Channel partner ecosystems will evolve to support digital adoption

An exclusive review of TBR’s ongoing analysis of ICT vendors’ go-to-market strategies and Tailored Services capabilities

Shifts in customer consumption preferences and efforts to accelerate revenue expansion in high-growth business segments continue to transform the go-to-market motions of leading technology and professional services vendors. Vendors are increasingly relying on their channel ecosystems to create self-sustaining economies that support their financial and strategic objectives in cloud, Internet of Things, artificial intelligence, digital, and other disruptive technology and services segments. As part of this effort to pursue channel-led growth, vendors are investing in new and revised channel partner programs, structures and strategies, and new partner types and ecosystems are emerging around major technology domains.

Join TBR’s Bryan Belanger and Colin Naples April 17 for a review of:

  • Major recent channel and alliance strategy trends and developments observed across TBR’s technology market coverage domains
  • Expectations for channel and alliance strategy trends and developments across TBR’s technology market coverage domains in 2019
  • TBR’s perspective on the importance of competitive channel strategy benchmarking, as well as recommended best practices for vendors to use in benchmarking competitive channel programs, structures and strategies



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].

Virtualization flips the axis on technology monetization and adoption

An exclusive review of TBR’s ongoing market analysis and tailored services frameworks

Technology monetization strategies continue pivoting from transaction sales to subscription sales predicated on building viable consortiums to generate the ecosystem flywheel effect. There has been an obvious shift in the consumption of basic compute resources from capitalized instances owned and maintained by enterprises to software-controlled, multicloud environments delivering “cloud economics” to traditional environments. Join TBR analysts Geoff Woollacott and Bryan Belanger as they analyze this shift and its expected impact on the market.

Virtualization and ongoing price point reductions shift internal IT departments from the role of security guard — rationing finite, costly resources — to the role of concierge — articulating the art of the possible to line-of-business users. In short, technology adoption will increasingly become a people problem addressed through consensus building around companywide business rules, while hardware has become a loss leader, as have some advisory services, to generate the long tail of sticky subscription services.

Don’t miss:

  • The general state of the technology monetization fabric and its disaggregation into discrete services components
  • The ongoing convergence of services providers, and the strengths and weaknesses of the conventional business models all struggling with the same pivot to participate in ecosystem flywheels
  • Common challenges needing market testing, given enterprise customers become increasingly unforgiving of monetization and service missteps


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].

Cloud repatriation follow-up: Do you really know the value proposition of cloud?

A few weeks ago, I blogged my thoughts about cloud repatriation and how it feels like an over-emphasized trend. In my professional analysis amid researching various reports and interacting with data center vendors, one of the key pieces of the cloud repatriation narrative is that customers will move to cloud without a full picture of the costs and ultimately retreat to a more predictable environment. Seems like a reasonable hypothesis, but has this been tested? Also, is cost really the core decision driver?

A recent call with an enterprise IT buyer shone light on this topic, as much of their story about consuming IT didn’t align to the market generalizations. For starters:

  • The buyer is in the healthcare industry but is using cloud services, even migrating some critical applications like ERP to a SaaS-based solution. Generally, it’s thought that the industries with sensitive data will stay away from cloud solutions.
  • The company typically keep $500 million in the bank at any given time, meaning the perceived challenge of capex outlay associated with on-premises solutions isn’t much of an issue to drive it to adopt off-premises cloud solutions.
  • But the real kicker? The customer indicated its cloud-based solutions are at best cost-neutral and sometimes even more expensive than their on-premises counterparts.

This came as a bit of a surprise to me, as these elements are counter to the typical IT industry narrative. If an enterprise is investing in an off-premises solution already knowing they will pay the same or more than an on-premises solution, what’s the point?

Let’s look at this particular customer’s cloud journey. Their first foray into enterprise cloud was, like for many businesses, using Office 365 and products such as Exchange for email. Based on the value seen from this implementation, including reduced management overhead and end-user benefits, they started adopting cloud-based offerings in other areas of the IT stack.

When describing the organization’s process for making decisions around acquiring IT solutions, the buyer described a fairly complex, quantitative strategy for assessing the ROI of any given solution over a three-year period. The assessment includes four facets:

  1. Will it save time? This can include making IT employees more efficient or enabling business unit employees to improve their workflows.
  2. Will it save money? A detailed calculation considers elements like license costs, management overhead and how these will change over the three-year period.
  3. Will it make money? This particular buyer works for an organization that acquires other companies often. The buyer described a scenario where using cloud solutions helped integrate an acquisition target’s data within two weeks and enabled a new product to be launched within a month of the acquisition.
  4. Will it reduce risk? Risk can take many forms, from risk of an IT outage to risk of interrupted operations or compromised IT security.

