TBR Weekly Preview: March 4-8

As we start winding down beginning-of-the-year earnings calls, here’s what you can expect from the TBR team this week:


  • In 3Q18 TBR noted Salesforce built on its industry-specific strategies by releasing Financial Services Cloud for retail banking and by expanding its target audience for Education Cloud. Salesforce’s ongoing innovation to address vertical use cases and ability to understand customers’ business needs enabled the vendor to execute multiproduct deals in 4Q18. TBR expects Salesforce will close 4Q18 with $12.2 billion in annual revenue, keeping the vendor on track to attain its $21 billion to $23 billion annual revenue goal in 2021. (See Jack McElwee for more analysis.)
  • Google Cloud’s hiring of Thomas Kurian as CEO (replacing Diane Greene) is meant to attract enterprise customers and facilitate stronger competition at scale with Amazon Web Services and Microsoft; Kurian, former Oracle president of Product Development, brings deep understanding and detailed messaging on the technical and business impacts of cloud. TBR’s 4Q18 report will detail Google Cloud’s continued innovation among its core AI and ML portfolios while partnering and leveraging Kurian’s clout to gain enterprise mindshare, which will be increasingly critical to long-term success. (For everything Google and cloud, see Cassandra Mooshian.)


  • Cisco continues to grow revenue as it transforms itself through acquisitions, divestments and new product releases that enable the company to reduce its reliance on hardware — a commoditizing market — and embrace software. TBR’s 4Q18 Cisco report will include deep dives on Cisco’s most recent acquisitions, including Luxtera, which will help Cisco attract more webscale spend and improve the performance of its proprietary-based solutions, as well as Ensoft and Singularity Networks, which will broaden Cisco’s software capabilities in the service provider space. (Mike Soper leads TBR’s analysis on Cisco.)
  • TBR will also report on Cisco Services and the company’s expansion around software and next-generation solutions, which has created advisory and implementation opportunities that enabled Cisco Services to accelerate growth in 2018. An increase in software-related services as well as adoption of next-generation secure and intelligent platforms and products that support clients’ digital business will create attached services opportunities for Cisco Services, driving revenue expansion throughout 2019. (For more on Cisco Services, see Kelly Lesiczka.)
  • TBR’s latest report on Perspecta will provide an update on how the fledgling company is managing the task of integrating three legacy organizations into a unified whole. In past reports, we have talked about how the company’s innovation incubator, Perspecta Labs, underpins its long-term position in the federal services landscape. Our 4Q18 Perspecta report will dive more deeply into how the company introduces Perspecta Labs to its biggest client, the U.S. Navy, in advance of the recompete of Perspecta’s largest contract, which entails managing the Navy Next Generation Enterprise Network. (Joey Cresta heads up TBR’s Public Sector practice.)
  • As reported in our initial response, NetApp earned $1.6 billion in revenue in 4Q18, representing a 1.6% year-to-year increase. Strong 1H18 revenue momentum enabled the vendor to achieve solid year-to-year revenue growth for 2018, demonstrating the success of some of NetApp’s strategic moves during the year. Our full report will dive into the 2018 establishment of a cloud infrastructure business unit that will enable NetApp to pivot its portfolio further in 2019, as the company, one of the few major pure play storage vendors left in the market, transforms itself to establish its brand as one that enables customers’ digital transformations. (See Stephanie Long for more analysis.)


  • Utilizing its technology expertise and ability to address clients’ business challenges, Capgemini reached its 2018 revenue growth and profitability goals and is confidently moving into 2019. Capgemini’s bookings reached their highest level since 1Q17 in 4Q18. In the latest full report, TBR will note how the increase in bookings, combined with Capgemini’s unified go-to-market approach; enhanced offerings around digital, cloud and industry-specific solutions; and reinforced expertise via training and reskilling, will enable the company to sustain revenue growth. (Elitsa Bakalova covers Capgemini for TBR.)

