solutions will continue to increase and begin to offset revenue growth pressures in 2H19. — Elitsa Bakalova, Senior Analyst

TBR’s IBM report highlights some of the recent developments in IBM’s Systems Hardware portfolio as the market awaits the newest refresh of IBM Z, which is likely to be announced at the end of 2019 and become generally available at the start of 2020. Hardware-centric investment trends are also highlighted, for both IBM’s traditions Systems Hardware portfolio and its investments in quantum computing. TBR’s financial projections in this particular iteration of the report include how TBR anticipates the Red Hat acquisition will impact corporate numbers. — Stephanie Long, Analyst

Lackluster performance in traditional IT and telecommunications continues to weigh down T-Systems’ revenue, but cloud-based services will help revenue rebound in 2Q19. Strengthening its partner network improves T-Systems’ innovation as well as drives adoption of its cloud and IoT capabilities. For example, its recent partnership with Software AG allows T-Systems to underpin its Cloud Internet of Things platform with the Cumulocity IoT platform, expanding its delivery scale in Europe and North America.
Kelly Lesiczka, Analyst

HCL Technologies (HCLT) emphasizes its engineering and R&D core services to support foundational revenues as the company balances acquisition integration with portfolio management. With the completion of its acquisition of IBM Software assets at the beginning of July, HCLT launched HCL Software, which we expect will help the firm deliver software and product solutions that bridge HCLT’s legacy services with its Mode 2 and Mode 3 emerging technologies and services, particularly for cloud, digital and analytics, and security. — Kelly Lesiczka

In our upcoming DXC Technology Initial Response, TBR will look at whether DXC has been able to overcome recent pressures stemming from completion of several large contracts without replacement and ongoing headwinds in legacy applications work. — Kevin Collupy, Analyst

Additionally, check out our recent insights into IoT and KPMG, available in our Special Reports section.  

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

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

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

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

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

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

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

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

TBR Weekly Preview: May 20-24

Before the long weekend here in the U.S., our teams will be publishing deeper analysis on some of the vendors that released earnings earlier this quarter. As always, our approach starts with the individual companies, then builds to an understanding of the larger market.

Additionally, don’t miss this Wednesday’s webinar Bringing the best: Talent and technology in management consulting. Register today!

Tuesday

  • The combination of Atos’ integration and technology capabilities with Google Cloud technologies, made possible by the pair’s global partnership, which marked its first year on April 24, is expanding Atos’ cloud client reach and driving revenue opportunities in secure hybrid cloud orchestration, data and AI, machine learning, and digital workplace solutions for enterprises. The acquisition of Syntel expanded Atos’ cloud advise-build-run portfolio and client reach, notably in North America, and provided critical scale for Atos’ Business and Platform Solutions division, which will accelerate Atos’ cloud advisory and implementation activities. Integration of security services and products into cloud solutions, enables Atos to transform clients’ IT and business models and securely support and manage both cloud and legacy IT environments. — Elitsa Bakalova, Senior Analyst
  • The most recent edition of TBR’s Colocation Benchmark highlights how hybrid IT adoption is a driving force behind colocation adoption as colocation providers offer both data center space and connections to leading cloud providers. The availability of hybrid PaaS and IaaS offerings such as Microsoft Azure Stack and, soon, AWS Outposts provides additional opportunities to extend enterprise colocation environments. — Cassandra Mooshian, Senior Analyst
  • TBR’s Cloud Professional Services Market Forecast details how healthy growth will persist across cloud professional services markets despite automation’s downward pressures as hybrid IT sprawl proliferates. Accenture and IBM remained the top two vendors overall in cloud professional services in 2018, while Accenture is expected to take on significant additional market share through 2023 as it benefits from its C-Suite exposure and position as a technology-agnostic third-party expert. — Cassandra Mooshian, Senior Analyst

