the past, present and future of it business models: what you don’t know will hurt you

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

Technology Business Research Webinar Series Oct. 23, 2013

TBR’s view on the state of the industry

TBR

TBR Webinar Series | 10.23.14 | www.tbri.com | ©2014 Technology Business Research Inc.

TBR’s View on the State of the Industry

Geoff Woollacott

Practice Manager/Principal Analyst

Software and BI

Email: [email protected]

Twitter: @gwoollacott

2

TBR


3.0


The market disruption forces established vendors to defend on the left and go on offense on the right to maintain relevance

3

Ominously, incumbency is at a low point as end customers take their time evaluating cloud as they recognize the fundamental shifts in skills required to manage the new data fabric

CPU Storage

Private DC2LOB “DC2L”

Virtual Desktop Infrastructure

Public SP2LOB “SP2L”

Storage CPU

Analytics

Data Apps

H Y B R I D

Software Defined “X”

TBR

TBR Webinar Series | 10.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. 4

Different vendors and analyst houses deploy varied terminology to explain the industry disruption

… 2.0 and 3.0, borrowed from software revision levels, provides a simple shorthand


Traditional on-premises data center construction constrained by hardware

Cloud-delivered solutions unleashed by analytics

“To be clear, the IT market is going through the biggest, most disruptive and yet most opportunistic transition in its 60-plus-year history. At this particular time, the pace of this transition is accelerating.”

— EMC CEO Joe Tucci in the 4Q13 earnings call opening remarks

Ruled by “HAL’s Law”

Ruled by “Moore’s Law”

“… This time in the industry is different, right? With these three shifts all going on at once, so it is unprecedented change which then leads to your question.”

— IBM CEO Ginni Rometty in the 3Q14 earnings call Q&A

TBR


This graphic summed up accurately the IT industry for decades — but not anymore

5


In this interconnected system in which investment limited business data collection and manipulation, IT history revolved around engineering solutions to bypass bottlenecks

CPU Storage

2.0 I/O

TBR


Virtualization and cloud increase the velocity of innovation from Moore’s Law speed to HAL’s Law speed

6


CPU Storage

Analytics

Data Apps

I/O

At this point the bridge between the two platforms remains tenuous, requiring selling motions to defend the 2.0 environment and to maintain and grow presence in the 3.0 environment.

3.0 2.0

TBR


The old IT on-premises data center becomes a private cloud, with the added complexity of LOB demands for BYOD flexibility

7


BYOD shifts security innovation to the network, which compounds when the VDI components have access to other data sets and clouds not within business IT control.

CPU Storage



Analytics

Data Apps

3.0

TBR


BYOD ties all clouds to the enterprise, while elastic infrastructure opens up partner opportunities and chokes past business models

8


BYOD, security and privacy impede adoption; a strategy of “own the base, rent the variable” for “bursty” applications encourages adoption.

CPU Storage



Analytics

Data Apps

H Y B R I D


Storage CPU

3.0

TBR


While LOB users access the virtualized 2.0 platform, they value 3.0-platform outcomes

9


3.0 platform success will flow from outcomes-led marketing to discrete LOB personas, with IT being more of an obstacle to overcome with speeds and feeds rather than the entrée to the LOB.

CPU Storage



Analytics

Data Apps

H Y B R I D


Storage CPU

3.0

TBR


The biggest impediment to 2.0 erosion remains the orchestration layer; once solved and commercialized, volatility will skyrocket

10


Virtually all technology vendors struggle to monitor shifting IT consumption patterns tied to rising LOB influence over IT and increasing demand for improved business outcomes from IT.

CPU Storage




Storage CPU

Analytics

Data Apps

H Y B R I D

3.0 Software Defined “X”

TBR


Software Defined “X” 3.0

Storage


Analytics

Data Apps

Messaging must flank sales still targeting IT buyers and create demand with LOB buyers by messaging outcomes rather than speeds and feeds

11


For decades IBM relied on industry marketing to convince C-level management to recommend IBM; now the company is shifting to industry-specific persona marketing by CxO buyer

CPU



Storage CPU

H Y B R I D

Message

TBR



Companies must reassure traditional sales targets and show them how to protect their existing hardware investments during the shift

12


Selling to LOB buyers can put vendors in competition with IT departments for LOB IT spending, requiring firms to reassure skittish IT administrators



Storage CPU

H Y B R I D

Storage


Analytics

Data Apps

Data Center Sell

CPU

TBR



Storage

SP or channel selling has to show product flexibility and breadth while also showing the LOB market opportunity for the partner

13


The market message stays the same, but the tactics to win the LOB business shift to the channel with similar selling techniques deployed by the SP sales team.

