Achieving Business Value with Managed Services

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IDC's latest research reveals that organizations are using Avanade's application and infrastructure Managed Services to create significant business value - recording an average five-year return on investment of 446%. This IDC InfoBrief, sponsored by Avanade, demonstrates how Avanade Managed Services can assist organizations in maintaining competitiveness, ensuring they achieve their top business goals.

Learn more at http://www.avanade.com/managed-services

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Achieving Business Value with Managed Services

  1. 1. An IDC InfoBrief, sponsored by Avanade | May 2014 Managed Services Achieving Business Value with
  2. 2. pg 2 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services * IDC utilized its standard ROI methodology for the results shown in this electronic book, which were adapted from the IDC White Paper, Achieving Business Value with Avanade’s Application and Infrastructure Managed Services, by David Tapper and Randy Perry. This methodology is based on gathering data from current users of Avanade’s services as the foundation for the model. For more information, please visit www.avanade.com/managedservices. IDC’s research and analysis* demonstrates that Avanade’s Application and Infrastructure Managed Services delivered an average payback period of just over four months from going live, and an ROI of 446% through the following benefits: Business Value Highlights Payback period just over four months. ROI: 446%. Lowering annual operations cost by $2.2 M while increasing revenue Helping IT staff achieve 67% time savings and productivity gains on application development and 42% on application management Mitigating risks by reducing downtime by 64% Lowering infrastructure costs by an average of 13% IN BENEFITS FOR EVERY $1 INVESTED RETURNING OVER $5 Home
  3. 3. An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services pg 3 As more employees treat business IT like it was theirs – bringing their own mobile devices to work, or leveraging social media to pursue business opportunities, or adopting a cloud service for important business processes – more pressure grows on IT departments to overcome obstacles presented by these technologies and capitalize on the opportunities. Yet, when asked to use technology to innovate while also maintaining a steady state, IT struggles to respond without the needed resources and skill sets. IDC research shows that enterprises increasingly turn to managed services to mitigate risk and achieve 5 important business goals. Transforming the Economics of IT Business Goal #1: Optimize Financial Management While Meeting Key Performance Metrics Business Goal #2: Allocate Talent and Skills to Focus on Core Competencies Business Goal #3: Support Need for Greater Business Agility and Operational Excellence Business Goal #4: Provide Access to Flexible Sourcing Models Business Goal #5: Implement Strategic Change Home
  4. 4. pg 4 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Most importantly, enterprises are looking to managed services providers to enable and help drive more strategic capabilities and continuous innovation. Of course, buyers still want providers to help standardize and consolidate their IT environments. But, increasingly, enterprises also want to optimize the value of their existing software assets and move to innovative delivery models such as cloud and software-as-a- service, including access to new intellectual property. The Ultimate Goal The ultimate goal is to gain new capabilities from the managed service provider that buyers can use to innovate new products and services in order to grow their business. Home
  5. 5. pg 5 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Avanade’s application and infrastructure managed services can help organizations achieve each of the business goals previously listed. Avanade, a joint venture between Microsoft and Accenture, brings together a set of core competencies and capabilities that combine the best of both companies: Considering Avanade Avanade is a Managed Services specialist for Microsoft technologies Microsoft’s comprehensive enterprise platform of technologies and access to Microsoft’s R&D resources Accenture’s industry and business acumen, cross-industry solutions, and horizontal solutions accelerators Source: Avanade, 2014 Home
  6. 6. pg 6 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services IDC conducted interviews with Avanade’s application and infrastructure managed services customers to measure the financial impact to these organizations of their use of Avanade’s services. These organizations are realizing financial benefits from their use of Avanade’s managed services in 5 key areas. Avanade’s managed services 5 key areas 1. IT Staff Productivity Gains 2. Business Productivity Gains in Operations 3. Business Productivity Gains Resulting in Higher Revenue 4. Risk Mitigation Benefits 5. IT Infrastructure Cost Reduction IDC Business Value Study Financial Benefits IT staff productivity gains Business productivity gains – operations Business productivity gains – revenue Risk mitigation benefits Infrastructure cost reduction $51,279 $23,009 $6,465 Total: $89,018 per 100 users $2,807 $5,458$100,000 $80,000 $60,000 $40,000 $20,000 $0 Non-Discounted Average Annual Benefits per 100 Users Source: IDC, 2014 HomeHome
  7. 7. pg 7 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Because of the talent, skills, and experience that Avanade offers, the IT staff of customer organizations have become much more productive and are realizing significant time savings for completing important tasks. For example, Avanade has helped the IT staff achieve average time savings of 78% for forecasting and configuration management activities and 67% for application development activities. Study-Finding Spotlight #1: IT Staff Productivity Gains DIRECT FROM THE CUSTOMER: “If it’s a situation where we’re in a long-term project, and we need to deliver over time, then our ability to switch out needed skill sets with Avanade could easily save us 50% of the calendar time it would otherwise take.” IT Staff Activity Time Savings 78% 67% 66% 42% 27% 12% Forecasting/ configuration management Application development Help desk and responding to downtime Application management Training Time dealing with vendor Source: IDC, 2014 Home
