Sourcing Industry Briefing & BYOD Trends

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Harvey Gluckman, ISG Partner, presented at the 2012, Hospitality Upgrade magazine's CIO Summit. Harvey’s presentation, "Sourcing Industry Trends and BYOD,” examined how outsourcing and managed services has become a dominant service delivery strategy within in the hospitality industry during the past two years. He explored the current state of industry sourcing trends, market trends affecting the CIO agenda, and the ever-changing service provider landscape. Harvey also examined how “bring your own device” (BYOD) is affecting enterprise adoption practices, information technology (IT) support decisions and the end-user services outsourcing model.

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Sourcing Industry Briefing & BYOD Trends

  1. 1. Sourcing Industry Briefing & BYOD Trends Hotel, Restaurants & Leisure Industries Copyright © 2012 Information Services Group, Inc. All Rights Reserved. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from ISG, Inc.
  2. 2. Busiest Year Ever in the Broader Outsourcing Market TCV ($B)* Trends ↑ Number of Contracts Total TCV Restructured TCV ↑ EMEA – record year ↓ Americas & Asia-Pacific 99.485.0 90.0 93.5 93.1 ↓ Mega Relationships $92.2B 5 yr avg ↑ Restructurings → Pace of Annualized Rev. 30.6 32.4 Growth ─ Flat to 1% 21.1 20.2 14.8 → BPO up 49%, ITO down 6% → Leading IT Providers 2007 2008 2009 2010 2011 Consistent across Top 20* Managed Services Contracts with TCV > $25M → Contract Durations 2
  3. 3. Major Developments in the U.S. Sourcing Market1 2 U.S. Companies ranked in G-500 U.S. TCV ($B) Continues Contribute Less to US Awards Significant Downward Trend 7 Yrs Ago 7 yrs Today ↓~30% $ Ago Today $ $41 $28 ↓25% 58% of TCV 33% of TCV3 U.S. Market Saturation for G-100 4 Pool of U.S. Companies Ranked in G-100 is Down Today ↓40% 47 55% 7 Yr Ago 28 7 Yrs Ago Today 3
  4. 4. Changing Outsourcing Market Dynamics1 More Transactions Include Offshore Delivery Than Ever 2 Large Companies Leveraging Multi-sourcing More Than Ever % G2000 7 Yrs Ago 33% 2x 33% 53% Today 69% 10 Yrs Ago Today3 4 37 Continued Growth in Savings Number of Service Providers Making Realized through Outsourcing Up 75% Share of TCV 15 Today 7 7 Yrs Ago 10 Yrs Ago Today 4
  5. 5. Key Long-term Trends in Sourcing Structure & Solutions1 Shift in Enterprise Decision Maker’s Solution Requirements Longevity Disposability 2 Shift in ITO Enterprise Pricing Strategies Pricing Bands Utility Pricing3 Shift in BPO Enterprise Purpose, Spurring Activity Traditional Industry 4 Global Service Provider Community Changing Shape Back-office Specific $ 5
  6. 6. Service Provider Diversity Creates Price Pressure India-heritage Provider growth In Mid-Market Space % New Contracts Market Share in TCV Bands MNCs India-heritage $25-199M $200-999M $1B+ 2000 87% Today 2000 68% 58% 2005 77% 20% 2010 87% 1% 6
  7. 7. Industry and Technology Trends Affecting the CIO Agenda ► Margin Pressure ► Shift to Standardized Solutions Cost / Capacity ► Efficient Use of Capital ► Global Service Delivery ► Responsive Capacity ► Transformation ► Data Analytics / BI► Cloud: As-A- Service ► Social Platforms ► Unified Communications Solutions Capability Upending Customer ► Next-Gen Systems ► Mobility eEnablement Centricity of back-end systems ► Multi-sourcing ► Data Privacy & Security ► Service Integration ► Global Service Delivery Challenges ► Governance ► Business Resiliency 7
  8. 8. Hotels, Restaurants & Leisure − Market Overview23 Public Companies Market Size (ACV) - Hotels, Restaurants & Leisure In G2000 $404 $309 $319 $291 US$ Millions $227 $140 $155 11 12 $58 $22 Outsourcing Growth: 159% 141% 11% 47% 36% -6% 9% 27% 69% Not Outsourcing 2003 2004 2005 2006 2007 2008 2009 2010 2011 8
  9. 9. Hotels, Restaurants & Leisure − Functional Areas Hotels, Restaurants & Leisure companies tend to have high levels of adoption for many ITO towers, indicating a tendency to bundle ITO services 2011 IT Functional Areas Under Managed Service Contracts > $25M TCV 100% 82% 85% 80% 61% 64% 64% 60% 55% 55% 55% 47% 48% 47% 40% 27% 20% 0% Any ITO ADM Data Center Mid-Range Network EUC / SD Hospitality & Leisure Market AvgSource: ISG Note: Excludes Private Companies Prevalence 9
  10. 10. Hotels, Restaurants & Leisure − Functional Areas Hotels, Restaurants & Leisure companies tend to have high levels of adoption for HRO service offerings 2011 BPO Functional Areas Under Managed Service Contracts > $25M TCV 70% 64% 60% 47% 45% 50% 40% 29% 30% 19% 15% 20% 9% 9% 12% 9% 10% 9% 10% 0% Hospitality & Leisure Market AvgSource: ISG Note: Excludes Private Companies Prevalence 10
  11. 11. Bring Your Own Device (BYOD)