CPU



H Y B R I D Virtual Desktop

Infrastructure

Analytics

Data Apps

Service Provider Sell

Storage CPU

TBR


The shifting dynamics of the data fabric cascade through virtually all aspects of the industry as we know it, representing fundamental change

TBR’s View on the State of the Industry: Blue Suit to Add-to-cart Hypothesis

Is this a vendor path forward in the disruption or a customer escape route?

Prospect, qualify, close Intercept on the Web, educate, close

Sell FUD to IT; assure LOBs Sell outcomes to LOBs; assure IT

Speak speeds and feeds Speak business

Heavy reliance on packaged products Automated IP driving services margins

Sell strategy, then install, then results Access data, show value, sell service

Sell service by labor hours times rates Sell service by KPI-measured results

Blue-suit selling or analog dollars

Add-to-cart selling or digital pennies

Partner to cut sales expense Partner to accelerate IP development

TBR


Questions?


TBR


Appendix


TBR


The critical messages by segment provide predictive indicators on the program attributes each segment values

TBR’s View on the State of the Industry: Evolving Channel Value Propositions

Clear Swim Lanes Shared Risk

Transition Advice Freemium Tools/Training

Channel Access Matchmaking

Freemium Tools/Training Funding

Outcomes Time to Value/ROI

Capex/Opex Flexibility

Training IP Access App Dev Tools Speed

Speed IP Access App Dev Tools Community

Speed Simple Portal Navigation App Migration Automation

Legacy Partner

Green Field

End User

Business Model

Persona

Suits Sandals

TBR


The critical messages by segment provide predictive indicators on the program attributes each segment values (cont.)

TBR’s View on the State of the Industry: Evolving Channel Value Propositions

Legacy Partner

Green Field

End User

Business Model

Persona

“We need you to provide sales coverage, and we will establish clear account swim

lanes with our direct staff.”

“We’ll certify your applications, sell them through our sales channel and facilitate

partnering with other channel members.”

“We will protect your investments and reduce your overall IT expense and time

to value.”

“We will train to maintain our hardware; we will offer discounts on the app dev tools for software development.”

“We will provide freemium tools and platforms to facilitate writing apps to our open platforms.”

“We will train you on the emerging technologies and how to migrate your legacy applications to them.”

Suits Sandals

TBR


TBR research around buyer types shows end customers following three distinct patterns of on-premises and cloud deployments

Three Categories of Buyers

1. Buy Outcomes

2. Build Results

3. Own & Control

Purchase business outcomes — not technology

Build solutions from platforms — but do not invest in underlying technology

Build solutions from basic technology

TBR’s View on the State of the Industry: Buyer Types

19

TBR


Three Categories of Buyers — Conversing with outcome-based buyers requires transformation

Listening to customer wants will determine the right sales message

TBR’s View on the State of the Industry: Buyer Types

1. Buy Outcomes

2. Build Results

3. Own & Control

“I want my sales team to be more effective.”

“I want to build a mobile app with location services.”

“I want control of a data center, flexible infrastructure and a custom application.”

20

TBR


MNCs and Indian 5 firms will take different routes to services expansion, and the routes parallel how employees will advance as well

Indian 5/PM Path

TBR’s View on the State of the Industry: Global Delivery Expansion Routes by Vendor Category

MNC/Thought Leader Path M&A Route/ Burn Out

Logical Expansion

Existing Process New Process

Challenge Area

Skills/ Portfolio

Logical Expansion

New Thought

Existing Thought

TBR

Indian 5 Process Leverage

MN

C T

ho

ugh

t Le

ade

rsh

ip

Implications

• Indian 5 leverage flows from process innovation.

• MNCs’ leverage flows from thought leadership.

• Employees and business partners have similar strengths and weaknesses by process.