Be on the lookout for additional analysis from TBR, including assessments of Accenture Technology and TELUS International. TBR’s next webinar will be held March 20 and feature Senior Analyst John Caucis talking about healthcare IT services.

Bringing the best: Talent and technology in management consulting

Insights from TBR’s Professional Services team

Join Senior Analysts Elitsa Bakalova and Patrick Heffernan and Research Analyst Kelly Lesiczka as they discuss the infusion of technology into every aspect of management consulting. In addition to detailing changed business models among the Big Four and Strategy-centric firms, the team will review how asset- and IT-centric consulting vendors have increasingly brought their technology-trained talent to bear across the management consulting space.

Don’t miss:

  • Which IT services vendors and consultancies have best transformed their talent to handle the new management consulting world
  • How emerging technologies, particularly artificial intelligence, will change the business models of management consultancies
  • Why companies like Capgemini, IBM and Accenture will be the ones to watch through 2019


TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

5G-readiness spend and migration to new network architectures spur the TIS market to growth in 3Q18

According to Technology Business Research, Inc.’s (TBR) 3Q18 Telecom Infrastructure Services (TIS) Benchmark, the TIS market grew as communication service provider (CSP) investment in areas tied to 5G-readiness increased. CSPs are rearchitecting their networks leveraging NFV, SDN and the cloud as well as implementing new business models, which requires growing spend across a broad range of professional services. Deployment services spend grew slightly, but the market will strengthen as the 5G spend cycle ramps up over the next couple of years, although the spend intensity will be lower than during the LTE cycle. RAN suppliers Nokia (NYSE: NOK), Ericsson, Huawei, ZTE and Samsung will capture incremental TIS market share as they drive high volumes of services attached to their 5G RAN. This is already occurring to some extent as CSPs densify networks as part of their 5G-readiness strategies. Though 5G will require significant hardware spend, the aggregate amount will be lower compared to LTE, which will drive vendors to explore new market areas, such as Industry 4.0.

The managed services market was flat year-to-year in 3Q18 as a decline in outsourcing was offset by growth in the out-tasking market. Generally, vendors are exercising pricing discipline when determining which outsourcing contracts to take on in an effort to improve margins. Ericsson is currently leading the way in this regard as it evaluates 42 contracts for exit or rescoping. Huawei, ZTE and CCS have been less concerned with price and are focused on consolidating the outsourcing market. Other vendors, including those that are historically hardware-centric with little to no footprint in the managed services market, are increasingly playing in out-tasking as they will manage applications deployed in CSP networks. Ciena (NYSE: CIEN) is an example of this trend.



TBR’s Telecom Infrastructure Services Benchmark provides quarterly analysis of the deployment, maintenance, professional services and managed services markets for network and IT suppliers. Suppliers covered include Accenture (NYSE: ACN), Amdocs, Atos, Capgemini, CGI, China Communications Services, Ciena, Cisco (Nasdaq: CSCO), CommScope, CSG International, Ericsson, Fujitsu, Hewlett Packard Enterprise (NYSE: HPE), Huawei, IBM (NYSE: IBM), Infosys (NYSE: INFY), Juniper Networks (NYSE: JNPR), NEC, Nokia (NYSE: NOK), Oracle (NYSE: ORCL), Samsung, SAP (NYSE: SAP), Tata Consultancy Services, Tech Mahindra, Wipro (NYSE: WIT) and ZTE.

Cyber-sweet Carolina: Capgemini’s new SOC

Last month my colleagues Bozhidar Hristov and Elitsa Bakalova joined me for a chat with the Capgemini executives who are leading the company’s new security operations center (SOC) in Columbia, S.C. Drew Morefield and Ninad Purohit explained that the new SOC will become part of a global network of 10 SOCs and close to 4,500 cybersecurity experts. Listening to Morefield and Purohit explain the firm’s offerings and capabilities, starting with an acknowledgement of the overwhelming volume of data and existing, often fragmented, cybersecurity programs and policies enterprises have in place now, we gained an appreciation for Capgemini’s approach to digital strategy and end-to-end cybersecurity capabilities.