  12. 12. BYOD: An IT Mega-trend Enabled by Three Trends in Technology ► Every conceivable software offering is now available via the “Personal” Cloud public internet; enterprise-class technology now available to the SMB customer. Enterprise ► Consumer technology is driving changing expectations in Consumer enterprise technology; employees grow accustomed to app- Expectations store like features that are often free, and updated often. ► Mobile platforms (smartphones and tablets) are now nearly Mobile as powerful as the PC; smartphone + tablet shipments Technology outpace PC shipments in 2010 and 2011 12
  13. 13. BYOD Taking Two Paths of Adoption IT Policy, “Personal” Security & Cloud Results Compliance G1000: awareness and limited recognition; Enterprise very little adoption. Consumer Unclear Expectations ROI Midmarket & Selected Technolgoy Firms: recognition & Mobile adoption Technology Legacy Apps 13
  14. 14. BYOD Significant Challenges & Hurdles to Overcome► IT Policy, Security & Compliance  IT policies and processes need to be re-worked from the ground-up to accommodate  Without control of assets, IT cannot guarantee security & integrity of data; CIO exposed  IT builds apps for standardized platforms; BYOD is inherently non-standardized  Legal implications around device ownership in a reimbursement model► Unclear ROI  Device maintenance better supported by employee vs. corporate; less expensive  Reimbursement vs. procurement may actually cost more  IT says it will not support; but ends up supporting a non-standardized environment  Significant new unplanned technologies may be required (e.g. VDI, MDM, client-side virtualization, etc.)  Unplanned downtime for information workers (e.g., go to Apple store for new HDD)► Legacy Applications & Connectivity  Large enterprises have built client-server apps to work on specific OS builds; refactoring  Limited connectivity for mobile workers means information is stored locally or VPN required  Web-based, app-store like portfolio and infrastructure may needed to fully take advantage  ….BUT employees still want those corporate apps on their phone!! 14
  15. 15. Results These dramatic market changes across cloud & mobile are driving employees to BYOD models, but enterprises are only slowly supporting this shift.► Creating a significant demand for BYOD approaches:  52% of all info workers use 3+ devices for work and growing PLUS ONE annually  25% of devices used for work are not PCs  71% of companies want to implement app-stores internally► However, enterprises are not responding  Less than 10% of companies are planning or have implemented BYOD programs  Over 70% of employees will continue to be provided and supported by a corporate smartphone policy  Only 11% have set up internal app stores  Only about a third of organizations surveyed say that usage of consumer technologies in the workplace are key to employee retention and productivitySources:Forrester: Info Workers Using Mobile & Devices For Work Will Transform Markets,IDC: Top 10 2012 PredictionsSymantec: State of Mobility SurveyUnisys: Consumerization of IT Benchmark Study 15
  16. 16. BYOD Opportunities: MarketTo date, only a small handful of large companies have moved to BYOD, most beingtechnology companies. However, these companies generally report:► Information workers are happier and may be more productive  Intel reports that they gained 1.6MM hours of productivity from their BYOD shift.► IT is freed-up to work on more important projects  In theory, IT no longer needs to spend time building, testing and deploying PCs and mobile phones, and can instead work on projects to help growth or improve productivity.► BYOD creates a progressive image for the company  Nearly all major technology magazines and blogs are looking for real-world examples of BYOD; when they find it, it is highly publicized and is excellent case-study fodder.Sources:Intel: Improving Security and Mobility for Personally Owned Devices 16
  17. 17. BYOD: Outsourcing TrendsTo date, only a small handful of large companies have moved to BYOD, most beingtechnology companies. A few have outsourced BYOD services support:► The key additional End User Services to support a BYOD environment are:  Mobile Device Management (MDM) and  Mobile Applications Management (MAM)► The two services overlap and appear to be merging into:  Asset Management, Software Distribution, Security Management  Current trends see a consolidation in the software vendor space and potential integration with enterprise scale master console or management systems► Open issues: Market alignment on pricing and SLAs; multiple class of usersSources:Intel: Improving Security and Mobility for Personally Owned Devices 17
  18. 18. harvey.gluckman@isg-one.comwww.isg-one.com

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