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At IDC Directions 2014 in Stockholm and Copenhagen I gave a presentation regarding the future in IT Service challenges and new sourcing models. Aimed mainly towards Services vendors in the Nordics.
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#directions14
IT Service challenges and new sourcing models
#idcdirections
Johan HallbergResearch Manager, IT Services and CXITCIO Agenda
© IDC 2014#directions14 2
Nordic ICT Investment Drivers 2014 – 2015
Line Of Business priorities
Improve productivity/efficiency (52%) Optimize business processes (35%) Enhance customer experience (29%)
IT Priorities
Reduce cost (45%) Develop solutions to improve business
processes (36%) Aligning IT systems with business processes
(31%)
© IDC 2014#directions14 3
Nordic ICT investments in 2014
Maintenance New projects0%
10%
20%
30%
40%
50%
60%
Increase investmentsReduce investments
ICT Budgets increasingly shifting towards new projects IT organisations are desperately looking for reducing cost for managing the current infrastructure Budgets are available for new projects – if the business case is solid
© IDC 2014#directions14 4
Top prioritized new ICT projects in the Nordics
ERP Solu
tions
Indust
ry-s
pecific
solu
tions
Mobilit
y so
lutio
ns
Custom
er exp
erience
solu
tions
IT s
ecurit
y
Unified C
omm
. & C
ollabora
tion
Infra
stru
cture
Optim
izatio
n0%
10%
20%
30%
40%
50%
Top 3 Priority 1
Solutions supporting the core business drives demandMobility, security and infrastructure are means and functionalities
© IDC 2014#directions14 5
Back-end IT vs Front-end IT
STABILITY GROWTH
• Focus: Simplification, standardization, globalization
• Locked down: few major new apps built there, slow change cycles
• Little or no experimentation• "Sober" priorities: reliability,
security, integrity, integration, high volume processing
• Shrinking: Total spend here is at best capped, more likely aggressively shrinking.
• Focus: Enhanced Customer Experience, CRM, analytics, mobile, social, often with cloud-based delivery
• Fast-moving: Agile development• Experimentation is actively
encouraged: new, fast-changing, fast-built apps that plug into the slower-changing Back End
• "Heady" priorities: drive revenue growth, raise customer satisfaction, build brand differentiation and loyalty
• Growing: Net new ICT spend is here
vs
© IDC 2014#directions14 6
Work with your clients LoB!
By 2016,
80% of all new IT
related investments will directly involve Line-of-Business executives.
- IDC Prediction 2013
© IDC 2014#directions14 7
Shift to new Consumption and Service Delivery Models
Traditionalbrick-and-mortal
workforce
Virtualworkforce
TraditionalIT Delivery
Platform-based cloud service delivery
(e.g., SaaS)
Wo
rkfo
rce
mo
de
l
Service delivery model
"We rather buy business outcome based ICT Service (and we do!), than hundreds of consultants…“
(CIO @ Global car manufacturer)
© IDC 2014#directions14 8
Source: European Services, Custom IBM Enterprise Survey , March 2012- N=140 – only those that are currently outsourcing
Applications
Datacenter
Network
Desktop
0% 10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
30%
24%
27%
26%
31%
41%
35%
27%
25%
27%
32%
36%
14%
7%
5%
11%
1st Generation 2nd Generation3rd Generation or above Don't know
“How would you describe your organization`s current outsourcing contracts?”
50% European Organizations engaged in IT outsourcing be this apps or infrastructure
On average 33% of organizations outsourcing have 3rd generation engagements or above (safely assuming cost take out has occured)
About 25% of organizations are considering IT outsourcing in the next 12 months
Outsourcing Maturity
© IDC 2014#directions14
Vendor consolidation - cutting number of suppliers
Cutting outsourcing costs
Improving quality of service from vendor
Gaining access to better technical skills
More collaborative approach - more contract flexibility
0% 10% 20% 30% 40% 50% 60% 70% 80%
19%
21%
25%
16%
19%
55%
55%
57%
64%
70%
Rank 1, 2 or 3 Rank 1
“If your organization has switched IT outsourcing vendor in the past 12 months, what was the key motivation for doing so?” Please rank your top three motivations in order of importance (Nordic results).
9
• Service quality and cost control? Sure, but what CIOs need from strategic suppliers is something more: helping them to challenge and transform their organization by using world class talents and skills.
© IDC 2014#directions14 10
Essential guidelines
Winners are consulting led and business oriented
Winners are proactive and leads the clients
Rethink your sales – drive volume!
Invest in your talents – 3rd platform talent!
AND never forget Thought leadership – Guiding, not just following, clients drives
differentiation, fights commoditization. Fancy growth? Become a front-runner of the 3rd platform by
innovating your offerings!
Questions?
11© IDC 2014#directions14
Johan HallbergResearch ManagerIT Services and [email protected]
@JohanHallberg