Executive Insights for Supplier Intelligence

Since 2020, the use of digital workplace services by U.S. state and local governments and educational (SLED) agencies has seen significant changes and advancements. This shift, in large part, is due to pandemic-driven impacts in work environments, widespread staff retirements and shortages, and most recently, the availability of substantial funds from the U.S. federal government to upgrade IT and increase the operational efficiency and effectiveness of associated projects.

When we analyzed the future of the work and workplace technology services and solutions market in 2022, we remarked that enterprise workplace leaders are at the center stage of the transformation. 2023 has experienced two significant developments so far. First, there is a growing concern about a possible economic slowdown. Second, there have been substantial developments in artificial intelligence technology. These developments, combined with the trends we observed last year, namely growing acceptance of hybrid working and increasing focus on sustainability and a tech-savvy workforce, are largely influencing enterprise workplace technology buying decisions.

Asset management is an important area of focus in asset-intensive industries, such as oil and gas, metals and mining, industrial machinery, and power and utilities. The need to increase the life span of equipment, plants, machinery and other assets is driving the adoption of asset management tools and software. Implementing EAM software helps utilities and companies from other assetintensive industries improve efficiency, lower emissions and reduce costs, with maximum uptime and reliability. 

There is a strong and growing market for managed services BPO, with contact center agreements contributing heavily to this growth. In the last three years, the demand for resilient and advanced digital customer experience (CX) increased, leading to a surge in investments activities in this space.

The growth of CX services has been phenomenal in the last couple of years, which reflects its growing importance among enterprises and their drive to ensure the best and most seamless experience for customers, with the intent of winning and retaining them. Enterprises are leaning on managed services partners to help them drive and transform their CX functions.

In today’s consumer markets, retail and consumer packaged goods (CPG) companies are becoming alike in their operations and aspirations due to changing consumer behavior, technological advancements and market dynamics. Notably, CPG companies are adopting a direct-to-consumer (D2C) sales approach to widen their customer reach through own-brand stores and online channels. Some major CPG brands aim to achieve more than half of sales through D2C channels. Even the companies that do not pursue D2C sales are improving their customer relationships through loyalty programs, highly personalized marketing and offers redeemable at stores.

Virtualization led by hyperscalers has accelerated among business and technology stakeholders globally. Heavy business reliance on virtualized environments for various workloads, including missioncritical applications, has made virtualization mainstream in the  current IT market. Infrastructure modernization through virtualization has enabled enterprise clients to accrue the benefits of scalable network and storage capacity. In the pursuit of digital transformation, enterprises worldwide expedite the end-to-end digitalization of their business processes. Google Cloud, one of the leading hyperscalers, facilitates enterprises to gain a competitive edge through agility, flexibility and elastic scalability, translating into an elevated end-user experience. Service providers build their unique capabilities and functionality on GCP, which is leading the digital transformation space with the advanced technology required for redesigning and refining its relationships with product vendors, global system integrators (GSIs) and enterprise clients. The partner ecosystem comprises entities that establish a symbiotic relationship with listed products and offerings on GCP. Google and its partners rely on each other’s inherent expertise and technology prowess. While Google incorporates advanced partner services into its platforms, GSIs leverage the vast reach and innumerable benefits offered by Google to cater to enterprises’ client needs. By utilizing their extensive industry expertise, consulting partners ensure value generation to an enterprise through joint capabilities.

North American power and utilities industry may not drive global headlines but faces considerable headwinds such as increasing clean energy adoption (decarbonization), ensuring grid and service reliability and resiliency, improving infrastructure security, and optimizing costs.

The year 2022 saw multidimensional challenges, which helped revolutionize the U.S. cybersecurity market from different perspectives. In that year, the U.S. witnessed more than 1,800 reported breaches, which was slightly lower than in 2021, which saw 1,862 incidents. However, the sophistication of the attacks was significantly higher in 2022, with more than 422 million individuals impacted compared with 298 million in 2021. The decline in breaches was partially due to federal laws that issued rulings to report only during actual damage  and not for a potential one. While most large firms issued a breach notice, the notices had little to no information on the extent and impact of the attacks. Industry sources cite that the average time to identify a breach is about 207 days, which is almost half a year; the impact of the breaches is either unknown or not investigated further.

Research by Comparitech shows that the total cost of data breaches faced by the U.S. government in 2022 was $26 billion. This amount could have been spent on education, healthcare, defense or justice if cyberattacks were managed well. The research shows that such  attacks impact approximately two-thirds of U.S. citizens. The downtime for a breach in local government was five months. In terms of the attack targets, the top five states are Texas, Georgia, California, Florida and Pennsylvania.