This is one example from one enterprise, but it illustrates the point that cost is far from the only factor being weighed when making choices about how IT is going to be delivered. Or at the very least, cost is not simply what you pay for a solution; decision makers must consider the many risks and benefits that spider across an organization. A higher fee for an IT solution might be a small price to pay if it increases your time to market by three times or more. Moral of the story: Know what the actual criteria are for your customers’ decision making. You may be failing to sell to their most important buying points. Or, you may be sending the wrong message!

Postcards from the edge: Complexity is here — wish it were not

“Analog dollars to digital pennies” is a phrase used to discuss the continued compression on technology price points as Moore’s Law economics, coupled with continued IP abstraction, creates economic trigger events aimed squarely at legacy business model best practices. Recently, I attended analyst events in New York City — one sponsored by Lenovo and one by Canonical — that outline these economic trigger events, albeit from different sides of the same coin.

Canonical CEO Mark Shuttleworth used the term “economic trigger events” often in his opening remarks. The idea is that technologies and new price points create trigger events that result in new economic fundamentals where some participants will be disruptors and some will be disrupted.

The rise in the hype cycle around edge computing as it joins forces with cloud, artificial intelligence (AI)/machine learning, and Internet of Things (IoT) creates a veritable Gatling gun of economic trigger events. These events accelerate business model disruption as we pivot to the Business of One era.

The disruption sits atop the continued economic pressure from commoditized hardware. What’s behind it all is that while infrastructure is valuable, it is not valued. In short, the margin moves out of infrastructure and into the business outcome. Technology enablement is less constrained by affordability and more by determining what business value can be derived from the application or use case.

Rather than being the lead decision in business investment decision making, infrastructure acquisition becomes the derived decision. The service attach rate or services drag becomes the fuzzy guide point for new inventions and new business models. Broad, ubiquitous ecosystems become imperative to generating sufficient margin in the digital penny world to justify the ongoing development, monitoring, and maintenance of secure flexible infrastructures that won’t break and will keep data secure and private.

For Canonical, this means focusing on the connection between operating system and cloud control planes to ensure a single code set operates silicon as large as high-performance computers (HPCs) and as small as single-purpose IoT devices. Compute infrastructure is assumed to work, until it breaks, and then users realize just how valuable that hidden infrastructure provisioning is.

As Canonical is hardening the abstraction layer to ensure seamless interoperability, Lenovo (and many other hardware manufacturers) create purpose-built appliances optimized for edge workloads. In some instances, these will be small appliances simply capturing data and routing it back to clouds for ingestion into massive analytics engines. In other situations, it will be very-high-performance compute engines with GPU accelerators in simple, easy-to-operate form factors where AI inference in real time has to be performed at the edge. Here again, the assumption will be that the edge appliance can operate (in a retail convenience store, for example) without the need for any technically savvy personnel to monitor, manage or provision the device on-site.

Look for more detailed special reports from TBR on the Lenovo and Canonical industry events in the next few weeks.


Is ‘cloud repatriation’ real?

Cloud repatriation is real, but not real enough to change the prevailing cloud trajectory. Think of it as the exception, and not the rule.

It’s a question I’ve heard multiple times: “We heard that [insert giant company name] is taking their apps/data off [insert giant public cloud vendor name] and moving it back into their own data center. Is this the beginning of a big shift?” If your job is in any way related to selling products or services for enterprise data centers, “cloud repatriation” sounds like a promising concept. Amazon Web Services (AWS) and Microsoft have been eating the lunch of a whole bunch of IT companies, and those IT companies would like that lunch back, thank you very much. But is the exodus of customers from public cloud really happening? Well, I have some good news and some bad news.

Bad news first: Cloud repatriation is not a market-changer

Cloud repatriation is not real in the sense of being a major, market-shifting trend worthy of its own buzzword. I will not deny the existence of one-off customers making a monumental shift away from public cloud. TBR sees anecdotal evidence of companies leaving public cloud environments, but we don’t see a wholesale move to strictly on-premises environments. The numbers tell it all: TBR estimates the PaaS and IaaS market grew 16% overall in the second quarter, with the big three juggernauts (AWS, Microsoft, Google) growing 58% on average within the segment, accounting for about $10 billion of the quarterly segment revenue. If anything, the public cloud market is moving toward an oligopoly as it consolidates. But it’s not shrinking. The market growth is far outpacing the loss of any customers that may be defecting.

