Industry executives and experts share their predictions for 2022.  Read them in this 14th annual VMblog.com series exclusive.

Digital with a Purpose

By Ali Hussain, Vice President of Cloud Engineering, NTT DATA Services

In 2020 with the pandemic we got a sample of the saying, "making predictions is hard, especially about the future" so please take what I say with a grain of salt. And now as we see businesses recover from the uncertainty and try to deal with the pent up demand compounded with increased need for digital skills we are seeing a global skills shortage. 

As we try to prepare for this changing landscape it is important to remember the first principles of "why a digital transformation?" A digital transformation is about using technology to prepare businesses for today's fast changing world. This requires a diligent focus on achieving value and cannot be accomplished with a haphazard strategy.

As employers try to get a handle on this situation, I believe the market will bifurcate into a split role for cloud services. Commoditized services and value-driven services. Many established businesses will stick to the old way of doing things. Looking at humans as machines and trying to calculate business outcomes as throughput of factory production lines. To them the ultimate metric is someone that can put the right keywords on a resume. They are going to get hit the worst with supply side pressure from salary hikes and market competition because they will struggle to differentiate their services from their competitors. 

On the flipside, new leaders will emerge with a strong focus on delivering business value to their customers. They will decouple the costs from the goal, to increase their margins and define their value to their customers. They will see the same talent crunch as other organizations but their focus on results will allow them to be creative in their organizations. Focusing on building cross-functional results-oriented teams they'll have more flexibility in utilizing and training existing skill sets in their employees. And their higher margin services will allow them to be able to acquire the best talent on the market. These different constraints will drive a wedge between these two types of services causing them to grow in very different ways.

We have already seen evidence of this in the cloud and data space. The leaders in these spaces haven't been the traditional GSIs rather they've been rag-tag startups. Redefining the ways business is done. And we see the GSIs clamoring to adjust to the rapidly changes rules of business by acquiring these startups. 

This split will reflect the different kinds of customer organizations. Effective customers with strong cultures and clean line of sight to their goals will appreciate the cost benefits of commoditized services. Having existing achievement cultures and strategic direction they may not see as much help in defining the value and would be able to have external teams contribute to their goals. But with leadership skills being one of the hardest to find skills they would appreciate the value-driven services. The second group would need help in defining their value drivers and translating it into actionable engineering work. This group will benefit the most from value-based services. Finally there is the group that would benefit from the value-based services but does not have the culture to allow them to choose what's right for them. Because as the services would have a race to the bottom, their incentives would align towards near-term cost savings at the cost of long-term strategy. 

At the very least we will see market strategies similar to the automotive space with e.g., Toyota being the every person's car while Lexus is the luxury brand. We'll see these differences couched in terms like Gartner's Mode 1 and Mode 2 IT. And different offerings created and presented to different teams. One of the keys to the success for services organizations will be how they will manage both internally and in messaging to the customer this split personality of their offerings portfolio.

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ABOUT THE AUTHOR

Ali Hussain is Vice President of Cloud Engineering at NTT DATA Services, as well as the co-founder and CTO of Flux7 Labs, an NTT DATA company. With more than 15 years of experience, Ali is a tech leader with a passion for using technology to remove the mundanity from our lives and allow us to live a more creative and fulfilling experience.