Digital transformation has been accelerating at a dizzying speed since 2020, and it will continue. As we enter 2022, several challenges and trends will impact the budget of IT service providers. Hybrid working and infrastructure require organizations to adapt the tools and services they use. Service providers enable this transformation by equipping companies with an array of products and services that meet the needs of the digital age.
However, service providers also feel the consequences of this acceleration of increasing inflation and materials costs. In this post, Ensono’s CFO, Scott Grossman, talks about industry trends and challenges that may affect budget spending.
Industry trends and challenges
The acceleration in digital transformation will require organizations to focus on making the right technology investments. As C-level executives start working on their goals for the year, service providers need to keep up with the demand for services and products to meet our clients’ priorities.
There are, however, a couple of main challenges service providers face. The first one is the increasing cost of input prices as evidenced by the recently reported 6.8% inflation. One of the key benefits of working with a managed services provider is that a client does not have to build the solution themselves, meaning stitch together the hardware, software, networking, monitoring, reporting, etc.
At Ensono, we’ve built a platform layer called Envision and we layer our services on top. This removes the up-front investment on behalf of the client along with providing much more predictable cost structure. By taking on the responsibility of procuring the inputs and delivering the services, however, we take a risk on the cost of those input prices; which have been going up recently as evidenced by the steady inflationary uptick.
The second challenge prevalent in the industry is the growing talent shortage. For some years now, we’ve seen a growing gap between the demand for IT talent and the number of skilled professionals. In a recent Forbes article, the expanding skills gap is called “An urgent issue for employers in the United States, which has more than four times the number of job openings requiring AI and machine learning skills than in India, the next-largest market for these roles”.
Ensono delivers services in four primary areas: mainframe, private cloud, public cloud, and consulting; and there are labor demand pressures across all of them, the cause of which varies. In the public cloud, for instance, the demand for public cloud services has outstripped the talent available to operate and manage those environments. According to Gartner, public cloud services spending will grow to $397.5 billion. The problem is that companies cannot match that growth in the talent area. According to a recent McKinsey report, 95% of respondents said a shortage of cloud talent was one of the biggest challenges they face.
In mainframe services, a transition in the industry is posing an added challenge. The fact is that mainframes are still used by over 70% of Fortune 500 companies and those companies are not training new associates how to use a legacy technology. Most companies using mainframes have aging IT maintenance staff—and the employees who understand and can perform maintenance and run operations are retiring.
As clients face pressure from retiring staff, we need to supplement that gap by providing our own mainframe talent. While it may not make sense for an individual client to re-hire and re-train their workforce on mainframe skills, at Ensono, we support a diverse, global client base and have the scale to support hundreds of clients’ mainframe environments. We certainly see similar pressure around the retiring workforce. However, we are training the next generation of mainframe talent through our Mainframe Academy and developing what we call Millennial Mainframers!
Biggest challenges in 2022
Cybersecurity risks are undoubtedly among the biggest challenges for organizations in 2022, and IT enterprises are no exception. The increase in software supply chain attacks imposes new business risks, as evidenced by the recent Log4j exploit. As a service provider, our clients look to us to keep their most mission-critical workloads secure and we have a rigorous cybersecurity posture. Cyberthieves don’t sleep and we need to be cognizant that the threat is ever-changing.
Talent retention is one of our top priority challenges. We believe that the path to success consists of hiring the right people and retaining them. As a leadership team, we not only talk about it frequently but also adhere to our company values and offer training and support to retain the experts in their field. In this way, we ensure consistent service to our customers.
Benefits of the Ensono approach
Our business model and budgeting approach enable us to deliver more benefits to our clients. When our clients undergo a digital transformation, we deliver our services at scale. A digital transformation and mainframe modernization is a highly complex operation, and the current inflationary and labor environment is making it harder for clients to manage all the input pricing and labor market factors. Our approach allows us to help our clients alleviate some of these pressures.
There has been no better time to outsource. Ensono’s solid system gives our clients the peace of mind that enables them to focus on their core business, knowing we have their backs as service providers and work with them as a team.
Learn more about how Ensono’s expertise as a managed service provider helps our clients manage digital transformation.
If you found this article helpful, please share it on social media.