Posts

Establishing realistic expectations for AI potential requires vendors to address economies of change management first, technology second

AI is one of the technologies that will help standardize the digital transformation (DT) market and turn the wildly loose use of the term digital into tangible business results. Though the technology sparks urgency for many buyers to accelerate the execution of their DT programs, they need to carefully balance messaging with external and internal stakeholders around the possibilities with shutting out the critics, many of whom project AI will kill jobs.

Principal Analyst Patrick Heffernan and Senior Analyst Boz Hristov dug into this topic this week during TBR’s webinar, Are digital transformation buyers ready for AI? The webinar covered insights into buyer’s AI readiness, AI market maturity and opportunity, and more. Check out the replay any time on TBR’s YouTube channel.

Additional reports recently published by TBR’s analyst teams

4Q19 Lenovo Group: PC business performs well ahead of COVID-19 impact

Lenovo’s Data Center Group has the right investments in place to thrive in 2020. Its services business is picking up, the channel program is armed with new leadership ready to expand and its portfolio is aligned to address emerging demands like the edge. However, macro factors such as supply chain implications of COVID-19 and server market softness will likely impact financials for the next year or so despite strategic investments.

4Q19 Atos: Establishing an industry-led organizational structure

In 1Q20 Atos’ new CEO, Elie Girard, will implement a new industry-led organizational structure with six global industries and five regional business units that has been in the works since early 2019. The new structure will reshape Atos’ portfolio and go-to-market approach to better align with clients’ specific industry needs. This is a positive move for Atos that will accelerate its transformational activities with clients; however, Atos will have to expand its bench of business consultants with industry expertise to successfully compete with established industry-specialized providers, such as Accenture.

4Q19 ManTech: Aggressive efforts across the board lead to outstanding results

ManTech’s performance in 2H19 underscores the company’s success with its core Department of Defense (DOD) and Intelligence Community (IC) customers as well as the alignment of its services and solutions portfolio with federal IT spending priorities, especially in areas such as space and cybersecurity. DOD and IC budgets continue to expand, presenting a great opportunity for ManTech to capture more spend from its largest customers. ManTech has also been very judicious in its recent acquisitions, gaining access to new agencies as well as new capabilities that should allow the company to expand revenue growth with additional new customers.

4Q19 T-Systems: Leveraging digital and agile to drive profitable growth

T-Systems is better equipped to upsell growth areas on its own platforms as well as support its partners’ digital platforms with migration and managed services. Improving access to technology and industry areas within Deutsche Telekom allows T-Systems to fill portfolio gaps without pursuing acquisitions. However, as T-Systems refrains from acquiring or forging a strategic alliance around consulting services and maintains a relatively small practice compared to peers, the company could be restricted to managed services and integration services opportunities, hindering its ability to diversify revenues.

The JEDI contract: We don’t see the force; do you?

Considerable ink has been sacrificed parsing both the wisdom and the potential winners and losers of the Joint Enterprise Defense Infrastructure (JEDI) contract award, which is estimated to be worth up to $10 billion over 10 years. TBR wrote two commentaries around the topic in June that handicapped the potential bidders and outlined the fundamental consumption model shifts triggered by continued technological innovations changing public sector procurement factors from affordability to governance compliance — or from “wallet to will.”

The impetus for revisiting the contract flows from the Pentagon again pushing back the timeline on submitting proposals by three weeks. That the Department of Defense once again pumped the brakes despite a desire to accelerate modern technology procurement, while simultaneously ending the Q&A portion of the solicitation period, highlights the tensions and challenges created by the shift from wallet to will.

At TBR, we continue to question the efficacy of a single-source contract for cloud infrastructure services. This concept of working with one cloud vendor for compute was leading edge in the commercial space about a decade ago as enterprises wrestled with how to automate the seamless movement of applications and data between on-premises and cloud compute instances. With this technological problem largely addressed in the hybrid cloud era, the new technological challenge facing leading enterprises is automating that seamless deployment across multiple cloud environments.

In this adoption of new, consumerized technologies, we see the disruptive forces aiming at the public sector IT market opportunity. The Pentagon seeks a single-source captive solution, betting on one firm’s ability to stay ahead of the market on innovation for a decade. Such a bet makes little sense to TBR or to the industry executives with whom TBR has discussed the JEDI contract structure. Furthermore, much has been written lately about the concept of asymmetric competition, which postulates that open platforms actually shorten the competitive advantage windows technological innovations provide to technology vendors. In short, being able to exploit leading edge technology requires that companies lessen their reliance on single-source vendors rather than doubling down on them.

It has been argued that military strategists plan how to fight battles without fully appreciating the changes in warfare they will face going forward. Awarding a single-source, 10-year contract for technology innovation sounds like a continuation of that misaligned planning process. In the private sector, such deals trigger business exits from improper planning. In the public sector, the exposure to lagging strategic planning manifests in threats to national security.