Friday

  • TBR’s initial look into Hewlett Packard Enterprise’s (HPE) 1Q19 performance deep dives into HPE’s infrastructure strategy amid recent ongoing changes as HPE enters the final year of its Next initiatives. Commoditization continues to take its toll on infrastructure vendors’ bottom lines, increasing competition and encouraging more nuanced strategies to get ahead. — Stephanie Long, Analyst
  • The 1Q19 Fujitsu Cloud report deep dives into Fujitsu’s cloud strategy amid recent changes. As the company no longer competes for new IaaS opportunities outside of Japan, Fujitsu is leaning on partners and their expansive customer bases more significantly and strategically amid the company’s own strategic shift. — Cassandra Mooshian, Senior Analyst

Finally, publishing this week from John Caucis are 1Q19 assessments of federal IT majors CACI and Leidos, including key developments from the quarter and detailed analysis of each company’s fiscal performance. Nearly a year after losing out to General Dynamics in the competition to acquire CSRA, CACI aggressively jumped back into the M&A fray, spending nearly $1 billion on acquisitions during the quarter to deepen its capabilities in C4ISR, cybersecurity, signals intelligence and electronic warfare for the U.S. Department of Defense and intelligence community. In the past, CACI’s MO regarding acquisitions was often paying a premium to scoop up differentiating solutions capabilities, and after paying $225 million to acquire N.Y.-based Mastodon Design and its 50 employees, it appears CACI retains an aggressive, but judicious, M&A posture. CACI delivered 12%-plus year-to-year growth during 1Q19 — more than half inorganic in nature. Federal IT peer Leidos delivered strong organic growth in its first quarter following its “year of transition” in 2018, suggesting its revamped growth strategy, which hinges on effective leverage of the information systems and strategic solutions assets acquired from Lockheed Martin nearly three years ago, is working. With its operational and organizational revamp around its core markets complete, Leidos is beginning to turn its attention to adjacent market opportunities, including in the U.K., where it plans a significant ramp up of recruiting activities in 2019.

TBR Weekly Preview: May 13-17

As we move further into May, we will shift from initial earnings reports to larger, detailed reports on the vendors we cover, plus the benchmarks and market forecasts for the broader areas, such as cloud and telecom. And definitely do not miss Wednesday’s webinar on digital transformation.

Monday

  • The IBM Cloud report highlights how cloud remains an increasingly key component to IBM’s hybrid business model and long-term strategy. IBM reported single-digit cloud year-to-year growth, at 7%, a remarkably smaller rate than its larger cloud peers, which underscores the continued messaging and go-to-market shortcomings it needs to overcome. Cloud is often relied on as IBM tries to bounce back, but the cloud business also needs some attention. IBM will continue to sell off noncore software assets to hone its hybrid IT focus and messaging — the success of which is largely contingent on the planned acquisition of Red Hat in late 2019 by IBM. — Cassandra Mooshian, Senior Analyst

Wednesday

  • Strengthening its focus on premium customers enabled AT&T to improve the EBITDA margins of its Mobility and Entertainment Group divisions in 1Q19, despite competitive pressures hindering subscriber growth. Though AT&T will continue to trail T-Mobile in postpaid phone net additions throughout 2019, AT&T will boost Mobility margins through its premium unlimited data plans and by being disciplined in its device promotions. Conversely, AT&T continues to lose video subscribers to over-the-top platforms, but the operator’s higher DIRECTV price points will help strengthen Entertainment Group margins. — Steve Vachon, Analyst

