This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Helen Huntley

Vice President, Research

Outsourcing 2020: Get Your Vision Right for the Future

IT’s Impact on the Business Has Increased Over Time

IT

Business

IT

BusinessBusiness

Past Present Future

Present Outsourcing Era – Sizeable Shifts

VerticalSpecialization

ITO/BPO

Selective Sourcing

Internet,Cloud,

EmergingTechnology

Business Executing

Deals

Global Delivery

Shorter Deal

Duration

Custom to

Standard

IT

Business

Future Outsourcing – Leveraged

• Global and Domestic Delivery Optimization

• Externally Owned Assets

• Leveraged IP/Solutions

• Micro Verticalization

• Multi Provider Aggregation

• External Innovation through Strategic Suppliers

• Redefinition of Leading Suppliers

86%IT's strategic contribution to

the business will increase

in the next two years

50%Agree that IT is the way

to change the rules of

business competition

Results From the Gartner-Forbes

2012 Board of Directors Survey…

Gartner-Forbes 2012 Board of Directors SurveyTop 5 Priorities

1. Attracting new customers

2. Retaining and enhancing

existing customers

3. Focusing on core

competencies

4. Maintaining competitive

advantage

5. Fostering innovation

What are CEOs and senior business

executives’ views on the quality or capability they would most like to see improved

in CIOs?

Evolving CIO Role

Data: Gartner CEO and Business Executive survey

Changing Expectations for CIOs, Areas for Improvement

1. Business Awareness, Understanding

and Acumen

2. Communication Skills

3. Vision & Big Picture

4. Situational Awareness, Realism &

Pragmatism

5. Efficiency & Productivity

6. Leadership

7. Investment, Value & Financial Acumen

8. Flexibility

9. Innovation

10. Integrity, Trust & Accountability

Deliver better49%Business

focus23%

Incorporate new tech

trends 14%

Engagement/communication

7%

Other4% No reply

3%

Business understanding/awareness 9%

Business strategy alignment 6%

Rev. growth + end customer focus 3%

Business process focus 2%

Competitive advantage focus 2%

Anticipate/predict business need 1%

Proactive change and innovation 5%

Keep pace with technology 4%

Cloud modernization 2%

Mobile business enablement 2%

Tech selectivity and hype filtering 1%

Social media business enablement 1%

IT management improvement 8%

Cost effectiveness 8%

Security and risk management 5%

Speed and agility 5%

Core responsibility excellence 5%

Add business value beyond IT cost 4%

Business productivity improvement 3%

Integrated change management 3%

Simplification 2%

Balance local and global needs 2%

User friendly systems focus 2%

Talent management 1%

IT demand management 1%

Regulation agility 1%

Challenges for the CIO

"We brought in 40% of new

product revenue."

“Expanding into new markets and

geographies will drive our business growth."

“We must hire IT resources with

business skills."

"Predictive markets and gamingpsychology

help us uncover brilliant ideas."

"We are all about differentiation.

We seize advantage."

“How do we change the rules of competition."

"Innovation catalyst teamskeep us several steps ahead of

our competitors."

"Yes, I'm in linefor CEO succession."

CIO

The Board and CEOs Rising Expectations will Influence the CIO

2014 – 2020 Represents Significant Change for the Business and IT

Evolving CIO Role

Nexus of Forces

IT Skills Shift

Growing Information

Business Model Evolution

Emerging Technology

DIGITAL PRESSURE

The Digital Dragon Is Upon Us, 2339 WW CIOs from 77 Countries Agree

"My business and its IT organization are being engulfed by a torrent of digital

opportunities. We cannot respond in a timely fashion, and this threatens the

success of the business and the credibility of the IT organization."

"The IT organization has the right skills and capabilities in place to meet upcoming

challenges."

4

We have nothing we recognize as digital

strategy14%

We have some strategy in that area, but not called out as

digital, 37%

We have a digital strategy, separate to our main business

strategy16%

Digital strategy is an integrated part of our

main business strategy, 32%

Our digital strategy is our business

strategy2%

Digital Strategy Is Advancing

"To what extent does your organization have a digital strategy today?"

49% have a digital

strategy

Data: Gartner CEO and Business Executive survey

The Chief Digital Officer Role Is on the Rise

Industry %CDOs

Media 21%Communications 13%Services 11%Banking 10%Insurance 9%Retail 9%Healthcare Providers 5%Government 5%Manufacturing & Natural Resources 5%Wholesale Trade 3%Education 3%Transportation 4%Utilities 1%

Gartner predicts a tripling of the CDO role by 2015

9

Nancy McKinstryCEO, Wolters Kluwer

CNBC Interview 2013

"When I took over as CEO

70% of our revenue came

from print products.

10 years later over 75% of

our revenue come from

online, software and

services."