• But, innovation only from strength relies too heavily on “playing offense.”

21

TBR


Logical Expansion


Challenge Area

Skills/ Portfolio

Logical Expansion

New Thought

Existing Thought

“Defense”

Logical Expansion


Challenge Area

Skills/ Portfolio

Logical Expansion

New Thought

Existing Thought

TBR

“Offense”

Indian 5/PM Path MNC/Thought Leader Path M&A Route/ Burn Out

MNCs and Indian 5 firms will therefore have to play defense against competitors’ attacks on their weaknesses

TBR’s View on the State of the Industry: Global Delivery Expansion Routes by Vendor Category

22

TBR


TBR’s View on the State of the Industry: Global Delivery Price Elasticity and Inelasticity Drivers

Margin protection will come from the process excellence where price elasticity rules and from IP differentiation where price inelasticity rules

Pure Price Elasticity or Commodity

Pu

re In

ela

stic

ity

TBR

Price Elasticity Parallel

Pure Price Elasticity Pure Price Inelasticity Commoditization Arc

Implications

What will be the rate of disruption, consolidation and job loss in the

industry with services commoditization capable of

happening “a million times faster” over the next 20 years?

23

TBR


Commodity

Bleeding Edge

Dated Process

Untested Process

Untested Thinking

Dated Thinking

TBR

Hold the Center Square

Proven Thinking

Proven Process

Land and Expand

Implications

• Elastic infrastructure enables smaller enterprise to innovate.

• The simpler tasks allow IT vendors to test concepts before scaling them to large enterprise.

• Holding the “Center Square” allows for greater nimbleness.

IT innovation unleashed by the cloud will shift to the midmarket space to establish sound POC tests and reference accounts

TBR’s View on the State of the Industry: Innovation Shifts

24

TBR


Geoff Woollacott

Practice Manager/Principal Analyst

Software and BI

Email: [email protected]

Twitter: @gwoollacott Telephone: 603.929.1166

James McIlroy Vice President of Sales Email: [email protected]

