Digital innovation shift shakes up IT budgets

New research shows a change in attitudes toward IT investments, with business looking to go beyond modernized infrastructure to digital innovation; other IT channel news.

IT service firms expect a shift in technology budgets and customer demand as businesses transition from IT modernization to digital innovation.

A raft of reports and studies published this week point to a changing market. As organizations gear up for expected post-pandemic economic growth, they are widening the scope of digital transformation. Whereas back-office efficiency and cost-cutting drove earlier investments, organizations have begun focusing on competitive posture, customer experience and the digital workplace.

That's particularly the case for companies further along the digital adoption curve. "Higher maturity companies are looking to innovate how they go to market, how they interact with customers and how work gets done," said Rich Nanda, principal at Deloitte Consulting and co-author of the company's digital maturity study, based on a survey of 2,860 executives involved in digital transformation initiatives.

Deloitte's survey found 69% of respondents plan to boost their digital transformation budgets in light of the pandemic. Those budgets are expected to increase 15% in the next 12 months compared with the previous 12 months. The strategy behind that spending reflects a shift from adopting technology to building upon prior investments for competitive differentiation.

"Cloud computing, automation, and artificial intelligence will not provide meaningful differentiation in themselves," Deloitte's study noted. "Instead, they will be the new platform on which companies will compete."

Services providers like Deloitte are evolving to match customer demand for cloud-native development and other offerings that can provide an edge, Nanda said. IT services firms, overall, are investing in cloud development skills.

More evidence for growth-minded digital innovation comes from Aptum, a hybrid multi-cloud MSP. The third installment of the company's Cloud Impact Study noted 80% of the 400 senior IT professionals surveyed "see success in utilizing cloud services to unlock greater business profitability." The company said the cloud's agility helps organizations scale their services and launch new offerings.

In addition, digital transformation became the top business initiative in a survey conducted by Acorio, a ServiceNow consultancy and NTT Data company. The ServiceNow Insight and Vision report, which polled 492 respondents who are using or have used ServiceNow, said digital transformation grew 20% year over year, overtaking service management as the No. 1 initiative.

Digital transformation's ascendency has influenced Acorio's approach to the market. Customers' digital transformation pursuit, and ServiceNow's role in that movement, "certainly helps frame our advisory methodology going forward -- though we have always had that eye on the horizon," Acorio senior vice president Ellen Daley said.

Higher maturity companies are looking to innovate how they go to market, how they interact with customers and how work gets done.
Rich NandaPrincipal, Deloitte Consulting

In a bid to support sales prospecting, Acorio plans to release a thought leadership series on how digital transformation initiatives affect a customer's Now platform strategy, she added.

Not every organization, however, is ready to ramp up their digital objectives. Companies with less digital maturity are still migrating data and infrastructure to the cloud, Nanda said. The consequences for digital stragglers could prove dire, according to Deloitte's survey: About two-thirds of commercial respondents believed organizations that fail to digitize in the next five years will collapse.

Those companies already trail digital leaders by a growing margin. Accenture earlier this year reported the tech gap widened during the pandemic, with digital leaders expanding their advantage from two times faster growth compared with digital laggards to five times faster growth. A new Accenture study, which incorporates that finding, also discovered that digital leaders "focus on a broader value agenda," with more companies in that category achieving goals in customer experience, employee experience and the expansion of access to advanced technology. Accenture polled 4,300 executives for its study.

A Forrester Research report published earlier this month corroborates the Accenture research. Companies with adaptive capabilities, which are characterized by a shift to digital business, grew at a rate of three times the industry average, according to Forrester's Q3 2020 North American Future Fit Technology Survey.

Enterprises trailing their peers remain in the game, however. Accenture's survey identified a group of "leapfroggers" growing at four times the rate of laggards. Leapfroggers have flipped their IT budgets to favor innovation spending over operations and maintenance, the professional services company noted.

Businesses playing catchup should work on core IT modernization while also keeping innovation in mind, Deloitte's Nanda said.

"If you are running on infrastructure that you created 20-plus years ago, you can't move at the speed of digital," he said. "So, all companies need to have a keen eye on the base level of modernization. In parallel, companies should be looking at, once that I have a base level of data and infrastructure in the cloud, 'What are the net-new things I need to build for customers and employees?'"

BitTitan acquires ServiceNow tool for MSPs

BitTitan, a Bellevue, Wash., company that focuses on MSP automation, has agreed to acquire Perspectium, a data synchronization-as-a-service platform for ServiceNow customers.