We also discussed scale and global reach. In North America Capgemini has a satellite R&D-centric SOC in Dallas that is used as a technology incubator and an experience center. Morefield and Purohit noted that Capgemini will further expand its SOC resources and security services capabilities in North America in the coming months with facilities in Foxborough, Mass. (home of the New England Patriots) and San Diego that Capgemini will gain after the acquisition of Leidos Cyber is complete (subject to anti-trust and Committee on Foreign Investment in the United States approvals expected this month).

So why Columbia, S.C.? Quite simply, a combination of prime real estate and readily accessible talent. In a previous acquisition, Capgemini took over a physical structure ideal for a SOC and a new Advanced Technology Development Center. Perhaps more importantly, Columbia itself hosts the University of South Carolina, a natural pipeline for young talent, and the area includes three military installations, a perfect source of experienced cybersecurity veterans. In Capgemini’s words, “high-quality people, a central location, and the best technology.”

OK, so will Capgemini use the new SOC as a draw for new clients, not just new talent? Morefield and Purohit said the security practice would mirror strategic efforts across the global company by focusing on expanding its footprint with existing clients, particularly those that “already believe in Capgemini, have trust with” the company, and are looking to change their cybersecurity services vendor or posture.

Does this new SOC set Capgemini apart from the competition? Maybe not, but so what? The company does not need groundbreaking or unique security offerings to win new work with existing clients, the target market for the Capgemini security practice. The company needs talented people, excellent facilities and access to the best technology through alliances, all complemented by global scale and global delivery. Cementing those fundamentals, building partnerships with the university through recruiting and with the greater Columbia community by investing in veterans, and continuing to expand capabilities and scale globally should sustain double-digit growth and reward Capgemini’s decision to invest in cyber, along with digital and cloud.

Now we need to go visit. (For additional insights, read our blog on EY and special report on Accenture.)

Engaging with clients’ business side to address mission-critical challenges

TBR perspective

“Capgemini is overall in a good shape relative to the market,” said Capgemini CEO Paul Hermelin during the opening keynote session at the company’s Global Analyst and Advisor Day 2018. Over the past six quarters, Capgemini has accelerated its revenue growth, reaching 8% year-to-year in constant currency in 1H18, and improved its profitability, aiming for an operating margin before other expenses of between 12% and 12.2% in 2018, owing to growth in scale of digital projects, automation, low-cost leverage and cost management. However, there is always room for improvement, and Hermelin pushes Capgemini’s management team to do more. Over the past several quarters, Capgemini has made changes to its portfolio, organizational structure and sales model to address rising demand coming from clients’ business side instead of their technology side. TBR believes Capgemini has a competitive portfolio and global services capabilities that will continue to move the company in the right direction. Capgemini is notably well established in India, not only for outsourcing but also for digital and cloud, and is able to provide fast-growing and emerging solutions at scale while continuing to address clients’ outsourcing needs with revitalized core offerings.

Transforming portfolio, organization and sales will drive revenue growth in the coming quarters

Following a disciplined portfolio management approach, Capgemini is reshaping its offerings to provide solutions, such as digital, cloud and cybersecurity, that enable clients to build their digital models. The company revitalized its core infrastructure, application and business services offerings, such as through launching next-generation ERP solutions to reimagine enterprise core systems to fit in the digital world, and infusing automation and AI across the portfolio to increase value for the client. Partnerships with technology vendors, startups and academic institutions are a key lever for expanding Capgemini’s portfolio and filling in capability gaps instead of always developing its own intellectual property, which can lead to increased costs and slow down the company’s digital and cloud portfolio expansion. From an organizational standpoint, Capgemini has shifted to a unified go-to-market approach that presents one face to the client and sells the entire Capgemini portfolio. From a sales perspective, the company has been pushing initiatives to foster strategic client relationships by deepening the engagement and offering all dimensions of Capgemini’s portfolio. The objective is to have an established group of strategic relationships in which Capgemini ranks among the leading IT services vendors for those clients to address their mission-critical challenges. This relationship approach in which Capgemini is the strategic supplier somewhat resembles Accenture’s (NYSE: ACN) Diamond Client structure.

