isg market update
TRANSCRIPT
© 2015 Information Services Group, Inc. All Rights Reserved.
© 2015 Information Services Group, Inc. All Rights Reserved.
Preparing for the Future Smart ISG Market Update
Harvey Gluckman
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Chasing Future Smart
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Future Smart: Hanna-Barbera
Drones 3-D Printed Food
Flying Cars Jet Packs Robotic Help Holograms
Smart Shoes Smart Watch
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Looking back at 2014 …
Replacement Automation
Continuous Contracting
Enterprise Analytics
Service Integration
Internet of Things
Crowd Sourcing
Outcome-based Pricing
Hybrid IT
Global Business Services
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Only some service providers are achieving digital maturity …
The GOOD Market aggressive in productizing offerings & services “as-a-service”
What we are seeing now
Enterprises want to go faster … with or without IT.
DIGITAL SOLUTIONS
The BAD Packaging confusion: Is it a product, a service or a solution?
The UGLY Many can’t articulate: How does it change your customer’s business model?
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Rise of Bimodal IT
Mode 1 – Systems of Record Mode 2 – Systems of Differentiation
Examples:
o ERP, CRM, DW, Trading platforms
Characteristics:
o “Bullet proof”
o Operational rigor
o Often with regulatory/compliance implications
Examples:
o Analytics, Big Data , IoT, Mobile, Social apps
Characteristics:
o Experimental
o Trial and error/“Fail Fast”
o Speed, speed, speed
o Customer-focused
&
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Bimodal IT Challenges
o How to synchromesh the 2 operating modes?
o How to integrate infrastructure, applications and business processes?
o Where to find the required skills?
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Opportunity of Digitization
IT $ spend
APIs & complexity
Integration in/of products & services
Future Smart
Internet of Things
Analytics & Big Data
Social Media
Cloud
Mobility
Automation
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Internet of Things
It’s not “Big Brother” … it’s “Big Mother”
o More embedded systems and smart metering
o Insights into user behavior o Focus on collaboration with
customers o Renewed focus on customer service
to define next wave of business innovation
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Impact of Digitization
PROVIDER TECHNOLOGY WAVE
Stirring up the status quo
Cloud
Automation
Robotics
A Buyer’s Market
Most recent ISG BENCHMARK DATA reveals price declines more than 20% in some cases
20% - 50%
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Impact of Digitization
ARC leads CLIENTS to EXPECT NEW COMMERCIAL MODELS Not just short-term contracts, but effectively pay-as-you-go and outcome-based models to ensure flexibility
DYNAMIC ON-DEMAND MODELS Supplant on premises, fixed-pricing models
Significant Provider Challenge MIGRATION TO CLOUD SERVICES = LOSS $3 to $4 dollars in hardware/software revenue is replaced with only $1 to $2 of cloud-based revenue
$4
$2
?
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Impact of Digitization
Percentage of total number of ITO contracts awarded: TCV > $10M
-5%
5%
15%
25%
35%
45%
55%
Big 5 US Big 4 Europe Big 5 Indian Others
2011
2012
2013
2014
2015e
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Impact of Digitization
-5%
5%
15%
25%
35%
45%
55%
Big 5 US Big 4 Europe Big 5 Indian Others
2011
2012
2013
2014
2015e
Percentage of ACV of ITO Contracts Awarded: TCV > $10M
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à
à
à
How do I provide a stable environment?
IT is the owner of services
Plan, Build, Run o Run/Change the business
How do I enable business objectives?
IT is the broker of services
Dev/Ops o Bimodal
What are clients thinking?
Old World: process-focused
New World: outcome-oriented
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What are clients thinking?
Old World: process-focused
New World: outcome-oriented
à
à
à
Customer centricity: cost optimization bricks, clicks, rings, knocks
Back-office efficiency
ITIL rigor Regulated cadence
Customer centricity: revenue expansion information, reaction, promotion
Mid/front-office to drive revenue expansion and new revenue models
Agility, flexibility Continuous development / releases
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What are clients thinking?
Old World: process-focused Old World: process-focused
New World: outcome-oriented
à
à
à
Formal governance
Optimizing current state; lower costs
IT & corporate business processes
Flexible governance with heavy use of analytics & dynamic decisioning
Flexibility to create new capabilities; Elastic, self-service, auto provisioning
Integrated Global Business Services; process, cost, customer insight benefits
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Old World: process-focused Old World: process-focused
New World: outcome-oriented
à
à
Broad-scale contracts; generalized scope
Long-term commitments; 1/2 devoted to transformation
Small arrangements for specialized point solutions
Transactional modularity for maximum flexibility; rapid adoption of new service platforms
Transaction Structure
What are clients thinking?
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Old World: process-focused Old World: process-focused
New World: outcome-oriented
à
Economies of standardization; focus on unit costs of effort
Economies of automation; focus on productivity and effectiveness
Transaction Structure
What are clients thinking?
à Transition & termination complexity;
fear, uncertainty & doubt Plug & play mindset
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Where to invest?
o Data analytics o Product engineering o Software-defined everywhere o Automation o Hybrid IT management o Cyber security & risk management
www.isg-one.com
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