Such platforms can prove costly to deploy but are necessary for specialized customer environments, BitTitan CEO Geeman Yip said. Perspectium, however, offers "standard endpoint connectors and configurations" that let MSPs use the platform out of the box. MSPs can also use the platform to configure custom synchronizations that address complex customer environments, Yip added.

BitTitan plans to integrate Perspectium's technology with its product portfolio. "We absolutely see integration opportunities between Perspectium and the other BitTitan products," Yip said. He added that BitTitan plans to launch its first integration product later this year.

The Perspectium transaction is expected to close in 30 days.

Other news

Dell Technologies and Secureworks, a managed security services provider (MSSP) based in Atlanta, unveiled a managed detection and response (MDR) service. The service is available in North America through Dell ProManage and will roll out globally as a standalone service on May 10. The service uses Secureworks' Taegis XDR offering.

  • Upstack, a web platform that sells cloud services through cloud sales agents, acquired Cloudnexion, a technology and telecommunications consulting firm. The deal is the first of several the New York-based company plans to transact following its $50 million equity investment from Berkshire Partners earlier this month. Private equity partners are pouring investment dollars into cloud consulting services.
  • HCL Technologies, a IT services and consulting firm based in Noida, India, will incorporate IBM's Cloud Pak for Security into its Cybersecurity Fusion Center, which provides threat management services to clients globally. The IBM offering will serve as the foundation for a unified security platform that connects security teams, tools and processes across the threat lifecycle, according to IBM.
  • Most large enterprises lack a well-developed approach for data management, according to 2nd Watch, a cloud migration and managed cloud services provider based in Seattle. The company surveyed more than 150 cloud-focused IT professionals and found 70% of them don't have what they consider a mature data strategy.
  • Accenture and SAP will create offerings to help fully decarbonizing supply chains. The initiative will combine SAP technology with Accenture's Sustainability Services. Accenture is also working with Salesforce to assist customers with their sustainability objectives.
  • ManageEngine, the Austin, Texas-based IT management division of Zoho Corp., unveiled RMM Central, a remote monitoring and management offering for MSPs. The product provides network performance monitoring, automated IT security, centralized asset management and remote troubleshooting, according to the company.
  • Mission, a managed cloud services provider based in Los Angeles, partnered with Alert Logic, an MDR platform provider, to offer its Mission MDR service. Mission MDR is geared to AWS environments.
  • Also, in MDR, Data Defenders, a managed cybersecurity services firm based in Chicago, partnered with eSentire, an MDR services provider, to provide MDR services for the city of Aurora, Ill. A cybersecurity program is part of the city's Technology Strategic Plan.
  • Otava, a cloud solutions provider based in Ann Arbor, Mich., said it achieved VMware Cloud Verified status, which denotes companies that deliver VMware-based software-defined data center infrastructure as a service.
  • Softchoice, a multi-cloud MSP based in Toronto, launched a suite of offerings for deploying, migrating and managing cloud applications. Softchoice Cloud Management Services include cloud lifecycle services, cloud governance, cloud operations and cloud optimization. Cloud optimization includes a monitoring service that spans Microsoft Azure, AWS and Google Cloud.
  • D&H Distributing, a distributor based in Harrisburg, Pa., launched a Components and Gaming Business Unit. The business unit will encompass esports, PC gaming and integrated components for customized PCs and computing systems. Services include installation and presales/post-sales support from D&H's professional services and sales enablement teams.
  • Tanium, an endpoint management and security company based in Kirkland, Wash., has tapped Oracle Cloud Infrastructure to deliver its Tanium as a Service SaaS offering. The Oracle relationship is part of Tanium's multi-cloud approach to SaaS. Ryan Andorfer, vice president of cloud computing at Tanium, said Tanium as a Service provides channel partners an offering they can present to Tanium's and Oracle's shared prospects. In addition, the as-a-service offering gives MSPs "a solid foundation to build their businesses on top of," he said.

Executive appointments

  • Deepwatch, an MSSP based in Denver, named Carl Helle as its CRO. Helle's responsibilities include leading the sales and channel organization. Helle was previously senior vice president and CRO at BeyondTrust.
  • ITK Solutions Group, a digital transformation consultancy based in Beverly, Mass., appointed Brenden Smith as director of its Microsoft Power Platform practice.

Market Share is a news roundup published every Friday.

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