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PwC cloud report points to 'value gap'

Despite widespread enthusiasm for cloud computing, many organizations have yet to see a significant payoff from their investments, a PwC cloud study found; other news.

Cloud adoption has reached near ubiquity among enterprises, but more than half of them fall short of obtaining significant value from their investments.

A PwC cloud report published this week points to an incongruity between corporate enthusiasm for the technology and actual results. The professional service firm's research found 92% of the senior executives polled are "all in on the cloud" or have adopted cloud computing in many parts of their operations. However, 53% of the respondents acknowledged they had failed to realize substantial value from their cloud spend. PwC surveyed 524 U.S. executives including CIOs, CTOs and chief information security officers (CISOs). Most work for Fortune 1000 companies.

"This value gap that we have quantified really speaks to the market's need for assistance to drive sustained outcomes with cloud," said Jenny Koehler, U.S. deputy advisory lead at PwC.

Obstacles in the path of realizing cloud value include lack of integration with legacy systems and data, insufficient technical talent, governance challenges, and cybersecurity/privacy issues, according to the PwC cloud study.

In addition, organizations struggle to measure the effects of cloud adoption and often fail to conclusively attribute business outcomes to cloud use. Forty-nine percent of respondents cited an "inability to measure value" as a key barrier, the survey noted.

The difficulties in measuring the cloud's value could indicate a lack of alignment between cloud adoption and business strategy, Koehler said. An overly broad or abstract definition of value might also be at fault. If business leaders pursue general outcomes such as cost reduction or top-line growth, they will find it hard to "measure and attribute it to the act of something in the cloud," she said. Factors other than cloud computing could have influenced desired result.

Jenny KoehlerJenny Koehler

Value becomes easier to measure when linked to a more specific definition, Koehler noted. In manufacturing, for example, a business could focus on whether investing in the cloud to provide factory floor workers with better information resulted in higher throughput at a plant.

As businesses grapple with realizing cloud benefits, consultancies have an opening to help them with metrics. Upskilling enterprises to boost their "digital fluency" amid the cloud talent gap is another opportunity, Koehler said.

And while cloud value remains elusive to enterprises, there's cause for optimism, Koehler said. The survey revealed a higher level of cloud engagement among C-suite executives: More than half of the board members polled said they had responsibility for setting cloud strategy, while CFOs, COOs, chief revenue officers and chief human resource officers also showed significant involvement.

"You've got the C-suite saying, 'We are responsible for this,'" Koehler said. "Now you can have a business conversation."

Tech services bounce back

IT and consulting services continued to rebound in the first quarter of 2021, growing 3.3% quarter-over-quarter, according to the U.S. Census Bureau.

That sector generated $257.2 billion in revenue for the quarter, up from $248.9 million in Q4 2020. Hosting and data processing services experienced the highest quarter-over-quarter growth at 5.7%, followed by management and technical consulting at 4.9%. Computer systems design and services, a broad area that includes systems integration, operations and custom programming, saw 1.4% revenue growth. Those numbers are based on an analysis of the Census Bureau's quarterly selected services estimates, which it published June 10.

Those subsectors all declined during the COVID-19 pandemic. Consulting, which has traditionally relied on face-to-face meetings, plummeted 12.8% in Q2 2020 compared with the previous quarter. Computer systems design and services dropped 5.7%, while hosting declined 1.5% during that period.

In Q1 2021, IT and consulting services outpaced the broader services industry, which grew 2.4% to $4.2 trillion.

Accenture agrees to acquire Umlaut

Accenture said its pending acquisition of Umlaut, a consultancy based in Germany, will help it meet an urgent need to digitalize customers' engineering and manufacturing functions.

The transaction, expected to close by the end of 2021, would contribute more than 4,200 engineers and consultants to Accenture's Industry X services, which focus on industrial digital transformation. Umlaut, which provides engineering consulting and services, focuses on industries such as automotive, aerospace and defense, and machinery. Its services include strategy, process design and deployment, manufacturing and supply chain management, and software development.

Nigel StaceyNigel Stacey

COVID-19 accelerated the demand for digital technologies, including cloud, edge computing, AI, 5G, digital twins, digital threads and robotics, said Nigel Stacey, senior managing director at Accenture and global lead for Industry X. The pandemic revealed gaps across engineering and manufacturing when companies struggled to run production lines or failed to respond to multiple changes in consumer buying patterns, he noted.

"Digital technology would help those companies make those shifts much quicker," Stacey said.

In addition, manufacturers in industries such as automotive find their physical products have become more digital. "Software is now defining the product," he noted. That recognition marks a significant change for companies' R&D, engineering and product development groups.

The push for sustainability, meanwhile, also drives the need to digitize engineering and manufacturing. Consumers and regulators want businesses manufacturing products in a more sustainable way, Stacey said.

