Monday Morning Impact – June 27

Gartner Forecasts Worldwide Government IT Spending to Grow 5% in 2022

Government IT spending is forecast to increase across all segments except internal services and telecom services, according to a recent market research report by Gartner, Inc. Continuing the trend from 2021, software is forecast to record the strongest growth across all segments in 2022. Meanwhile, as legacy modernization continues to be a priority in government organizations, growth in the data center systems segment will continue to slow though the forecast period.

Worldwide government IT spending is forecast to total $565.7 billion in 2022, an increase of 5% from 2021, according to Gartner.

“The last few years of enduring pandemic challenges have mobilized a wave of digital transformation activities in government organizations across the world,” said Daniel Snyder, director analyst at Gartner. “Governments are executing innovative activities by harnessing technology to streamline digital services, advance automation processes and evolve citizen experiences.”

Governments continue to invest in critical application software that directly support end user interfaces driving strong growth in this segment. Spending on telecom services is set to decrease in 2022 as governments reduce spending on expensive legacy systems in favor of digital service delivery models.

Anything-as-a-Service (XaaS) is gaining popularity across government organizations as it provides better return on investment normalizing IT spend over time making budgeting for IT more predictable, while avoiding the accrual of technical debt. Gartner predicts that by 2026, most government agencies’ new IT investments will be made in XaaS solutions.

“The pandemic sped up public-sector adoption of cloud solutions and the XaaS model for accelerated legacy modernization and new service implementations,” said Snyder. “Fifty-four percent of government CIOs responding to the 2022 Gartner CIO Survey indicated that they expect to allocate additional funding to cloud platforms in 2022, while 35% will decrease investments in legacy infrastructure and data center technologies.”

Gartner clients can read more in “Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2020-2026, 1Q22 Update.”

Channel Impact^®
With the ongoing talent challenges facing organizations, XaaS makes it easier for government organizations to find the right talent via XaaS operating models. XaaS delivery models require different internal IT skill sets and place less demand on the organization to develop or acquire emerging IT skills, which are often hard to find and difficult for governments to afford. Partners should consider adjusting their sales strategies accordingly.

Sage: Upskilled Workers are the Number One Investment Priority for Channel

A study by Sage, a Dallas-based company specializing in accounting, financial, HR, and payroll technology for small and medium-sized businesses, shows the channel ecosystem is increasingly prioritizing technical expertise in both hiring and investment.

According to the report, challenges in finding and keeping talent are hitting the channel sector, with US resellers mostly feeling the pinch. Half of all US respondents currently in the process of recruiting noted difficulty finding both skilled management level staff, while 49% also cited difficulty attracting skilled entry level talent. Competition was only slightly tapered within the UK, with 46% and 40% also struggling to source these levels.

Over half of all US resellers cited cloud computing (53%) and data engineering (52%) as required skillsets, while just under half listed cyber security skills (48%), coding (45%) and AI/ML development (44%) as desired skills. By contrast, in the UK, just under two fifths of resellers placed cloud computing (39%) and cyber security skills (39%) as desired traits for new talent, while 35% are looking for coding skills. Interestingly, the current external business climate may have forced UK reselling companies to focus more on the running of their business, with 36% actively recruiting for essential business roles.

“Customers are looking to their channel partners to help make digitalization a reality as they embrace new revenue streams and invest with an eye on the future,” said Aziz Benmalek, President of Sage North America, and EVP of the company’s Global Partner Organization. “They are being asked to provide expertise in the most complex technological areas – from protection against the latest cyber threats to the enablement of AI and ML.”

Over the past 18 months alone, 39% of the 1000 channel resellers surveyed have invested resources to technically upskill their workforce, while 36% adopted greater eCommerce functionality during the same period.

This investment in technology is unlikely to slow. Resellers surveyed predicted that by 2024, services requiring more specific technical expertise such as cybersecurity service provision (40%), SaaS application management (38%) and public cloud consumption (33%) will be among those most demanded by clients. Almost one-third (30%) also believe that customers will be looking to specifically increase the efficiency, intelligence and automation of their business processes or operations (BPO).

When predicting areas of investment for their customers over the coming months, almost half (49%) believe customers will look to grow their data center management revenue, while 40% have a sharp focus on generating revenues from data analytics and AI software enablement.

‘The Channel Landscape – Partnering for Success’ report by Sage included 1,000 responses from decision-makers in the tech industry whose company resells tech and IT supplies/ services: 500 within the UK, 500 within the US. Survey respondents were queried between April and May of this year.

Channel Impact^®
The data show areas of focus for channel partners, many of whom are tackling the same challenges.

Forescout Adds New Managed Service Provider Partner Offering

Forescout Technologies, a San Jose-based cybersecurity company, has announced the expansion of its Envision Channel Program, launching a new Managed Service Provider (MSP) Partner Program to support customers with enhanced technical and professional service capabilities.

The updated program is expected to provide qualified partners with a variety of enhancements including flexible licensing and billing options in exchange for owning the customer support experience, access to learning resources and related assets to further develop technical competencies across the Forescout platform, and a newly developed Accredited Engineer course for technical partner staff to be introduced to the Forescout Continuum Platform.

Additionally, the company has created the Forescout Forerunner Program which recognizes partners who accelerate onboarding and service delivery for client end-users.

“Forescout’s channel program has played a pivotal role in our company’s business journey,” said Keith Weatherford, Forescout’s vice president of worldwide channel sales. “The evolving digital terrain is creating new demand to activate Forescout services and capabilities so these new initiatives will provide a seamless set of training and enablement resources to support them on this path.”

Channel Impact^®
With its new accreditations for partner engineer and technical support and new Managed Service Program, Forescout is recognizing and rewarding its global partner ecosystem to drive new earning opportunities and recognize the value add that they bring to the company’s success.