idc directions 2014 in nordics - it service challenges and new sourcing models

#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%)


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


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


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


Work with your clients LoB!

By 2016,

80% of all new IT

related investments will directly involve Line-of-Business executives.

- IDC Prediction 2013


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)


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.


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

mailto:[email protected]

idc directions 2014 in nordics - it service challenges and new sourcing models

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