Deloitte, OSF Digital snap up more companies

In other transactions this week, Deloitte acquired Terbium Labs, a digital risk protection company based in Baltimore. Deloitte will incorporate Terbium Lab's offerings within Deloitte's cyber practice, specifically its Detect and Respond offering.

The deal marks Deloitte's third cybersecurity acquisition this year and the second in June. Deloitte purchased cloud security company CloudQuest earlier this month and threat hunting specialist Root9B in January.

Meanwhile, OSF Digital, a digital transformation services provider based in Quebec City, purchased Werise, a Salesforce consultancy based in Brazil. The deal boosts OSF Digital's Salesforce Cloud offerings in Latin America, according to the company.

In May, OSF Digital acquired Adept Group, a Salesforce partner in New Zealand. In June, the firm purchased Relation1, a Salesforce partner in Canada.

Partner roster update

  • D&H Distributing, a distributor based in Harrisburg, Pa., added Password Boss' password management offerings to its product lineup for MSPs. Password Boss joins other products within D&H's MSP Cloud Cluster. Those offerings include products from Acronis, Axcient, CharTec, ConnectWise, Liongard, SonicWall and Sophos. MSP Cloud Clusters have been part of D&H's cloud strategy since 2019.
  • Involta, a hybrid IT and cloud services company based in Cedar Rapids, Iowa, partnered with Radware to offer its distributed denial-of-service (DDoS) security to customers. The addition of Radware DDoS Protection Service expands Involta's ability to meet security requirements in healthcare, manufacturing and financial services, according to Involta.
  • Claro Enterprise Solutions, a technology services company based in Miramar, Fla., said it attained AWS Direct Connect Partner certification. The certification lets Claro Enterprise Solutions offer customers access to secure Multiprotocol Label Switching connections through AWS cloud services, the company said.
  • Applied Insight, an IT services firm based in Tysons, Va., that works with federal government customers, said it earned AWS' Managed Service Provider validation.
  • Climb Channel Solutions, an Eatontown, N.J., distributor and subsidiary of Wayside Technology Group, added Datadobi's unstructured data management software to its GSA Schedule 70 contract. The move lets Datadobi resellers use the GSA schedule to pursue public sector business.

Channel program launches and updates

  • FourQ, a Westport, Conn., company that offers intercompany financial management software, launched a partner program to promote and develop offerings in tax, billing, vendor payments and financial transformation. The program spans four channels: technology partners; managed service and business process outsourcing partners; consulting and professional services partners; and referral partners.
  • CRM provider AmoCRM, based in San Francisco, has begun hosting live events with its partners on its AmoCRM Partners Instagram page. The company said it will invite partners to speak at its conferences on sales, marketing and entrepreneurship. AmoCRM's partner program, launched in in 2019, offers a 35% sales commission that can grow up to 50% based on sales volume. Program participants can also access free training, priority support and an Enterprise AmoCRM account for two months once they become listed in the program's partner directory. Each time a partner makes a sale, its account subscription is extended for six months, the vendor said.
  • Avanan, a New York cloud email and collaboration security vendor, rolled out its global channel partner program for VARs, MSPs and managed security service providers. The program is led by Michael Lyons, vice president of global channels.

Other news

  • Enterprises should build and manage an ecosystem of co-innovation partners that include cloud and software platform vendors and IT services providers, according to a Forrester Research report published in June. Service providers are becoming "value orchestrators" in these emerging ecosystems, according to Forrester. "Future fit" businesses tap "consultancies, agencies and technology service providers that can design business architectures, compose solutions and orchestrate the value available in the cloud," the market researcher noted. Accenture's April report on partner-vendor relations cited the need for co-innovation in the channel partner ecosystem.
  • Navisite, a managed cloud service provider based in Andover, Mass., added a virtual CISO (vCISO) offering to its cybersecurity services portfolio. The vCISO service gives clients on-demand access to cybersecurity professionals, a cybersecurity risk assessment and security roadmap development, the company said.
  • Diversified, a technology solutions provider based in Kenilworth, N.J., selected Vyopta's monitoring technology for its Pulse service. Pulse combines Diversified's IoT managed service offering with Vyopta products to monitor and manage the IoT landscape.

Executive appointments

  • Kaseya, an MSP software vendor based in Miami, appointed Kathy Wagner as its CFO. The move supports Kaseya's growth via workforce expansions in Miami, Vancouver and Dublin, as well as the opening of a security operations center, the company said. Wagner joins Kaseya from Citrix Systems, where she was vice president of global finance and administration.
  • StorOne, a software-defined storage vendor based in New York, named Bill Cordero as vice president of worldwide channels. Cordero will launch the company's PartnerOne program for resellers and service providers. He was previously vice president of worldwide channel sales at Yellowbrick Data.

Market Share is a news roundup published every Friday.

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