The good news: Companies continue to use on-premises data centers, negating the need for repatriation

Very few companies see a future without owning some kind of data center. Apps that never leave the data center do not need to be repatriated in the first place (although they will likely need to evolve to a more agile and scalable delivery method). As you can see in Figure 1, the bulk of companies expect to maintain a roughly even mix of on-premises apps and those in hosted cloud environments. Smaller companies are most aggressive in their desire to reduce their on-premises footprint while the largest companies make it clear they don’t see a future in hosting everything. These projections make sense to me, especially based on my conversations with IT execs in small and large enterprises. Smaller companies tend to be concerned about the proficiency of their own data center while larger companies are full of complexities that make moving to a new environment a challenge.

Application hosting strategy by number of employees

The reality: Most companies seek a balance

By and large, companies are evaluating the best fit for workloads, acknowledging that there is no one-size-fits-all solution. Regardless of the type of cloud(s) being used, more than 80% of users will either maintain or expand their environments over the next three years. The proportion of buyers planning for public cloud expansion exceeds that of those engaging in on-premises private cloud expansion. But the fact remains that there is not a mass exodus from any specific environment. Regardless of environment, changes and evolutions will occur, even within self-built private clouds.

Companies' expected changes in current cloud usage for 2018, 2019 and 2020

Given that business-to-business buyers are all over the map when it comes to cloud adoption, where can IT vendors succeed? There’s no easy answer, however, when discussing this topic with my colleague Senior Analyst Cassandra Mooshian, she had this to say:

“Recognizing there will be both exceptions and changes for most customers over the next three years is important for vendors, regardless of their cloud point of view. Yes, there will be workloads that have migrated to cloud that will move back to a traditional or on-premises delivery method. However, there will also be services deployed on premises that could eventually be moved to a cloud environment as customer needs and costs change. Something simple, yet critical, for vendors is to understand that no two IT environments are the same, especially across market tiers. Vendors may want their customers to go all-in on cloud, but that just is not feasible for larger organizations or even smaller companies in regulated industries or regions.

“The key to vendor success is to understand that there will be workloads best suited for cloud, while others may work just fine in legacy environments. The kicker will be in helping customers embrace hybrid, understand what works best where, and ultimately integrate and orchestrate it across each customer’s unique blend of legacy and cloud workloads. Once trust is established and there’s a mutual understanding around the idea that all options can and should be considered, that’s when long-term relationships start, and each company has a ‘favorite’ vendor or two.”

To discuss this topic further or learn about TBR’s cloud customer research, contact me at [email protected].


Dell Technologies and Draper: Helping IT help business

“Focusing on business outcomes” has become a very shopworn phrase for industry pundits. However, nothing crystalizes the power and importance of the concept more than detailed discussions with IT departments of flagship enterprises followed by tours of the business units they support. Seeing both affords insight into how these IT and line-of-business (LOB) entities view their interactions.

Draper shared its transformation story with a coterie of industry analysts at Dell Technologies’ (NYSE: DVMT) request on July 31 at Draper’s main facility in Cambridge, Mass. The company proved refreshing in its candor as well as in its use of business language to talk about IT rather than using IT language to feign knowledge of business outcomes. Staying focused on business objectives is the way forward for IT vendors and enterprise IT employees alike, and Dell Technologies and Draper are speaking the right language.

Digital transformation starts with executive sponsorship, as cultural change must precede technological change

A recent TBR special report examines the fundamental shift in IT consumption in the public sector “from wallet to will.” In general, this discussion contends that the increased consumerization of IT and the move to virtualization, standardization and automation enable more customer-focused interactions between IT and the LOBs they support. Presently, this concept is slowly working its way into the public sector, and it is no shock to TBR that Draper now has to embark on this transformation, given how much of its activity focuses on government-sponsored projects.

Draper CIO Michael Crones provided an overview of Draper’s history and the recent organizational changes. With Moore’s Law economics driving lower entry price points for adjacent use cases, Draper is currently reviewing its archives of curated IP to determine how, with this newer, lower-cost compute infrastructure, the IP can be repurposed for broader commercial use cases.

Capitalizing on this IP inventory initiative, however, requires a major cultural shift in how IT is viewed, managed and deployed. Many firms fail to have executive management signal the importance of change by stressing the need for, and adherence to, shifting operating practices.

