How Industry Alliances Help Businesses with IT Modernization

No single entity can affect digital transformation alone, why would you with industry alliances to help. System complexity, regulatory requirements, security threats and rapid innovation drive the need for deep business and technical expertise, agility and the flexibility to meet customers “where they live.”

“Having the best partners and most effective alliances gives us the agility and flexibility to deliver faster, differentiated value to our customers,” said Kyndryl’s SVP of Global Strategic Alliances Stephen Leonard. “It’s important to understand that an ecosystem of partners is not a ‘distribution channel’ for selling products. We sell insights, expertise and services.”

In advance of Kyndryl’s Alliance Summit, held Oct. 5-6, 2023, in Washington, D.C., Leonard and IDC’s Matt Eastwood, senior vice president for Worldwide Research, discuss the importance of industry alliances in IT modernization.

How do alliances help customers innovate and transform business operations?
Leonard: The value for customers with complex IT estates is found in services, not products. There’s always a vendor willing to sell products so you can “build your own adventure.” But customers need a trusted partner who’s dedicated to their success. And that means a firm that works with established ecosystems so customers can benefit from tailored, customized and best-in-class solutions without reinventing the wheel.

This ability is critical in times of rapid change. Think back two years ago, and ask yourself who would have guessed that generative AI — and the confusion and misinformation around it — would be on the minds of every decision maker? Forging alliances and partnerships — and having the business acumen and technical expertise to understand where customers are coming from — is the only way to stay current with emerging trends.

Eastwood: Technology partner alliances are instrumental in facilitating innovation and business transformation for customers. These alliances create a diverse ecosystem, granting access to an array of technologies and domain knowledge. Customers benefit from integrated solutions that address complex challenges without the need for extensive customization. Expertise sharing also fosters innovation and quicker technology adoption. Furthermore, alliances reduce risks associated with technology adoption and offer cost-efficiency through shared resources and economies of scale. They accelerate time-to-market, enable scalability, and drive innovation by promoting healthy competition and cooperation.

In essence, technology partner alliances empower businesses to thrive in the ever-evolving tech landscape by providing access to expertise, mitigating risks, and driving innovation and efficiency.

What are the keys to success?
Eastwood: Successful alliances, whether they are technology partnerships or other strategic collaborations, hinge on a set of key factors. First, clear and shared objectives and alignment among all parties are essential to the alliance’s success. Mutually beneficial outcomes, such as access to new markets or technologies, are critical to ensure each partner gains from the collaboration. Compatibility, encompassing both goals and cultural values, helps prevent conflicts down the road.

A detailed agreement that outlines roles, responsibilities and exit strategies is vital, as is strong leadership and governance to oversee the partnership effectively. Open and transparent communication, trust-building, shared resources and risk mitigation further contribute to alliance success. Flexibility, measurable outcomes, conflict resolution mechanisms, continuous evaluation, and a long-term perspective round out the factors that underpin a successful alliance.

Leonard: For Kyndryl, success began with our Microsoft partnership days after our launch as an independent company. In short order, we added Google Cloud and Amazon Web Services (AWS) — rounding out the world’s leading hyperscalers. After them came Dell, Oracle, SAP and more, but we’ve limited the number of our alliances and the size of our ecosystem to best-in-class. These are the hyperscalers and solutions providers that our customers want and need to work with, including the most recent addition, Palo Alto Networks. And we’ve upskilled our workforce and onboarded people with the specialized expertise required to strengthen our six practice areas. Doing all of this has given Kyndryl access to a services market that will expand to $500 billion by 2024.

How is generative AI hype impacting IT budgets?
Leonard: There’s no doubt that “hype” is influential. It’s impossible for everybody in the digital economy to be talking about something without affecting the thoughts and behaviors of business decision makers. When it comes to generative AI, everybody is worried about making the wrong moves or being left behind. They know that if they don’t act, others will. But if they act incorrectly, it will cost them dearly. And that’s why it’s even more important to have a trusted partner with some skin in the game — a partner who has pinned their success to yours.

Of course, Kyndryl is no stranger to AI. We’ve already incorporated it into our Kyndryl Bridge platform, through which AI augments human insights to illuminate patterns in vast amounts of operational data. These patterns help our customers predict trends that impact business outcomes. AI will complement new ways of working by delivering better insights, more accurate predictions, fewer errors, greater security and faster time-to-value for our customers.

We’re also excited about major developments of generative AI that are happening on the hyperscaler platforms, and Kyndryl works with the world’s best. So whatever happens with generative AI, Kyndryl and our partners will be on the leading edge of helping our customers apply these new tools to their best advantage.

Eastwood: GenAI is predicted to boost productivity and output by 18% over the next decade. It offers a range of applications, from software development to industry-specific tasks like drug discovery. However, there are concerns about the rapid disruption it could bring to business models and the need to address ethical, regulatory and governance issues.

IDC believes the industry is entering into the “Era of AI Everywhere,” changing the way we interact with data and reducing development costs for new products and services. Tech suppliers are revising their strategies, particularly in infrastructure, software and services, as generative AI begins to reshape the marketplace. Security and trust issues are emerging due to the potential for fake synthetic content generation, and new markets are opening for personalized AI tools and solutions. It’s important to understand generative AI’s implications for future business models in the marketplace.