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Kathy Gibson reports from Gartner Symposium in Cape Town – IT vendors all seem to be driving different strategies in order to thrive in the new digitalisation world. But the jury is still out on whether the right move is to go big, as Dell has done; rationalise, as HP Enterprise is doing; or become a service rather than technology provider, as companies like IBM seem to be doing.

This is according to Peter Sondergaard, senior vice-president of Gartner, who believes any of these strategies – or, indeed, all of them – could prove successful.

“The fact that they are doing something is good,” he says. “Doing nothing is not an option.”

These organisation- and industry-changing moves won’t have been made on a whim, he adds. “I think each of them is taking calculated decisions that involve them positioning themselves differently in the market.”

As predominantly hardware vendors, companies like Dell and HPE could be struggling to find their niche in the world of digital transformation.  

“There is value in hardware,” Sondergaard stresses. “Just because everything is going to cloud doesn’t mean we don’t need hardware.”

Dell and HPE may appear to have taken completely different tacks, but they have both realised that they cannot continue to function as the integrated technology providers the industry knew through the 1990s and early 2000s.

“So focus and scale in the right area is better,” says Sondergaard. “They are all looking at where they want to focus.”

There are some important directions and operational models that customers should look for in their vendors, he adds.

“They owe us all clear explanations on future directions. But I believe that what becomes important is how they internally execute what users face: and this is how do you operate bimodally? These vendors all need to operate bimodally as well.

“We said for some time that these large scale providers have difficulty driving innovation across product portfolios, and will be challenged – and we have seen that playing out.

“Now they have to operate in a world where they need to scale some parts of their business, but innovate in areas they want to focus on,” Sondergaard says.

Meanwhile, the digital giants are posing a real threat to the current industry leaders in various verticals. Although this is largely in the business to consumer (B2C) environment at present, it could quickly shift to the business to business (B2B) world.

Their market dominance is based on the fact that these organisations own a full experience with the customer and have the ability to drive that all the way back up the value chain. Not all of the customer-facing giants have the ability to dominate the whole supply chain, though.

The digital giants that will disrupt industries are those that appreciate there is a digital product experience that attaches itself to the physical product.

The ecosystems thus created affect all organisations, and each company needs to decide what role they will play in the ecosystem, Sondergaard says.

“Are you the entity that controls things; are you the entity that adds value to it; or are you part of the partner-based environment?”

In the B2B environment, the market is still wide open for dominant players to emerge. These could be the digital giants, or they could be industry players that put their digital platforms in place.

Sondergaard believes we will likely see different leaders emerging in different industries, and even two or three options where there are several dominant players.