Thursday

  • TBR’s first public sector IT services report of the quarter, Raytheon Intelligence, Information & Services (IIS), will discuss how Raytheon’s IIS business group continues to deliver market-leading fiscal performance, despite the run-off of a major defense sector support contract. IIS delivered double-digit top-line growth in 1Q19, driven principally by continued robust expansion of its core cybersecurity and space programs. Growth in these key sectors, particularly in the classified arena, was critical in enabling IIS to deflect the impact of declining work volumes on the Warfighter Field Operations Customer Support program, though the wind down of this program will become increasingly taxing during 2019. Meanwhile, a newly centralized base of operations in the United Arab Emirates will generate mindshare and market share gains for Raytheon in the Middle East while the company positions itself at the forefront of the 5G revolution in federal IT as the premier contractor to escort defense agencies into the 5G era. Finally, Raytheon is targeting the lucrative European security market as an opportunity to leverage its cyber leadership and expand international sales. — John Caucis, Senior Analyst
  • Cisco strengthens its portfolio by attaching services to new product offerings to capture data center, IT infrastructure and workplace transformation engagements. However, declines within its deferred revenue signal the company could face challenges in maintaining services revenue expansion. — Kelly Lesiczka, Analyst
  • Capgemini continues to sustain its profitable growth through an operating model based on three pillars: a unified go-to-market strategy that presents one face to the client and sells the entire Capgemini portfolio, industry focus, and an agile and competitive portfolio. Changes Capgemini made during 2018 to its portfolio, organizational structure and sales model enable the company to address rising demand from clients’ business side and strengthen relationships with clients to expand wallet share. Offering industry expertise, such as through the new Unified Commerce Solution for Grocery, enables Capgemini to attract clients’ C-Suites by addressing their business-specific needs. Capgemini has a competitive portfolio and global services capabilities around fast-growing and emerging solutions and revitalized core outsourcing offerings that will continue to drive revenue growth for the company. — Elitsa Bakalova, Senior Analyst
  • Industry specialization is becoming a central focus of Atos’ strategy as the company articulates and delivers digital value and customer excellence leveraging its technology expertise and partnerships in areas such as security, cloud, IoT and quantum computing. One of Atos’ strengths is its ability to strictly execute on the plans it sets for its financial performance over three-year horizons and present consistent messaging to the industry analyst community. TBR expects Atos to execute on its plan to provide clients with innovative solutions that enable technology-powered strategies and business models. Deconsolidating Worldline as a stand-alone business as of Jan. 1 is a logical move that will have an immediate positive impact and enable Atos to focus on its core digital services activities. — Elitsa Bakalova, Senior Analyst
  • Despite the maturing smartphone market and competition from new mobile virtual network operators such as Xfinity Mobile and Spectrum Mobile, significant opportunity remains for T-Mobile to sustain subscriber growth, exemplified by the company gaining higher postpaid phone net additions in 1Q19 compared to 1Q18. Decreased postpaid phone churn, which has been lower than that of AT&T the past two consecutive quarters, is a main driver of T-Mobile’s higher net additions, as customers are becoming more satisfied with T-Mobile’s service options, network coverage and customer service. — Steve Vachon, Analyst
  • The strength of its broadband business will enable Comcast to sustain Cable Communications revenue growth through 2020 despite continued video subscriber losses as consumers shift to over-the-top offerings. Comcast will also sustain revenue growth long term through the company’s burgeoning businesses, including Xfinity Mobile, Xfinity Home and its machineQ IoT venture. — Steve Vachon, Analyst

Friday

  • Fujitsu Services benefits from portfolio investments but needs to reorient its focus on client retention to sustain growth. We expect Fujitsu will look to its services portfolio offerings and onshore centers, showcasing its technology expertise to create differentiation and extract additional wallet share as well as generate opportunities outside its traditional client base. — Kelly Lesiczka, Analyst

TBR Weekly Preview: April 29-May 3

Two weeks in a row cranking out tons of analysis around technology companies, their strategies and performances, and how we see the market changing constantly. As always, connect directly with the analysts if you have questions.