Customers expect a seamless experience from banks. The rising wave of challenger banks, neo banks and Big Techs entering the banking industry has led customers expect the same level of experience from their traditional banks. Banks today are creating digital and phygital (physical-digital) banking journeys to provide their customers a complete and seamless experience. Extending consistent omnichannel experience to banking customers has become essential to increase the bank’s reach to acquire more customers and serve  them through their channel of choice. Customer retention has also become a priority. Banks are now building the capability to leverage customer data to gain a deeper understanding of customer preferences and generate contextual insights. They are providing the right  product and service offerings for enhanced customer satisfaction. Small and midsize businesses (SMBs) are also looking forward to their banks for a superior hassle-free experience, and banks are directing their efforts to provide a digital banking experience that is  paperless and low touch. Hence, many banks today are on a journey to modernize their legacy platforms. They either do it via a progressive modulebased digital transformation to unwind the existing spaghetti architecture or an out-of-the-box implementation of a new platform to create a modern bank with fully functional digital capabilities.

As the commercial and consumer use of cloudbased IT infrastructure continues to grow, its use among state, local and education (SLED) and other public-service client organizations also increases. This, in turn, is driving rapidly growing interest in, and purchases of, private/hybrid/data center managed hosting and managed services by SLED organizations.

In the last four quarters, enterprises marginally restricted their spend on cloud technologies and business models to bring innovation and value to their end users. They are benefiting from using cloud computing environments and leveraging cutting-edge technologies  like AI, analytics and RPA, which are speeding the rate and pace of technological improvements and UX. Hybrid cloud has become the norm in the last few years, with private cloud having the lion’s share. With the growing demand for hybrid cloud solutions, IT  infrastructure environments have become more complex and difficult to manage. Enterprises are now more open to outsourcing these operations to service providers that have significant expertise in managing hybrid cloud infrastructure for enterprises in multiple  industries. Some of the key variables influencing outsourcing decisions are the integration and consolidation of data centers, server performance, virtualization, containerization, governance and compliance, downtime and data loss. ISG observed that due to inflation and several economic and political downturns, enterprises were seen spending less or holding or pushing their infrastructure transformation engagements to the next year. They are more cautious and strategic in their outsourcing decisions to manage their costs effectively in  this volatile economic scenario. This is corroborated by our ISG Index numbers, present in the Introduction part of the report.

Networks and software-defined solutions and services encompass many technological topics, business coverage areas, organizational functions, and business processes and methods. These solutions are closely related to the digitalization, enhanced security and cloudification trends of enterprises globally. This ISG Provider Lens™ study examines multiple network service and solution offerings related to software-defined networking (SD-networks) in the U.S. These include managed SD-WAN and associated core and mobility technologies and service offerings related to these segments, transformation services, edge technologies and secure access service edge (SASE).

Successful insurance carriers are characterized by their ability to easily analyze/assess and deeply understand the underwriting risk they take, instead of relying on probability. To remain competitive in the U.S., they must be aware of the evolving macro-environment, rapid climate change and increased inflationary impacts and be responsive to their consumers’ ever-changing demands, adapt to meet them and take on risks.

Industries and businesses are recording a rise in the number of digital products with the development of tools, techniques and capabilities that collaborate and connect in various ways. Cloud-based, no-code, low-code, scalable, resilient and secure platforms are in high demand because they efficiently deliver digital engineering services, including design, experience, operations and applications, across industries. Platform engineering toolchains enable self-service capabilities and help address end-user requirements.

Microsoft plays a pivotal role in many businesses’ digital transformation strategies and is one of the world’s leading enterprise technology vendors. Its products form the backbone of digital transformation for companies across the U.S. As a U.S.-based company, Microsoft generates half its revenues from its home country and has a strong historical footing in the region, especially among larger firms. The tech titan subdivides its offerings into three main pillars: Microsoft 365, which includes Office 365 and Windows; Dynamics 365, a business application suite; and Azure, a hyperscale cloud platform that operates globally. Power Platform, a more recent addition to the Microsoft portfolio, is a low-code development platform that enables citizen developers to build apps and workflows, thus extending the capabilities of existing portfolios.

The mainframe service market continues to grow as per ISG’s expectations for both conventional mainframe outsourcing and consulting services as enterprises migrate their mainframe applications to the cloud. With clients under pressure to reduce their mainframe costs, several service providers are addressing the increasing demand to free business data that resides in mainframe systems.

Global enterprises are accepting the hybrid working model, wherein their workforce is allowed to work from a location of their choice and asked to report to office in case of absolute need. Depending on an employee’s work profile, corporate culture and vision requirements, organizations worldwide are framing policies to distribute their workforce into remote and in-office working modes.

In 2022, enterprises in the U.S. invested significantly in analytics solutions to empower their business leaders and employees to make decisions using a data-driven approach. The market witnessed a notable change in the mindset of enterprise executives, reflected in the changing pattern of their investments that shifted from capturing and storing data to actively deriving value out of data. A burgeoning competitive environment and new-age startups with disruptive business models necessitated investments in analytics solutions that drive real-time insights and enable decision-making that is essentially data-driven. While the changing market dynamics demand a variety of analytics solutions and platforms, ISG’s analysis reveals that most of the U.S. enterprises are still in their early stages of analytics and data maturity, which warrants the adoption of tools and platforms that help in delivering visualized insights, data-led storytelling and eventually decision-making.