At the start of the pandemic, most companies paused their most demanding digital transformation efforts while they accelerated adoption of cloud services, increased security, and established remote work scenarios.
Since then, many of these companies have restarted their strategic projects, recognizing that they need to evolve to remain competitive. But the virus has created at least one significant side effect that will impact any digital transformation rollout: Who will do the work?
Knowledge gaps caused by employee burnout, disillusionment and job turnover pose obstacles to much-needed digital advancement. Add to this a malfunctioning supply chain and the rush to cloud services from even the slowest to adopt companies, and you get it the current boom is for Digital transformation technology service providerIT consulting and VARs.
However, the exact mix of skills that service providers will provide has yet to be determined. The shift towards strategic, transformative projects has increased the demand for IT professionals with expertise. Anyone who has a job has a job up to their necks. The enterprise architect (EA) might be able to bring an overarching perspective to these ambitious IT initiatives, but some industry observers doubt that customers will use such individuals.
Bright days for consultants, VARs and digital transformation service providers
Just a few years ago, companies might have viewed their partners differently – as mere service providers. All is well as long as they meet service level agreements, said Gordon Barnett, an analyst at Forrester Research. Now her role has expanded.
“Now it’s about a partner model with shared responsibility, especially as we move to leaner organizations,” Barnett said. The work has expanded from pre-deployment strategy to migration and adoption and continues through to the operational phase.
Elizabeth Costerian
In fact, business is booming at Continental Resources (ConRes), an MSP based in Bedford, Massachusetts. According to Elizabeth Costerisan, director of strategy and services at ConRes, the MSP would have had its best year ever – had it not been for supply chain issues.
“Managed services, professional services and CX groups have seen revenue and profitability go through the roof,” she said. “Sales increased by 230%.”
And Costerisan herself has observed her company becoming more integrated into a client’s daily operations. “You can’t retain talent and you can’t use tools,” she said. “They trust us. We know all the pitfalls.”
People with infrastructure experience are perhaps the hardest skills to find in the open job market, and this shortage has only worsened during the pandemic.
“No one wants to be the Cisco switch person, the NetApp storage person or the F5 firewall person,” said Rob Strechay, senior analyst at ESG, an analyst firm in Newton, Massachusetts. ESG is a division of TechTarget.
VARs and other IT consultants can maintain a group of people who can be deployed across different organizations on a temporary basis, Strechay added. “You can keep the infrastructure running as companies move up the stack to the app and integration layers to bring these things together.”
Spending on technology service providers has increased significantly
Forrester, the Cambridge, Massachusetts-based market research firm, recently released its global tech outlook and expects tech outsourcing and consulting to grow 8% in 2022. The report also states that IT services will grow by 6.8% this year. . This growth spurt is significantly faster than pre-pandemic levels and is due to both digital and cloud investments as well as the momentum of 2021, the company said.
Forrester also surveyed 1,550 technology services companies and decision-makers in 2021 about their use of technology service providers, management consultancies and vendor services and business process outsourcers in 2022.
According to Forrester, 76% of these companies will use technology service providers this year. Around 71% of companies pay for the expertise of a management consultancy. Another 70% said they would use the professional services of a VAR and 65% said they would hire a business process outsourcer. Forrester does not track year-over-year comparisons because the survey does not always include the same companies.
Additionally, some of the largest IT consulting firms reported exceeding last year’s growth targets, largely due to spending by technology services providers and general outsourcing.
Tata Consulting Services reported 14.4% year-on-year growth in the third quarter. The management consulting firm specifically cited consulting and service integration with a focus on digital transformation and accelerating the adoption of cloud platform services.
Accenture’s Q1 results ending in November showed a 27% increase in revenue from the same period last year. The company reported a 30% increase in new bookings compared to the same quarter last year.
Infosys reported that its digital business grew 34% year-on-year in the fourth quarter, accounting for 51.5% of its total business.
Capgemeni Group said its digital and cloud services recorded 14.6% growth in fiscal 2021, driven primarily by major digital transformation projects.
The resurgent EA?
If outsourcing for strategic tasks is so widespread, could there be no outsourcing? Role for the EA? That’s not so clear. In recent years, as companies focused their attention on tactical tasks, the role of the EA diminished. Whether the pendulum swings back or not is debatable.
As companies become interested in large-scale change again, they need employees who can see the entire company. Mark Hanson, chief architect at Ahead, a Chicago-based cloud consulting firm, does some internal development for external services and interfaces with cloud customers. According to Hanson, the EA’s role is still focused on developing strategies and aligning business and technology.
in a world where there are many dynamic changes, [enterprise architects] need a good friend and partner.
Mark HansonChief Architect, Ahead
“There’s a lot under the hood,” he said. “Road maps, strategic direction. And in a world where there are many dynamic changes, [EAs] need a good friend and partner.
Jason Baragry plays a similar role as chief enterprise architect, but at Ardoq, a Norwegian company that makes a data collection tool for enterprise architects. Baragry’s job is to research the customer base, study trends, advise and ultimately feed information back to the product development team.
People need information about what their colleagues are doing, and to achieve this they need tools that provide information in a business context so that non-IT practitioners can use it. “The trend I see is to democratize decision-making,” he said.
This could result in a tool being able to be used by a business user, but the information is then passed on to an IT consultant.
ConRes’ Costerisan said that while it depends on the vertical market, she primarily sees subject matter experts leading technology areas such as network, security or cloud.
“You need tools that create visibility,” she said. “But having the position of architect is no longer real.”
