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Datacraft Asia Strategy For Services 2010


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Business level strategy for Datacraft Asia in 2010.

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Datacraft Asia Strategy For Services 2010

  1. 1. Joshua Gavin Hong
  2. 2. Overview 1. The IT Market in Asia 2009-2010 2. Impact of the recession 3. Snapshot – Datacraft Asia 4. Growth Story – Datacraft Asia 5. Competitors 6. Porter’s Five Force Industry Analysis 7. SWOT 8. Global Strategy – Dimension Data 9. Challenges 10. Recommendations
  3. 3. The IT Market in Asia 2009-2010  The overall IT services market in Asia Pacific (excluding Japan) is estimated to grow at a compound annual growth rate (CAGR) of 9.9% for 2009-2013, reaching US$59.4 billion by 2013 (IDC’s Asia/Pacific)  2010 sees improved business sentiment and encouraging signs of economic recovery within the region, with the IT services market looks set to regain its momentum to rebound at a forecasted 8.9% in 2010.
  4. 4. The IT Market in Asia 2009-2010  Growth can be attributed to 3 factors 1. The adoption of new technologies (e.g. virtualization and tiered storage) and IT models like cloud computing to achieve infrastructure optimization 2. The impact of stimulus packages, particularly in the network services space as Asian governments look to improve connectivity to remote areas 3. Continued investment in outsourcing and managed services, particularly in growth markets such as India.
  5. 5. The IT Market in Asia 2009-2010  Top Concerns of Asia Pacific CIOs Heading into 2010  Maximizing value on previously purchased applications, systems and infrastructure.  Demonstrating value of ICT investments.  Delivering process management and operations excellence programs.  Measuring efficiency and effectiveness of ICT.  Defending core and non-discretionary costs.  Improving management decision making.
  6. 6. The IT Market in Asia 2009-2010  Enterprises are moving from a CAPEX to an OPEX model
  7. 7. Datacraft/Dimension Data Snapshot  Systems integration account for Businesses by revenue 81% of group revenue  Services provided among core IT 6% 4% Systems infrastructures (Network, voice 9% Integration and data comms, contact Express Data centres, operating systems etc. 81% Internet Solutions  Professional Services – Plan Plessey and build  Product procurement – Systems Integration Supported by long standing Breakdown mutually beneficial relationships with market leading vendors  Managed Services – Pure 15% Product maintenance services to more 26% Managed advanced services where 59% Services Datacraft takes responsibility for Professional monitoring and managing the IT Services infrastructures of clients
  8. 8. Datacraft/Dimension Data Snapshot  Services continuum  Business Lines  Key Verticals  Converged Communications  Financial Services  Microsoft Solutions  Data Centre and Storage Solutions  Manufacturing  Customer Interactive Solutions  Media and communications  Security Solutions  Travel Transportation & Real Estate  Public Sector
  9. 9. Datacraft Asia Growth Story  Knowledge Acquisition  Fortifies services business with acquisition of Multisoft (networks, 2000), National Communication Services NZ (cabling, 2000) amongst others.  Global Partnerships  EMC corp – 2002  Microsoft – 2004  Sun Microsystems – 2005  Cisco Global Service alliance – 2006  Resource consolidation  Leveraged availability of low cost resources, labour and other infrastructural facilities with the consolidation of five managed services operations into one global services centre in India  Global Network  Datacraft a wholly owned subsidiary of Dimension Data – positioned as a stronger force. - 2008
  10. 10. Competitors  Computer Associates (CA)  Virtualization management, Security, infrastructure management,  CSC  Financial vertical, manufacturing, Public sector, managed network services  IBM  Infrastructure services, consulting  HP  Infrastructure services  Unisys  Data Centre, Security,
  11. 11. Porter’s five forces analysis – IT services asia Threat of substitutes Competition intensity (Low to moderate) (Moderate to High) • High cost • Large established • Manpower intensive players • Competitive pricing • High exit cost Buyer Power Supplier power (Moderate) • Skilled labor pool • Large number of potential buyers Entry Barriers (moderate to high)
  12. 12. SWOT – Datacraft/Dimension Data Strengths Weaknesses • Vertical expertise • Significant revenue dependency on product • Industry leading expertise in several lines of procurement business • Service offering does not reflect evolution • Global partnerships with market leading toward changing industry conditions vendors SWOT Opportunity Threats • Market conditions and mindset ready for new • Strong competition from major global players infrastructure management models in • Rising cost of skilled labor response to changing technology • Rapidly changing IT infrastructure landscape • Gaps in current service offerings
  13. 13. Dimension Data – Corporate Growth Strategy Geographical Increasing Increase Increasing expansion in market share Services existing client high growth in existing Revenues revenue markets businesses KPIs 1. Increased revenue from services 2. Maintaining gross margins 3. Improve operating margin 4. EPS growth
  14. 14. Dimension Data – Client Experience Strategy Demonstrating Exceeding Business and Enhancing Fostering client client technical delivery quality intimacy expectations expertise KPIs 1. Improved client retention trends 2. Improved client satisfaction trends 3. Improved managed services churn rates 4. Increased services and lines of business per client
  15. 15. Dimension Data – Operational Excellence Strategy Launching and Maintaining world Improving go-to- driving class operational market compelling processes and effectiveness offerings systems KPIs 1. Professional services utilization and realization rates 2. Certification and Partner awards
  16. 16. Challenges – Datacraft Asia 1. Transition up the value curve from IT infrastructure supplier to strategic IT partner  Perception hurdles; Datacraft traditionally ‘product’ based.  Services offering must be scalable and in line with technological advancements 2. Client adoption rates  With the rapidly evolving IT landscape, some segment of the market may be resistant to change 3. Competitive offerings  Strong competitive offerings in areas of high growth 4. Talent / Expertise  Time needed for training
  17. 17. Business level strategy – Focus areas in 2010 1. Virtualization  Will be the top networking investment over the next 5 yrs as CIOs continue to be Virtualization focused on cost reduction 2. Managed Services  Organizations looking to lengthen the lifecycle of existing infrastructure, refresh cycles delayed. Services 3. Multisourcing  Traditional outsourcing strategies are no longer Managed Multisourcing satisfactory for some Services organizations.  Looking for service providers to provide strategic effectiveness
