The Year in Preview 2023

With another year behind us, we’re capitalizing on the lessons we’ve learned and the conversations we’ve held over the past 12 months to strategize for the year ahead.

Building upon feedback shared by industry thought leaders, business champions, and technology stakeholders, we’ve compiled our 2023 Preview — a look ahead at the upcoming changes in the industry, and the ways in which you can prepare to weather the storm.

Mergers & Acquisitions Continue to Increase, Slimming the Provider Landscape

With tech layoffs at record-breaking heights, signs are pointing to a potential recession this year. In anticipation, service providers are streamlining operations and shedding extraneous assets and secondary lines of business by selling them off to competitors. While this leads to a smaller selection of providers for a given service, those remaining are expanding their reach into new markets.

• More than 2 million homes and businesses in 20 states will have access to enhanced fiber networks thanks to Brightspeed’s acquisition of Lumen’s incumbent local exchange carrier (ILEC) business operations. In Missouri, Bluebird purchased Missouri Telecom Inc.’s network assets, bringing dedicated ethernet, colocation, and cloud to three POPs in southwest Missouri via and additional 40 miles of fiber.
• With the global demand for UCaaS platforms still on the upswing, more markets will have access to all-in-one cloud-based platforms. 8x8’s acquisition of Fuze facilitates UCaaS offerings for Fuze’s enterprise audience. RingCentral’s strategic partnership with Mitel positions the voice company to seamlessly transition Mitel’s Cloudlink userbase from legacy PBX systems to RingCentral’s Message Video Phone (MVP) cloud communications platform.
• In the managed services realm, Comcast finalized its acquisition of Masergy, rounding out Comcast’s remote work solutions offerings of UCaaS, CCaaS, Versa Networks SD-WAN, Cisco Meraki and Aruba VPNs. Nitel expanded its global footprint with its acquisition of Hypercore Networks. The two managed services companies offer best-in-breed SD-WAN and cybersecurity solutions, but Hypercore will be adding its voice services to Nitel’s managed routing, software-defined networking, and layered security offerings.
• TierOne’s long-term partner AppSmart unified underneath the umbrella of AppDirect, building out a more robust cloud marketplace, SaaS offering, and support structure under the larger brand.

Although serving as a form of financial relief for providers, an influx of mergers and acquisitions inevitably means less choice for consumers. This slimmer provider landscape also comes with drastic changes in offerings from remaining providers, so working closely with advisors and industry experts is vital as consumers navigate this new landscape and the ways in which it affects existing and upcoming service contracts.

Fortunately, at TierOne, we remain constant no matter the changes within these businesses. And because we make it our business to keep our finger on the pulse of the industry, we are always abreast of the best solutions and most favorable pricing in the marketplace.

As Recession Fears Intensify, Interest in Cloud Platforms Grows

In the midst of recession fears, solutions that enable efficiency and reduce cost are likely to be at the top of every CIO’s wish list. Industry-wide, interest in cloud-based solutions is ticking up, as these all-in-one offerings come at a more palatable cost with scalable memberships and pay-as-you-go subscriptions.

The multifaceted capabilities of many cloud platforms can help organizations looking to control SaaS sprawl and subscription overspend. Tools such as automation, AI, app development, and analytics can vastly improve efficiency, especially for teams needing to accomplish more on tighter budgets.

“Cloud computing will continue to be a bastion of safety and innovation, supporting growth during uncertain times due to its agile, elastic, and scalable nature,” says Sid Nag, Vice President Analyst at Gartner. The organization anticipates that spending on public cloud services will grow 20.7% in 2023.

Hardware Deals Become Scarce Due to Lingering Supply Chain Disruptions

If the standalone features of cloud technologies weren’t enough to entice businesses to unplug, the scarcity of hardware might be what pushes them over the edge.

Ongoing COVID-related disruptions are impacting the availability of telecom hardware such as phones and adapters. China’s Zero COVID policy along with increased scrutiny from the FCC have throttled equipment output from China’s telecom sector, leaving suppliers scrambling to diversify their supply chains.

“Previously, providers offered free phones or volume discounts for large orders, but aren’t seeing those deals anymore,” says Richard Reding, Managing Partner at TierOne. “We’re still able to work our magic, but it is getting a lot harder to secure hardware at a discount.”

For IT teams looking to acquire phones or other hardware with their contracts, affordable options will be harder to find. In this new landscape, they might consider working with a technology agent, who can leverage priority access and industry contacts to secure increasingly scarce discounts.

Ransomware-Related Insurance Claims Drive More Stringent Cybersecurity Requirements

Developments in cyberattacks, especially with the availability of Ransomware-as-a-Service, have been a driving force in changes to cyber insurance.

In less than a year, cyber insurance premiums climbed an average of 28%. A primary driver of the increase is ransomware coverage. With the frequency, severity, and cost of cyberattacks on the rise — the average ransomware attack cost $4.54 million last year — insurers are raising prices and increasing standards for policyholders.

“Underwriters are also making requirements for obtaining cyber insurance much more strict, requiring things like two-factor authentication and the adoption of specific technologies,” according to Jon France, CISO at (ISC)².

Ransomware now accounts for 75% of all cyber insurance claims. With the rising costs of ransomware attacks, consumers can expect insurers to enact even more stringent cybersecurity requirements for their policyholders in 2023.

*****

Recession fears and an unstable future for the tech industry may be on the roadmap for 2023, but that doesn’t mean you have to be caught off-guard. Anticipating the ways in which these major trends will affect not only the industry but also your business can help you develop strategic plans and build resiliency to face the days ahead.