Editor’s note: Citrix, which has a major presence in Raleigh where its Citrix business group is based, is emerging from a year-long reorganization with a new portfolio of products and revised strategy, say Technology Business Research analysts Geoff Woollacott and Andrew Smith.

HAMPTON, N.H. – Citrix has emerged from a restructuring program that began in July 2015 and called for operating margin expansion, headcount reduction and realigning the company’s portfolio to prioritize digital transformation initiatives.

Per the restructuring announcement, Citrix plans to spin out its GoTo business (minus ShareFile) later this year, eliminated or sold several noncore products (including Melio and CloudPortal), and appointed Kirill Tatarinov as its new CEO.

The past 12 months were busy for Citrix, and the vendor used Synergy, its annual customer event, to unveil a new strategy and portfolio to customers and partners. During his keynote at this year’s Synergy event, Tatarinov emphasized Citrix’s goal of returning the company to its core tenets of IT and application enablement, and providing those capabilities to help today’s enterprises overcome a widening productivity gap generated by IT complexity. To accomplish this, Citrix is embracing services and solutions delivery across the entire customer ecosystem, leveraging its point products to better serve IT purchasing preferences.

Citrix is executing this strategy at a time when its core customers are shifting their consumption preferences, evaluating application and access delivery capabilities via subscription and managed services rather than building these capabilities internally.

Citrix will capitalize on this trend by delivering an integrated portfolio of technology solutions under a single cloud services brand, which allows customers to subscribe to the capabilities they require to enable their workplace.

Citrix Cloud provides the platform for application, desktop, data and network delivery services

Citrix Cloud is the successor to Citrix Workspace Cloud, which provides a central management plane that IT administrators can leverage to provide automated connection to the necessary devices and applications. In addition to enabling customers and partners to manage their own XenApp and XenDesktop installations, Citrix Cloud offers XenApp services, XenDesktop services and XenMobile services, among others, which are managed by Citrix and accessed by IT administrators through a single management portal.

While the core technology underlying Citrix Cloud is not new, the marketing, pricing and delivery of services through Citrix Cloud will provide customers with a more refined experience and list of options than were available through Citrix Workspace Cloud. At a strategic level, Citrix Cloud is the next step in the vendor’s evolutionary approach toward hybrid cloud infrastructure management. The message to customers is clear: Citrix wants to provide them with simplicity and choice. The impact to Citrix’s partners is less clear. However, Citrix continues to cite the importance of partner delivery in deploying applications, desktops and users to the Citrix Cloud and managing updates. The ongoing expansion of Citrix’s Service Provider Program and clarity around the vendor’s evolving partner strategy will be important indicators of progress.

Under the traditional XenApp and XenDesktop paradigm, partners helped provide solutions across the entire customer ecosystem, linking together on-premises or cloud resources with Citrix solutions. Citrix Cloud changes this relationship, giving Citrix control of application and desktop service delivery. Partners will still be responsible for managing the underlying connections to applications and desktops. As a result, we expect Citrix to provide a level of advisory services to its largest customers, delivering managed services directly to those named accounts. For the rest of the market, we believe Citrix will be challenged to establish clear and consistent rules of engagement across the partner base. However, these guidelines will be essential for the success of Citrix’s cloud services and assuring partners its new services won’t encroach on their business.

Citrix’s future will extend beyond workspaces to IoT and machine data

The concept of the data explosion needs little elaboration. Citrix fully intends to participate in adjacent market opportunities such as the Internet of Things (IoT), where the security and management of machine-generated data are creating new opportunities. Citrix has a foothold in the space through the 2014 acquisition of Octoblu and approaches the IoT space from a device- and data-agnostic position, which it characterizes as the “Integration of Everything.” The vendor’s approach, based on Octoblu and pulling in other products such as Netscaler for ADC, provides Citrix with a logical extension to its core. We expect Citrix to solidify its presence in existing accounts through this type of incremental expansion by establishing frameworks and proof-of-concept test capabilities, which it can then deploy to new accounts and bring proof points to line-of-business and IT purchase decision makers, instead of competing primarily at the departmental and administrator levels.

TBR’s perspective on Citrix Synergy 2016 announcements and keynote address

Citrix made the tough organizational decision to bring costs back in line at the end of 2015. The vendor now faces the challenge of maintaining revenue and margin performance as it accelerates its shift away from traditional license purchase paradigms and toward a subscription-based monetization model based on cloud services for XenApp, XenDesktop, XenMobile and ShareFile.

The focus on new solutions, branding and partnerships with key players such as Microsoft during the Citrix Synergy 2016 keynote indicates Citrix is executing on its strategy to present customers with a refined, cohesive set of products — particularly across XenDesktop, XenApp and XenMobile — that align with leading public cloud providers such as Microsoft Azure.

Moving forward, we expect Citrix to focus on its sales strategy to establish new rules of engagement within its direct and indirect channels to optimize joint go-to-market efforts. This will allow Citrix to continue capitalizing on growing opportunities to deliver workspace as a Service solutions to enterprises. The vendor’s Workspace Suite grew revenue over 100% year-to-year in 1Q16, and its Citrix Service Provider partner program grew revenue over 30% year-to-year.

We believe these figures illustrate the increasing market demand for workspace services, and their value to captive IT departments that are increasingly tasked with adding strategic business value to their organization and helping embrace digital transformation.