  8. 8. pg 8 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Organizations are realizing five- year average annual business productivity gains of $23,009 per 100 users, or $2.21 million per organization, with Avanade. The most significant driver of these business productivity benefits is improved productivity among non-IT staff, enabled by Avanade. Study-Finding Spotlight #2: Business Productivity Gains in Operations Improved user productivity Faster time to market Reduced external spend on contractors $19,565 $1,965 $1,479 Total: $23,009 per 100 users $25,000 $20,000 $15,000 $10,000 $5,000 $0 Average Annual Business Productivity Benefits per 100 Users Source: IDC, 2014 DIRECT FROM THE CUSTOMER: “With the products and features that Avanade has helped us create, the typical user saves time. Our ability to create these types of features more than doubles with Avanade. These features help to increase revenue because it helps us improve our primary product that we sell to our customers.” Home
  9. 9. pg 9 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Your downtime could be costing you $480k/hour. Organizations are reducing the incidences of downtime and average time to recover from downtime. Organizations are also leveraging their use of Avanade’s managed services to increase their revenue by a five-year annual average of $6,465 per 100 users, or $620K per organization. Study-Finding Spotlight #3: Business Productivity Gains Resulting in Higher Revenues Business Productivity Enhancements — Revenue Annual Value Value per 100 Users Revenue impact — reduced downtime Reduced downtime — hours per year 21 Lost revenue per hour of downtime $480,000 Lost revenue recognized in study 25% Revenue impact — additional revenue $2,523,951 $26,287 from reduced downtime Revenue impact — improved operations Additional revenue from $575,000 $5,988 improved operations Additional revenue related to Avanade 12% Sum of additional revenue $3,098,951 $32,276 Realized revenue benefit 20% Net revenue benefit $619,790 $6,465 Source: IDC, 2014 Home
  10. 10. pg 10 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Organizations report that their help desk operations have become more efficient since moving to Avanade’s managed services. They have reduced the time it takes on average for their help desks to handle a call by 67% with Avanade. Study-Finding Spotlight #4: Risk Mitigation Benefits Reliability KPIs Advantage Without With with Avanade Avanade Benefit Avanade (%) Downtime Downtime incidents per year 10.30 6.14 4.16 40 Downtime hours per incident 3.34 2.18 1.16 35 Annual downtime hours per user 18.37 6.65 11.73 64 Service desk Level 2/3 calls per week 123.50 24.70 98.80 80 Minutes per call 26.25 8.75 17.50 67 Annual hours per user 1.39 0.46 0.93 67 Source: IDC, 2014 DIRECT FROM THE CUSTOMER: An Avanade customer noted that its help desk operations were “a more personalized service” with Avanade that “get the user back up and running faster — 15 minutes versus 5 minutes.” Home
  11. 11. pg 11 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Organizations are avoiding costs that they would otherwise bear to develop comparable internal solutions or to use another service provider and reducing spending on server hardware. On average, organizations are avoiding an average of $5,458 in costs per 100 users per year over five years, or $520K per organization. Study-Finding Spotlight #5: IT Infrastructure Cost Reduction Average Annual IT Infrastructure Cost Reductions per 100 Users Source: IDC, 2014 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Initial solution versus alternatives Server hardware Aggregate bandwidth Storage and networking Management software tools $3,368 $1,436 $260 $248 $146 $5,458 Home
  12. 12. pg 12 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services IDC’s research and analysis demonstrates that Avanade’s Application and Infrastructure Managed Services delivered an average payback period of just over 4 months from going live, and an ROI of 446% through the following benefits: • Returning over $5 in benefits for every $1 invested • Lowering annual operations cost by $2.2 M while increasing revenue • Helping IT staff achieve 67% time savings and productivity gains on application development and 42% on application management • Mitigating risks by reducing downtime by 64% • Lowering infrastructure costs by an average of 13% Business Value Highlights 5 YEAR AGGREGATE BENEFIT IN DISCOUNTED BENEFITS PER 100 USERS OVER 5 YEARS $28.6M $297,835 Home
  13. 13. pg 13 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services The five-year ROI analysis shows that on average, the organizations in this study will spend $54,592 per 100 users ($5.24 million per organization) on Avanade’s managed services and achieve $297,835 in discounted benefits per 100 users over 5 years ($28.60 million per organization). This results in an net present value (NPV) of $243,244 in discounted benefits per 100 users over 5 years ($23.53 million per organization) for their use of Avanade. Overall ROI Investment Benefits Cumulative net benefit $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 -$50,000 $28,265 $0 $100,179 $101,027 $101,974 $367,031 in non-discounted cumulative net benefits over 5 years $(30,461) Initial Year 1 Year 2 Year 3 Year 4 Year 5 $(8,513)$(8,513)$(8,513)$(8,513) $99,420 $(8,513) Cost Benefit Analysis Per 100 Users Source: IDC, 2014 Home
  14. 14. pg 14 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services According to the company, Avanade’s portfolio of services provides enterprises with a full lifecycle of options to support their needs across the entire IT environment for both business applications and infrastructure. Inside Avanade Avanade Lifecycle of Application and Infrastructure Managed Services Pricing Service Level Agreements Business Outcome Oriented Pay for Use On Premise Migration Velocity Transactional Hybrid Velocity of Changes Monthly Fixed/Variable Hosted Custom Mobile Availability Custom Public Cloud Support Response Resolution Multi-Year Private Cloud Application Managed Services Infrastructure Managed Services Platform • Custom Application • Microsoft Dynamics • Collaboration • Analytics • Private Cloud • Workplace • Unified Communications Collaboration Source: Avanade, 2014 Home
  15. 15. pg 15 An IDC InfoBrief, sponsored by Avanade | Document #247693 Achieving Business Value with Managed Services Inside Avanade Specializing in Microsoft technologies, this portfolio includes consultative services, which range from strategy, design, architecting, development, deployment, systems integration, and migration of IT and application technologies to 24 x 7, ongoing, proactive management and support. According to Avanade, the key for its customers is that all these service elements form part of the company’s managed services portfolio. As a result, Avanade is able to offer a menu of managed services that, for example, effectively include systems integration and application development delivered as a managed service. Additional information can be found at www.avanade.com/managedservices Avanade is able to deliver against its commitment to provide continuous improvement and innovation as part of its application and infrastructure managed services agreement. Home
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