Monday

  • In TBR’s 1Q19 Fujitsu Cloud Initial Response, we discuss Fujitsu’s strategy and next moves after its decision last October to stop international sales of K5. An increasingly strategic partnership with Microsoft coupled with continued enhancements to its data center and managed services businesses and capabilities will be ever more critical to the vendor’s long-term success outside Japan. — Cassandra Mooshian, Senior Analyst, Cloud and Software Team

Tuesday

  • In TBR’s 1Q19 Alphabet (Google) Initial Response, we track Alphabet’s ability to supplement core advertising revenue with sales of its Hardware products, Cloud services and YouTube subscriptions, as well as its investments in original and licensed video content that have begun to pressure margins. Alphabet’s Other Bets also comes into focus as the company leverages investments in the businesses within this segment, such as Waymo autonomous driving, Verily life sciences and Wing drone delivery, to create revenue streams that are sustainable over the long term. — Michael Soper, Senior Analyst, Telecom Team
  • Leidos begins 2019 with a renewed focus on growth and continued robust activity within its public sector healthcare business. TBR’s 1Q19 Leidos Initial Response will highlight two new collaborations to illustrate the increasing strategic importance of healthcare in Leidos’ revamped growth strategy, as well as updates on the company’s ongoing consolidation of its physical assets in the U.S. and expansion of its footprint in the U.K. — John Caucis, Senior Analyst, Professional Services Team
  • Digital marketing services (DMS) remains a growth opportunity — expected to reach $132 billion by 2023 — as CX-related content deployment advances to maturity. In TBR’s 2Q19 Digital Transformation Insights Report: DMS, TBR benchmarks 19 vendors that are well positioned to increase their share of the addressable DMS market, which on average expanded in revenue 22% year-to-year in 4Q18, through 2023.— Boz Hristov,Senior Analyst, Professional Services Team

Wednesday

  • In TBR’s 1Q19 Apple Initial Response, we will report on Apple’s efforts to shift toward a more services-oriented model as it combats slower product revenue due to lengthening smartphone ownership cycles and global saturation. While Apple’s extensive ecosystem puts it into a strong position to enter the vast content services ecosystem, the company will have to navigate busy service and content markets and overcome experienced and embedded competitors, such as Netflix, Amazon and Spotify. — Daniel Callahan, Analyst, Devices and IoT Team 

Thursday

  • With nearly $1 billion in new acquisitions in 1Q19, M&A is once again taking center stage in CACI’s overall growth strategy, enabling the company to align well with shifting defense and intelligence priorities emphasizing agile solution development, accelerated acquisitions cycles, and advanced communications and security products for warfighting and intelligence missions.  TBR will have in-depth analysis of CACI’s most recent acquisitions to expand its portfolio of cyber, electronic warfare and communications intelligence capabilities in our 1Q19 CACI Initial Response. — John Caucis, Senior Analyst, Professional Services Team

Friday

  • Cognizant’s strategic framework is in place, enabling the company to capture and accelerate digital opportunities. The recent acquisition of Meritsoft, which will add SaaS capabilities to its Digital Operations arsenal, reaffirms Cognizant’s commitment to digital and will help the company expand its digital platforms within its addressable market. — Kelly Lesiczka, Analyst, Professional Services Team 
  • Steady expansion of the number of clients in Tata Consultancy Services’ (TCS) largest segments illustrates the continued traction of TCS’ Business 4.0 framework, designed to drive digital enablement. TBR’s 1Q19 TCS report will discuss hiring trends and margin projections during the remainder of 2019. — Kevin Collupy, Analyst, Professional Services Team
  • As Infosys evolves its value proposition and go-to-market strategy, investments in AI, cloud and design thinking remain at the forefront of company executives’ agenda. A recent uptick in performance, evidenced by the healthy pipeline of large deals the company signed in FY19 for a total contract value of $6.28 billion, gives Infosys the confidence to invest and tout capabilities in new areas to secure long-term growth through product-enabled services. Doubling down on its position on the services supply side through investments in innovative portfolio offerings could help Infosys solidify its standing as a trusted outsourcer as it converts bookings to cash.
  • Boz Hristov, Senior Analyst, Professional Services Team

This week TBR will also publish several special reports on recent analyst events, including PwC’s Risk Summit and EY’s annual analyst event.