Telephone: 603.929.1166

25

TBR’s View on the State of the Industry: Webinar Contact Information

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https://twitter.com/TBRinc

http://www.slideshare.net/TBR_Market_Insight

http://www.youtube.com/user/TBRIChannel

https://www.linkedin.com/company/technology-business-research





TBR Quarterly Industry Coverage Computing, Storage & Devices

Software

Professional IT Services

Networking & Mobility

12 Vendors Covered

12 Vendors Covered

CA Technologies

Citrix*

Dell Software*

HP Software

IBM Software

Microsoft

Oracle

Red Hat

SAP SE

SAS Institute*

Symantec

VMware

Accenture

Atos

Bain & Co.*

Boston Consulting Group*

Capgemini

CGI*

Cisco Services

Cognizant

CSC

Dell Services

Deloitte Consulting*

EMC Services*

Fujitsu

HCL Technologies

HP Services

IBM Global Services

Infosys

McKinsey & Co.*

PwC*

T-Systems

Tata Consultancy Services

Unisys

Wipro IT Services

Xerox

Public Sector IT Services

10 Vendors Covered

Booz Allen Hamilton*

CACI International*

General Dynamics IS&T*

L-3 Communications*

Leidos*

Lockheed Martin IS&GS*

ManTech*

Northrop Grumman IS&TS*

Raytheon Intelligence, Information & Services*

SAIC*

Healthcare IT Services

5 Vendors Covered

Accenture HITS*

CSC HITS*

Dell HITS*

HP HITS*

IBM HITS*

12 Vendors Covered

Alcatel-Lucent

Cisco Systems

Ericsson

Google

Hewlett-Packard Telecom & Mobility*

Huawei*

IBM Telecom & Mobility*

Juniper Networks

Microsoft Telecom & Mobility*

Nokia Networks

Samsung Networks*

ZTE*

5 Enterprise Operators Covered

AT&T Business Solutions*

BT Global Services*

Orange Business Services*

Verizon Enterprise Solutions*

Vodafone Enterprise Services*

6 Operators Covered

AT&T T-Mobile USA

Comcast* Time Warner Cable*

Sprint Verizon

Acer*

Apple

Asus*

Dell

EMC

Fujitsu

Hewlett-Packard

IBM

Intel

Lenovo Group

NetApp

Samsung Devices*

Accenture Cloud*

Amazon Web Services

Atos Cloud*

Capgemini Cloud*

Cognizant Cloud*

CSC Cloud*

Dell Cloud*

Deloitte Cloud*

Fujitsu Cloud*

Google Cloud*

HP Cloud*

IBM Cloud*

Infosys Cloud*

Microsoft Cloud*

Oracle Cloud*

Rackspace*

Salesforce.com

SAP Cloud*

ServiceNow*

TCS Cloud*

Verizon Cloud*

Wipro Cloud*

Workday

Cloud 23 Vendors Covered

*Semiannual publication **Annual publication www.tbri.com ©2014 Technology Business Research, Inc.

23 Vendors Covered

TBR

Corporate IT Buying Behavior & Satisfaction Studies Desktops Services & Support

Notebooks x86-based Servers

SourceIT SourceIT Business Applications** 4 Segment Views Covered

SourceIT Consulting and Systems Integration for Business Applications**

4 Segment Views Covered

TBR Quarterly Industry Benchmark and Forecasting Coverage

TBR

www.tbri.com ©2014 Technology Business Research, Inc.

Software

Computing Devices Benchmark — Benchmark XLS Data

19 Vendors Covered

Data Center Benchmark — Benchmark XLS Data

17 Vendors Covered

Data Center Addressable Market Forecast — XLS Data

Devices Addressable Market Forecast — XLS Data

Carrier Cloud Benchmark* — Benchmark XLS Data

13 Vendors Covered

Public Cloud Benchmark — Benchmark XLS Data

50 Vendors Covered

Managed Private & Professional Services Cloud Benchmark*

— Benchmark XLS Data 29 Vendors Covered

Cloud Components Benchmark* — Benchmark XLS Data

10 Vendors Covered

Cloud Addressable Market Forecast — XLS Data

IT Services Vendor Benchmark — Benchmark XLS Data

30 Vendors Covered

Public Sector IT Services Benchmark — Benchmark XLS Data

20 Vendors Covered

Healthcare IT Services Benchmark — Benchmark XLS Data

19 Vendors Covered

Management Consulting Benchmark* — Benchmark XLS Data 15 Vendors Covered

Global Delivery Benchmark* — Benchmark XLS Data 14 Vendors Covered

Business Intelligence Services Vendor Benchmark* — Benchmark XLS Data

IT Services Addressable Market Forecast — XLS Data

Telecom Vendor Telecom Vendor Benchmark


Telecom Infrastructure Services Benchmark — Benchmark XLS Data

40 Vendors Covered

Expanded Telecom Infrastructure Services Benchmark — Benchmark XLS Data

40 Vendors Covered

Telecom Infrastructure Services Margin Benchmark — Benchmark XLS Data

5 Vendors Covered

Telecom Infrastructure Services Global Addressable Market Forecast

— XLS Data

Telecom Infrastructure Services North America Addressable Market Forecast

— XLS Data

Enterprise Networking Enterprise Network Vendor Benchmark*


Enterprise Networking Addressable Market Forecast — XLS Data

Network Infrastructure Services Addressable Market Forecast

— XLS Data

Network Infrastructure Services Benchmark — Benchmark XLS Data

12 Vendors Covered

Operator U.S. & Canada Mobile Operator Benchmark


Software Vendor Benchmark — Benchmark XLS Data

30 Vendors Covered

Business Intelligence Software Vendor Benchmark* — Benchmark XLS Data

31 Vendors Covered

Business Intelligence Addressable Market Forecast — XLS Data

Cloud

Networking & Mobility Professional IT Services Computing, Storage & Devices

*Semiannual publication

Customer Research Program Business Intelligence Professional Services Customer Research*

Business Intelligence Software Customer Research*

Cloud Brokerage Customer Research (4Q14)

Cloud IT vs. LOB Involvement Customer Research (2Q14)

Cloud Professional Services Customer Research*

Hybrid Cloud Customer Research*

Private Cloud Customer Research*

TBR

T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

About TBR 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, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. To learn how our analysts can address your unique business needs, please visit our website or contact us today.

Contact Us

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