At IDC Directions 2014 in Stockholm and Copenhagen I gave a presentation regarding the future in IT Service challenges and new sourcing models. Aimed mainly towards Services vendors in the Nordics.

1. IT Service challenges and new
sourcing models
Johan Hallberg
Research Manager, IT Services and CXIT
CIO Agenda
#idcdirections
#directions14

2. Nordic ICT Investment Drivers
2014 – 2015
Line Of Business priorities



Improve productivity/efficiency (52%)
Optimize business processes (35%)
Enhance customer experience (29%)
#directions14
IT Priorities



Reduce cost (45%)
Develop solutions to improve business
processes (36%)
Aligning IT systems with business
processes (31%)
© IDC 2014
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3. Nordic ICT investments in 2014
60%
50%
40%
30%
20%
10%
0%
Maintenance New projects
 ICT Budgets increasingly
shifting towards new projects
 IT organisations are
desperately looking for
reducing cost for managing
the current infrastructure
 Budgets are available for
new projects – if the
business case is solid
Increase investments
Reduce investments
#directions14
© IDC 2014
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4. Top prioritized new ICT projects in the
Nordics
50%
40%
Solutions supporting the
core business drives
demand
Mobility, security and
infrastructure are means
and functionalities
30%
20%
10%
0%
Top 3
Priority 1
#directions14
© IDC 2014
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5. Back-end IT vs Front-end IT
vs
•
•
•
•
•
•
Focus:
Simplification, standardization,
globalization
Locked down: few major new
apps built there, slow change
cycles
Little or no experimentation
"Sober" priorities:
reliability, security, integrity, inte
gration, high volume processing
Shrinking: Total spend here is
at best capped, more likely
aggressively shrinking.
•
•
•
•
#directions14
Focus: Enhanced Customer
Experience, CRM, analytics, mobile, soci
al, often with cloud-based delivery
Fast-moving: Agile development
Experimentation is actively
encouraged: new, fast-changing, fastbuilt apps that plug into the slowerchanging Back End
"Heady" priorities: drive revenue
growth, raise customer satisfaction, build
brand differentiation and loyalty
Growing: Net new ICT spend is here
© IDC 2014
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6. Work with your clients LoB!
By 2016,
80% of all new IT
related investments
will directly involve
Line-of-Business
executives.
- IDC Prediction 2013
#directions14
© IDC 2014
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7. Shift to new Consumption and Service
Delivery Models
"We rather buy business outcome based
ICT Service (and we do!), than hundreds of
consultants…“
Workforce model
(CIO @ Global car manufacturer)
Virtual
workforce
Traditional
brick-and-mortal
workforce
Traditional
IT Delivery
Platform-based cloud
service delivery
(e.g., SaaS)
Service delivery model
#directions14
© IDC 2014
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8. Outsourcing Maturity
“How would you describe your organization`s current outsourcing
contracts?”

Desktop
26%
Network
27%
Datacenter
27%
35%
24%
Applications
20%
32%
41%
30%
0%
36%
27%
31%
40%
25%
60%
80%
1st Generation
2nd Generation
3rd Generation or above
Don't know
#directions14
50% European Organizations
engaged in IT outsourcing be this
apps or infrastructure

On average 33% of organizations
outsourcing have 3rd generation
engagements or above (safely
assuming cost take out has
occured)

About 25% of organizations are
considering IT outsourcing in
the next 12 months
11%
5%
7%
14%
100%
© IDC 2014
Source: European Services, Custom IBM Enterprise Survey , March 2012- N=140 – only those that are currently outsourcing
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9. “If your organization has switched IT outsourcing vendor in the past 12
months, what was the key motivation for doing so?” Please rank your
top three motivations in order of importance (Nordic results).
More collaborative approach - more contract
flexibility
70%
19%
64%
Gaining access to better technical skills
16%
57%
Improving quality of service from vendor
25%
55%
Cutting outsourcing costs
21%
55%
Vendor consolidation - cutting number of suppliers
19%
0%
Rank 1, 2 or 3
•
10% 20% 30% 40% 50% 60% 70% 80%
Rank 1
Service quality and cost control? Sure, but what CIOs need from strategic
suppliers is something more: helping them to challenge and transform
their organization by using world class talents and skills.
#directions14
© IDC 2014
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10. Essential guidelines
 Winners are consulting led and business oriented
 Winners are proactive and leads the clients
 Rethink your sales – drive volume!
 Invest in your talents – 3rd platform talent!
AND never forget
 Thought leadership – Guiding, not just following, clients
drives differentiation, fights commoditization.
 Fancy growth? Become a front-runner of the 3rd platform
by innovating your offerings!
#directions14
© IDC 2014
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11. Questions?
Johan Hallberg
Research Manager
IT Services and CXIT
JHallberg@IDC.com
@JohanHallberg
#directions14
© IDC 2014
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