Atos’ pragmatism cuts through the AI hype

Atos Technology Days 2018, held in Paris on July 4 and 5, displayed myriad practical applications of emerging technologies. It was not A science fair with a focus on the future, as many technology vendor events have been of late. Rather, Atos showcased artificial intelligence (AI)-infused applications powering prescriptive maintenance, digital twins, Internet of Things (IoT)-enabled retail and payment applications, electric grid optimizations, and process optimization use cases for insurance and banking. The presentations walked through the underlying technological components powering these business outcomes and how Atos, in conjunction with its major technology alliance partners such as Google and Siemens, can stitch together existing technologies to deliver this business lift to its customers.

Industry, digital transformation and artificial intelligence : Services’ tea leaves for 2018

Going into the second half of 2018, TBR’s Professional Services Practice (PSP) anticipates providing additional research around a few issues that have been top of mind for TBR’s clients and the PSP analysts, including what fosters the new interest in industry-driven organization, which IT services vendors are both becoming more digital and delivering digital transformation services, and what impact will artificial intelligence (AI) have on profitability.

EY, SAP and Microsoft: A powerful triad for the Business of One era

Attending several EY analyst events in the past month has been a real eye-opener to the changing dynamics of a company that has traditionally been viewed as an advisory-led firm with strong credentials in the tax, audit and advisory domains, yet until recently offered precious little in the way of IT-centric services. This is not your father’s EY, as the company has been investing heavily in partnerships and in automating its IP in ways that radically reduce “run the business” IT costs while continuing to excel at “transform the business” advisory engagements.

A large part of EY’s accelerating performance can be laid at the feet of its partner ecosystem where the company has deepened partnerships with technology providers such as SAP and Microsoft, whose own services firms lack permission to play in the C-Suite or are just taxed based on current workloads and the industrywide skills shortage.

In short, the “axis has flipped” on what works with respect to ecosystem participation in the Business of One era, and this partnership triad appears to have many of the emerging bases covered. Figure 1 outlines the way in which TBR segments services portfolio options in one of its core market landscape constructs. TBR segments services into several different components, and it is through this kind of analysis that the power of the EY, Microsoft and SAP relationships truly come to life.

At the top of the triangle (A) sits the advisory-led services, where EY has competed successfully for decades. Here is where board and C-Suite objectives get clarified and then codified for execution by the IT practitioners in the front-office (C), middle-office (T) and back-office (B) layers. While both SAP and Microsoft have some advisory offerings, EY has the account credibility and existing relationships with the C-Suite, especially with the CFO through the company’s audit and tax services. In this way, EY can pull SAP and Microsoft into accounts where they have previously not had much visibility.

The front- and back-office technology segments are where Microsoft and SAP, respectively, have strong brand credentials. Microsoft has essentially owned the business productivity space for decades through Microsoft Office and has done an excellent job pivoting that business over from license to subscription software in the move to Office 365. SAP, likewise, has been a long-term premier provider of the core back-office systems of record now being migrated to the cloud as adoption there accelerates.

Lastly, and most importantly, is the middle-office integration layer, where the power of the partnership will bear the most aggregate benefit, as each participant has valuable domain knowledge to contribute. SAP has tight rules and policy guidelines by industry, Microsoft has the platform and tool sets to rival any competing cloud platform through Azure, and EY has the skills in translating business objectives into IT policies and rules for process optimization. The end result for enterprise customers is a faster, more economical and more agile use of IT for digital transformation.

The assessment by no means says that collectively EY, Microsoft and SAP will become Business of One de facto standards, but it does suggest these three working together in major accounts will give many of their competitors pause.

Intelligent use of artificial intelligence: A tech provider’s guide to automation success

The enterprise automation market opportunity is nearing a tipping point where proof-of-concept tests using adaptive, emerging technologies are hardening and scaling. The gap increasingly widens between leaders and laggards, with leaders now moving from obvious cost take out initiatives into creative destruction pilots for new revenue sources in adjacent markets. Amazon (Nasdaq: AMZN), for example, has been throwing knockout punches against traditional brick-and-mortar firms and is now taking aim at legacy grocers with its Whole Foods acquisition, which moves the company into adjacent markets. As little as one-tenth of data center personnel are required to monitor and maintain enterprise compute instances as more and more compute provisioning becomes abstracted and automated to create building blocks on the way to utility computing, a concept first raised before the turn of the century. Like it or not, we are on the way to Skynet.

By Executive Analysts Geoff Woollacott and Stephen Davidson