COVID-19 & IT Services: Cyber Security & Cloud Expertise are Paramount
The COVID-19 pandemic is causing a huge spike in the number of at-home workers. Estimates show that two thirds of the U.S. workforce now work remotely, and this number is expected to remain steady through April and potentially May. In turn, this has put extreme pressure on internet bandwidth. During the month of March, global internet traffic increased by 30% while normalized monthly growth was expected to be about 3%. Yet companies are being forced to slash IT spending because of the growing economic uncertainties as a result of the pandemic. The combination of a larger remote workforce, increased internet traffic, and shrinking IT budgets has presented cyber criminals with an ideal environment for wreaking havoc.
How Does COVID-19 and a Remote Workforce Impact the Future of Employee Engagement?
Many people claimed that 2020 would be the year of the distributed workforce. In the wake of unprecedented events in modern history, even the most optimistic believers could not have anticipated that the majority of the country would be currently working remotely. With COVID-19 rapidly spreading across the nation, leaders in the public and private sectors have been left with no choice but to require employees work from home. Prior to the crisis, a mere 3.6% of the U.S. workforce worked at home half or more of the time. Preliminary estimates show that as a result of COVID-19, anywhere from 25-30% of the U.S. workforce will continue to work remotely at least half of the time(1). What was once purely a social experiment, a distributed workforce may now be the reality for a number of Americans.
Consumer Purchasing Metamorphosis: How Consumer Purchasing Data is Shaping Loyalty Solutions
Today’s businesses face increasingly competitive dynamics in brand loyalty as consumer preferences become more demanding and less forgiving. Companies traditionally relied on a one-size-fits-all approach to attracting and retaining loyal customers. However, businesses are now adopting a personalized, targeted, and multi-channel approach throughout the entire consumer lifecycle. Payment platforms, in combination with tech-enabled engagement and marketing solutions, continue to emerge as a more attractive option to create experiential success for consumers through the use of artificial intelligence (“AI”), machine learning, and data analytics, which has driven M&A interest and activity in the space.
Private Equity’s Appetite for IT Services Firms Remains Ravenous
Private equity firms continue to actively invest in the IT Services sector. IT Services companies remain attractive investment targets for a variety of reasons, including:
- The information technology market is huge and experiencing secular growth;
- The complexity of technology solutions continues to increase, driving demand for outsourced services;
- The IT Services market is highly fragmented, which provides an opportunity for growth through acquisition;
- IT Services businesses benefit from economies of scale as personnel utilization improves, purchasing power increases and fixed costs are used more efficiently in larger businesses; and
- Customer relationships often involve providing managed services, which result in improved visibility into future financial performance.
The Expanding Technology Behind Channel Sales
If you’re a shopaholic, you’re probably a Nordy Club member or hold a REDcard from Target. If you can’t live without pumpkin spice lattes, you’re likely enrolled in the Starbucks Rewards program. Many business-to-consumer (“B2C”) companies utilize marketing, loyalty, and rewards programs to engage consumers and drive brand recognition and customer retention. These programs were early adopters of technology and software aimed at delivering effectiveness, efficiency, and measurability to rewards and marketing spend. However, business-to-business-to-consumer (“B2B2C”) companies and channel marketers have been slower to adopt similar technology, until now. B2B2C companies and channel marketers are beginning rapid adoption of technology and software to drive these types of measurable and repeatable results in their businesses.
Sounding the Alarm – Recent Cyberattacks Stoke the Flames of Red-Hot Managed Security Services Sector
A cyberattack against Capital One, which was perpetrated by a single Seattle-based hacker in March, exposed the personal information of nearly 106 million of the bank’s customers and applicants. Capital One’s management didn’t become aware of the incident until it was reported to the company by an independent security researcher in July. Just ten days after the Capital One hack hit the airwaves, another cyberattack was announced in southern California. Computers belonging to the city of Los Angeles were breached in late July, providing the hacker with access to the personal information of 20,000 applicants for positions in the police department. As these examples show, no organization is safe from cyber criminals.
Loyalty in the Workplace
The old adage about the finance industry was “if you want loyalty on Wall St., get a dog.” That mentality has slowly crept onto Main St. as cultural norms have shifted, a strong job market has persisted, and the options for job seekers have exploded and are just a click away. The change in employee loyalty is reflected in the fact that, over the last 20 years, the number of companies people have worked for in the first five years out of college has nearly doubled. The days of slowly moving up the corporate ladder during a 40-year career are largely gone. These secular trends have led to the emergence of employers looking for ways to engage with, influence and retain employees to ensure longer-term, stable workforces, which ultimately drive value to organizations.
IT Services Businesses . . . Making IT Happen
As digital technology continues to transform how business is done, the complexity and speed of change of information technology continues to increase dramatically. Many businesses realize it is impractical to invest in the required personnel and training needed to stay on top of the latest developments in technology. As a result, many companies, particularly small- and medium-sized businesses, rely on third-party service providers to install and manage their IT systems. The growing demand for these outsourced services has caught the attention of both strategic acquirers and private equity funds looking to capture share of a burgeoning global market, which is expected to grow at an average annual rate of 8.4% and reach $1.1 trillion by 2025.
Tech-enabled Innovation Amongst Incumbent Players in the Insurance Sector
Much has been written about the rapid digitalization taking place in the insurance sector. Enabled in part by rapidly growing insurance technology “insurtech” investments, numerous new entrants are testing existing processes, distribution channels and incumbent positions.
Less has been written about the tech-enabled innovation taking place amongst incumbents themselves.
Mobile and Video Lead Internet Advertising to New Heights
The Interactive Advertising Bureau (IAB) recently released its latest Internet Advertising Revenue Report, which is conducted independently by PwC on behalf of the IAB. As expected, the report shows internet advertising continues its unrelenting growth. For nine consecutive years, U.S. internet advertising revenues have maintained a double-digit growth rate. In 2018, internet ad revenues totaled $107.5 billion, which represents growth of approximately 22% over 2017.