  18. 18. Virtualization – Why? 1. CIOs continue to be focused on cost reduction 2. Organizations are increasingly adopting Virtualization as an energy, space and cost saving measure 3. Organizations seek competitive advantage by simplifying management and increasing operational efficiency 4. Virtualization has become a critical element of IT services that is a key component of more ambitious internal cloud computing development 5. Virtualization is becoming more pervasive in production use
  19. 19. Virtualization – Operational Challenges 1. Capacity management  By abstracting the virtual servers from the raw physical hardware, the actual resource requirements become ambiguous. 2. Security risk perception  Any new technology carries more perceived risk. the hidden nature of virtual infrastructure causes concern about new threats but even more around the risk of instability. 3. Proper skills are difficult to attain and retain  Virtualization marks a notable departure from prior operational models. Existing staff must be trained in the new technology and its complexity mandates automation.
  20. 20. Virtualization - Opportunity 1. Virtualization still in early phases of operational use 2. Newly introduced levels of complexity require refinement in operational processes and management  Standardization greatly simplifies the complexity of such environments 3. Top down management approach is needed  Virtualization and other infrastructure technologies are valuable but without strong infrastructure, application stability and performance suffers
  21. 21. Managed Services – Why? 1. Continued demand for managed services and outsourcing 2. Cost management becomes a key focus for organizations in the region. 3. Organizations in the region are increasingly aware of the need to increase efficiencies without incurring significant cost
  22. 22. Managed Services – Enterprise Challenges 1. Intensifying price competition 2. Declining customer loyalty 3. Expanding globalization 4. Escalating Operating costs 5. Increasing Technology complexity
  23. 23. Managed Services – Opportunity 1. Opportunities expected to arise in the managed services space as organizations move assets off their books and scrutinize their operating expenses more closely 2. New support contracts in conjunction with new hardware sales are likely to decrease 3. Organizations will look to lengthen the lifecycle of existing infrastructure 4. Demand for extended support services expected to grow as warranties expire
  24. 24. Multisourcing – Why? 1. Maturation of sourcing strategies 2. Movement away from fully-insourced or fully-outsourced procurement models 3. Organizations realizing the benefits of risk diversification and cost savings by using multiple vendors
  25. 25. Multisourcing – Enterprise Challenges 1. Outsourcing Deals Are Difficult to Build and Manage  Many organisations lack the experience to properly oversee and estimate the end-to-end effort that outsourcing requires  New options, such as alternative delivery and acquisition models, change the way the sourcing life cycle drives activities, and increases the complexity of the sourcing environment and the decision-making process  The service provider landscape is dynamic, which makes it frequently challenging to find the right one with which to build a long-lasting relationship. 2. Outsourcing Deals Often Fail to Deliver Expected Outcomes  Some challenges can arise such as, low end-user satisfaction, poorly defined business benefits and immeasurable deal benefits, complex governance and strained relationships 3. Outsourcing Deals Often Fail to Evolve  Outsourcing deals often aren't structured to provide the flexibility needed to enable the deal to adapt quickly to changes in the market and organisation
  26. 26. Multisourcing – Opportunity 1. Strategy management  Aligns sourcing actions with the business goals, strategy, frameworks and governance to ensure optimal ongoing business support 2. Risk management  Mitigates sourcing risks to substantially reduce the levels of risk across all deals 3. Financial management  Formulate financial targets with the business to establish a clear guideline for all sourcing activities. 4. Demand management  Oversees and prioritises IT services based on demand to optimise resources and skills across all sourcing activities 5. Service management  Aligns the services across internal and external service providers (ESPs) to achieve seamless, end-to-end service delivery 6. Programme management  Aligns portfolio and sourcing strategies so that projects achieve desired outcomes 7. Relationship management  Maintains the relationships with all internal and external service providers (SPs). It sets performance expectations with SPs, collects performance metrics for each and provides feedback 8. HR management  Forecast and fulfill staffing needs relative to sourcing needs to ensure an optimal level of skills and resources 9. Performance management  Optimise ESP’s costs and ensure that new or revised business goals are always attained 10. Contract management  Manages the contracting process to meet the organisation’s needs. It includes keeping internal contracts and industry best-practice contract templates for future use
  27. 27. Business level strategy - Execution Integrated Approach: • Client Identification 1. Increasing existing client revenue • Proactive assessments and Existing Client recommendations Accounts 2. Increasing adoption of managed services 3. Opportunity to exceed client expectations • Collaboration with product procurement team to upsell services 4. Upsell opportunities for services New Client • Proactive Client engagement exist with new product placement Accounts 5. Growth market for increased services scope (Virtualization/cloud computing) • Virtualization Management 6. Once developed, a virtualization Development of • Cloud Computing management solution would have a increased ready base of existing clients services scope
  28. 28. Business level strategy - Execution 1. Refinement of current Managed Managed solutions and development Services Multisourcing virtualization of new offerings Travel, 2. Vertical integration Financial Services Manufacturing Media and Communications Transportation and Real Estate Public Sector 3. Education in markets with China India Singapore Hong Kong Malaysia growth potential but mental barriers 4. Right product for the right Virtualization Singapore Managed Services Thailand geographical market
  29. 29. By Josh Hong - +65 96640483