Enterprises Are Also Dealing With The Rise of Extreme Information

59%Information is

growing annually

100%Stored information is

doubling YOY

80%Of data is

unstructured

2BIndividuals on the Web

(30% of global population)

Audit, archive and recovery is increasingly complex

275Exabytes per year in Global IP traffic

It is Imperative that We Apply Filters to Distinguish Information of Real Value

-55ºCMeasurement

270ºCThat which changes your

decision or course of action

28ºCThat which

reduces uncertainty

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graphy.jpg

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%27una_piscina.jpg

http://commons.wikimedia.org/wiki/File:PIA02405.jpg

MATERIAL INFORMATION

INFORMATION

DATA

Information is Everywhere! The Rise of Strategic Information Management

TextSocial

Image MobileTransactional

DataAudio VideoIT/OT

SearchEngine

Documents

stIMStrategic Information Management – The

Purposeful Application of Superior and Distinctive Information for Competitive Advantage

There Are Many Examples of Organizations Wielding "Information as Strategy"

Iceland provides fish traceability

information for consumers on time of

catch, trawler and sea location.

Walmart collects sustainability

information and is defining a standard

index of measurement for food and CPG.

Copenhagen Airport collects location

information from people's Wi-Fi devices

— so it can model for better passenger

flow and punctuality.

http://upload.wikimedia.org/wikipedia/commons/b/b7/Best_Buy_Express.jpg

Increase Channel Sales & Change Customer Experience

Our Business Models Have Had to Change

Source: Tesco Home Plus

Online

sales

increased

130%

Increase Customer Access & Channel Sales

Source: TescoIncreased Ease of Shopping, Differentiated

Philip ClarkeCEO, Tesco

2013

"To compete in the

new era of retailing I

believe that Tesco has

to be more than a retail

company. We have to

become a technology

company too."

• 10 million+ lines of code & IP Addresses

• The need for operational training growing

• The US Government is proposing “distraction guidelines” for automakers

But - Can We Go Too Far with Technology? 2020 Could Be Very Complicated

Gen Y Entrepreneurs Think Differently

• Born: 1982-2000

• Increased use and familiarity media and digital technologies

• Influenced by the rise of instant communication technologies, and social networking sites

• Peer-oriented due to easier facilitation of communication through technology

Generation Y’s Business Models Are Different, Partner Intensive, Our Future is Changing

Soapbox Soaps Founded: 2009 by two 22 year olds

Mission: “Buy a Bar, Donate A Bar" Empower Consumers to Change the World through Everyday Purchases

Business Model:

•Heavily Leverage Partners, Manage Integration Tightly

•Extensive use of Mobile and Cloud Technology

•Minimize CAPEX and OPEX

•Brand Awareness - Strong Social Networking and Social Marketing

SoapBox Soaps Heavily Leverages 30 Partners in its EcoSystem

Careers in IT and NecessarySkills Required Will Change

Career Change

Ahead

Creation of the "T"-Shaped IT Staff

Critical Skills Needed

• Business Acumen

• Vertical Specialization

• Supplier Evaluation & Selection (More buy, less build)

• Supplier Integration/Mgmt.

• Digital Workforce Engineering

Technolo

gy D

epth

Value to the Business V

alu

e t

o t

he

IT

Gro

up

Business Breadth

Changing IT Models That Supports the Business Like Never Before

Driving a New IT Model & Focus

New

Thinking

in IT

There are no

IT projects,

only

business

projects

Enable New

Business

Value

IT is agile; it

provides new

capabilities

when the

business

needs them

Show

Value for

Money

IT provides

services at

market-

competitive

prices

Create

Extended

Value

IT drives

business

performance,

measured

with KPIs like

market share

and EPS

• ROI

• Risk Mgmt.

• Vendor Mgmt.

• Governance

• It's no longer what you do, it's how you get it done through externalized sourcing

IT

What Else Does the Future Hold that Impacts Outsourcing?

Expanding Globalization of Business

Changing Value

Propositions

Changing Requirements

Source: www.botinacalls.com

Source: IHS Global Insight August 2013

31

Forecast: 2014 v 2013 Real GDP Growth = + 3.4% +2.4%

* = European Union

Note: Smaller Sized Numbers = GDP Growth in 2013 versus Bar / Larger Numbers = Forecast GDP Growth in 2014

4.7%

5.4%

7.5%

7.8%

1.7%

1.9%

3.0%

3.9%

5.1%

6.5%

5.0%

5.5%

-0.3 %*

0.9 %*

2.4%

3.3%

3.0%

3.6%

1.6%

2.7%

1.7%

2.4%

3.1%

3.6%

Global Opportunities – GDP Growth

What You Must Do Between Now and 2020?

Today’s Realities

• Budget

• Traditional projects

• Legacy support

• Customization

Requirements

• Aging technology

• Traditional skills

and staffing

Your Future Relies On:

• Harnessing the Power of

Your Information

• Mobile computing

• Social and

gaming capabilities

• Changing Your IT

Staffing Vision

• Partnering with the

Right Suppliers

• Using Emerging

Technology to Your

Business Advantage

IT = Business

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Helen Huntley

Outsourcing 2020: Get Your Vision Right for the Future