NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group
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NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group

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  • There is a powerful wave of forces that are converging to position enterprises to resolve their IT infrastructure operations challenges.Technology platforms are being unbundled as service-oriented architectures are applied to those platforms. Remote management tools enable the delivery of services from anywhere to anywhere. Virtualization approaches enable dramatic improvements in utilization.New talent sources are being unlocked. As capability in low cost locations is proven, enterprises of all sizes and types can leverage specialized skills like never before.New delivery approaches are also emerging as service-oriented architecture princes are applied to operations activities, standards for delivery mature, and modularization becomes possible. Transition: These forces enable the adoption of a Fluid Platform Architecture, liquefying sedimentation layers to position the enterprise to capture numerous advantages…

NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group Presentation Transcript

  • RIMO is Dead, Long Live RIMO February 2014
  • The King is Dead Long Live the King! Proprietary & Confidential. © 2013, Everest Global, Inc. 2
  • RIMO is disrupting the infrastructure market and redistributing the profit pool Asset-light players more profitable 2012; Operating margin in percentage IBM 13.3 Dell 7.1 HP CSC 8.7 0.4 TCS 23.7 Wipro 19.5 HCL 18.2 Cognizant 18.8 Proprietary & Confidential. © 2013, Everest Global, Inc. 3
  • RIMO’s impact is far from over, having only captured a small part of the market to date Asset-heavy players losing share 2010-2012; CAGR in percentage Annual IT outsourcing revenue US $000 2010 Asset-Heavy IBM 0.03 Dell 0.7 HP Avg. = -0.6% -1.4 2011 $18,000 -1.3 CSC $20,000 2012 $16,000 $14,000 $12,000 $10,000 $8,000 Asset-Light TCS Wipro 31.9 Avg. = 27% 28.3 $2,000 $0 IBM Cognizant Source: $4,000 15.8 HCL $6,000 Dell HP CSC TCS Wipro HCL Cognizant 42.8 Everest Group estimates Proprietary & Confidential. © 2013, Everest Global, Inc. 4
  • However, Cloud is growing at a rate that is disruptive ITO market segment 2012-2016 projected CAGR 2012; Percentage Revenue in US$ billion Cloud compute 41.9% Decrease in traditional ITO deal signings3 Number3 404 ITO market 19.3% 5.9% 307 2012 2013 5 2011 Infrastructure utility1 328 16 250 Increase in Cloud-related deal signings3 Number 70 62 26 Traditional ITO segments2 1 2 3 Source: 3.1% 190 2011 2012 2013 On-demand, shared IT infrastructure architecture Includes Network and desktop outsourcing, help desk outsourcing, data center outsourcing, storage as a service, and end user compute Engagements with infrastructure service in scope Gartner; Everest Group analysis Proprietary & Confidential. © 2013, Everest Global, Inc. 5
  • 50% of all data center workloads are advantaged through cloud delivery Improved Efficiencies/ Utilization ILLUSTRATIVE Wave I Low Risk Extensions DR/BCP “Spiky” LOB apps “Big Data”/ Analytics Web Sites Backup/ Archive ERP Test/Dev Virtual Desktop Email HCM Txnl Apps Wave II Driving Value Wave III Attacking the Core SCM Marketing Apps Adoption Driver Collab. CRM New Business Capabilities Proprietary & Confidential. © 2013, Everest Global, Inc. 6
  • An example of the nature of Cloud advantage Peak load - Public cloud Relative enterprise workload cost1 US$/GHz hrs Base load - Private cloud 100% 60-65% 60% 25% Dedicated 1 Source: Virtualized / Private cloud Public cloud Hybrid cloud Assumes average workload mix and profile; 15% of total peak workload hours shifted to public Cloud in an on-demand model; does not include application migration costs Everest Group Cloud Value Assessment Model Proprietary & Confidential. © 2013, Everest Global, Inc. 7
  • Long term contracts are no defense against cloud CLIENT EXAMPLE Alternative IT infrastructure solutions Baseline Traditional outsourcing procurement Contracted floor Cost index Next-Generation IT services solution Solution differences 120 110 Structure Services Pricing 100 Long term commitment for defined service portfolio Custom services and service level agreements (SLAs) Resource unit pricing linked to assets Hybrid roadmap of diverse IT service models Standard services and SLAs Pricing linked to model, including consumptionbased 90 80 70 60 50 40 YR0 Note 1: Note 2: YR1 YR2 YR3 YR4 YR5 Baseline and Traditional Outsourcing Procurement based on actual client projections and executed service provider contract, including transition costs Next Generation IT Services Solution estimates potential from executing roadmap of Next Generation IT initiatives to implement private Cloud and hybrid private/public Cloud solution over 4 years, including projected migration costs Proprietary & Confidential. © 2013, Everest Global, Inc. 8
  • RIMO players are extending the arbitrage model to embrace new models Provider Buyer Description   Management Tools as a Service platform – Transform IT operations desktops, storage, compute, telecom, securit y, and databases  Source: Manage and transform the infrastructure landscape – 20 countries,19,000 employees, 80 locations Manage SAP environment via a private cloud. – With client, consolidated 9 datacenters into 2, eliminated over 1,000 servers – 35 locations more than 50% consumers hosted on it Publicly available information Proprietary & Confidential. © 2013, Everest Global, Inc. 9
  • RIMO players are being out spent CLIENT EXAMPLE Approach: Full service public cloud     Softlayer (2013) - US$2 billion – Global Cloud infrastructure UrbanCode (2013) – Software delivery automation Green Hat (2012) – Software quality and testing for Cloud environments Big Fix (2010) – Management and automation for security and compliance software updates Approach: Management solutions on top of any next generation platform Plain text  Enstratius (2013) – Consolidated management across multiple Cloud platforms  Multiple acquisitions (2012) - US$5 billion – Credant Software – Data protection – Gale Technologies – Infrastructure automation – Quest Software – Value-added software solutions/virtualization  Boomi (2010) – SaaS integration Proprietary & Confidential. © 2013, Everest Global, Inc. 10
  • To recap  More remote management, fewer FTE’s  New skills set Arbitrage   Self healing systems  Automation Automated bursting Self-provisioning  Delivery SaaS…as a delivery model  Public cloud  Private cloud Proprietary & Confidential. © 2013, Everest Global, Inc. 11
  • The innovator’s dilemma RIMO Traditional IT Infrastructure Proprietary & Confidential. © 2013, Everest Global, Inc. 12
  • Dallas (Headquarters) info@everestgrp.com +1-214-451-3000 New York info@everestgrp.com +1-646-805-4000 Toronto canada@everestgrp.com +1-647-557-3475 London unitedkingdom@everestgrp.com +44-207-129-1318 Stay connected Websites www.everestgrp.com research.everestgrp.com Twitter @EverestGroup @Everest_Cloud Blogs Delhi india@everestgrp.com +91-124-284-1000 www.sherpasinblueshirts.com www.gainingaltitudeinthecloud.com