TBR attended Capgemini’s annual Global Analyst and Advisor Day, held at the company’s combined Applied Innovation Exchange (AIE) and Accelerated Solutions Environment facility in New York City. The facility opened in October 2017 and is part of a global network of 16 locations that enables clients to explore, discover and test new solutions in collaboration with Capgemini and an ecosystem of technology partners, startups, academic institutions and venture capitalists. The event featured plenary and breakout sessions on topics such as portfolio strategy and management; Capgemini’s artificial intelligence (AI) ambition and portfolio; Capgemini Invent, the company’s newest global business line; digital; cloud; and North America. Client cases and demos on AI Insurance, AI Digital Ops, AI Manufacturing and economic Application Portfolio Management (eAPM) exemplified Capgemini’s activities with clients and provided insights into delivered results.

Can management consulting survive digital transformation?

Join Patrick M. Heffernan, principal analyst, and TBR’s Professional Services senior analysts as they discuss the management consulting competitive landscape, highlighting specific vendors’ performances while diving deep on three specific themes: asset-based consulting, convergence of strategy and technology, and maturing digital transformation/innovation centers. The team will examine leading vendors, such as Deloitte, McKinsey, PwC, EY, Accenture, Capgemini and IBM, and discuss how these firms have adjusted to consulting in an era of digital transformation.

Don’t miss:

  • How consultancies bolt IP and emerging technology assets onto traditional consulting engagements
  • Expected impacts from the blending of technology and strategy consulting engagements and vendors’ practices
  • Which consultancies led the pack in TBR’s Management Consulting Benchmark
  • The next evolution of digital transformation and co-innovation centers


TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Equipment vendors continue to struggle with lower sales volume, while IT services and software-centric companies enjoy growth, thanks to digital

HAMPTON, N.H. (Jan. 5, 2018) — According to Technology Business Research, Inc.’s (TBR) 3Q17 Telecom Infrastructure Services Benchmark, leading vendors are making significant strategy changes and retrenching around their core competencies to weather subdued communication service provider (CSP) spend.

“Leading vendors are realizing they must transform themselves before they can effectively help their customers transform,” said TBR Telecom Senior Analyst Chris Antlitz. “New technologies and processes, particularly in the areas of cloud, artificial intelligence, cognitive analytics, automation and DevOps, promise significant agility, better outcomes and cost savings, and vendors must not only offer solutions that leverage these technologies to their customers but also adopt and employ these technologies internally to be credible, differentiate and remain competitive.”

Tier 1 network solution providers (NSPs) are going back to their product-led roots and doubling down on partnerships. Huawei, Ericsson and Nokia are all transitioning back to being product-led, which is an about-face from their prior strategy of being services-led. This strategy shift indicates that product-centric vendors have realized that the optimal go-to-market model is to stick to their core businesses and core competencies as much as possible and augment capabilities with partnerships.

TBR believes this strategy shift means NSPs will increase emphasis on product-attached services, which is their main telecom infrastructure services (TIS) profit pool, particularly maintenance services. This retrenchment by NSPs will also enable IT services companies to have a clearer path to capitalize on digital opportunities.

TBR’s Telecom Infrastructure Services Benchmark provides quarterly analysis of the deployment, maintenance, professional services and managed services markets for network and IT suppliers. Suppliers covered include Accenture, Amdocs, Atos, Capgemini, CGI, China Communications Services, Ciena, Cisco, CommScope, CSG International, Ericsson, Fujitsu, Hewlett Packard Enterprise, Huawei, IBM, Infosys, Juniper Networks, NEC, Nokia, Oracle, Samsung, SAP, Tata Consultancy Services, Tech Mahindra, Wipro and ZTE.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].



Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

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