Efficient digital transformation. The rationalisation of technological needs.
“We are all contingent, but you are necessary.” The technological element, like the mayor created by unrepeatable film director Cuerda, has become part of our social essence. It is present in our relationships, it is indispensable in our professional and personal environments, it even conditions the collective identity of different generations. With that background, it is fundamental to understand how the players involved in the technology market adapt their strategies to the present and future reality and can even influence it.
The recent past and the present moment have confirmed we have to live with uncertainty. The pandemic disruption generated such a massive convulsion that sped up technology adoption dramatically and by necessity. From an individual point of view, even the least digitally inclined users were forced to evolve. In the corporate field, less mature sectors in the internalisation of technological transformation understood its usefulness and the more advanced ones increased their commit to dynamise ongoing processes. This boom generated a revaluation of some of the big global technology companies that increased their investment and value in a probably unexpected way.
The year 2022, however, has proved to be a year of sharp correction of this expansion. The macroeconomic backdrop remains uncertain. The war in Ukraine, high inflation and the threat of recession are coupled with systemic supply-side difficulties. The closure of the post-pandemic cycle has also brought a reorientation of needs that have contributed to a sharp depreciation of the big technology players and, consequently, staffing adjustments and changes in strategy. If we observe, for example, the approach of the three main public cloud providers (Microsoft Azure, AWS and Google Cloud) we confirm that they are reinforcing their commitment to the offshoring of infrastructures with the development of regions in new locations, their development with a strong commitment to minimising their environmental impact and the implementation of new security tools and policies that guarantee the safekeeping of information. The continuous expansion of their services and solutions portfolio -beyond providing the infrastructure- makes them a reference in this field for customers and integrators. The new regions remove barriers in the decision-making processes that used to be based on the location of data in other continents or the (improvable) performance of communications.
This recent scenario has specifically affected software companies with the longest history in the market which still have a significant base installed on on-premise infrastructures. The mimetic behaviour of the market has contributed to the generalised loss of stock market value, and this has been compounded by the growing concern about customers’ evolution towards the Cloud, reinforced by the new capabilities of hyperscalers. In this case, many of these organisations have long since embarked on a path that is now gaining inevitable momentum: marketing their product as SaaS or PaaS, offering the user to pay for what they use rather than for what they have. Some of these companies have recently decided to develop merge or acquisition policies with the aim of gaining in competitiveness through the breadth of offerings. It is the case with Citrix and Tibco or, more recently, Qlik and Talend.
The scenario that makes up the current technological spectrum is completed by the emergence of new niche providers with a high degree of specialisation in one type of functionality or solution. Sometimes, even focused on a specific field of a business and/or industry. This makes sense in a market where the bandwidth in the offer of solutions rewards specific functionalities as an added value: matters such as user experience, time to market or more aggressive pricing models are usually decisive in their implementation.
Against this backdrop, what can be expected from the perspective of companies providing technology services and solutions? The evolution of this segment of the ICT market has been more constant both globally and in local terms. On a path of sustained growth, the year 22 in Spain ended as a good period, surpassing by half a point the global growth rate, estimated by IDC at 5.7% compared to the previous year. The expectation in the short and medium term is that this increase in investment will moderate, but always linked to the growth path.
If we analyse what motivates customers to invest in digitisation services today, we find different but many times, also complementary objectives. The main driver of current decision-making processes is the search for a short-term return. Efficiency is an asset that is revalued at a time when budget is available and presumably not for long. The recent past with – perhaps – an overly generic and grandiloquent expectation has established a bias of distrust that invites corporate technology asset managers to identify projects of manageable scope and almost unquestionable utility. This, far from being bad news, guarantees that service companies which know the business and suggest reliable technological solutions, continue finding opportunities.
Tactics comes after a decade of settling into grand strategic approaches to transformation. With the technology roadmap in place, organisations pursue different objectives that fit perfectly with the idiosyncrasies of a much more surgical action plan. One of the most repeated ones is the rationalisation of the use of tools based not only on the simplification of the architecture but also on automation and use-based licensing models. The gradual implementation of governed environments and the application of integration and continuous development methodologies allow to democratise the use of tools, increasing security levels and improving their effectiveness. Users gain in productivity with automatic process planning, with the re-use of already developed elements and by speeding up access to information. Most of these projects no longer have a necessarily cross-cutting component and can be developed with incremental scopes defining tangible quick wins for decision-makers and sponsors.
In order to strengthen this materialisation of value focused on business departments, we find another essential component: adaptation. The development of solutions that are increasingly tailored to a specific need helps show their use and calculate their return. Service companies that show their consultative ability in translating the business requirement, their knowledge of different technology options and their versatility in execution will gain the trust of customers and remain relevant in the market. They are and will be as necessary interpreters as the technological Pangaea they rely on, providing consistency and continuity to the corporations that hire them and helping vendors optimise their product.
This is how we understand it at Innova-tsn, where for almost twenty years we have been characterised by understanding the possibilities offered by the growing value of information in a constantly evolving environment. Despite our growth, we have acquired enough flexibility to face the new challenges the market poses us and the agility to learn from the new capabilities technology provides us with. Our history and current size gives us the experience and potential required to take on major projects, and our customer focus makes us a reliable partner to build long-term relationships with.”.