IT Outsourcing Enters a New Decade: Current and Future Trends

Transcription

1 IT Outsourcing Enters a New Decade: Current and Future Trends IFCLA 2010 Conference - Helsinki Click Claudio to Da edit Rold Master subtitle style VP, Distinguished Analyst Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via [email protected]. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

2 2010: Cloud Has Become the Metaphor For the Industrialization of IT Services Cloud computing represents a fundamental change in the relationship between those who use solutions based on technology and those who provide them. The result will reshape strategies from "budget" to "business" for providers and buyers alike.

3 Key Issues 1. What are the key trends affecting the outsourcing and IT service market in 2010? 2. How market trends affects service providers and what are the potential outcomes for the outsourcing and IT service market?

4 What Are CIOs' Priorities for 2010? Business Growth and Cost Reduction

5 What Are SOURCING Priorities? Traditional Objectives, Traditional and Alternative Models Top Sourcing Priorities of 206 European IT Organizations 2009/2010 Degree of Interest in Alternative Delivery Models Reduce cost, reduce assets or improve cash flow (economic, financial conditions) SaaS IU Cloud Computing Gain access to resources and capabilities RIM BPU SaaS Improve flexibility IU Cloud Computing Improve scalability RIM BPU Improve agility/reduce processing cycles (speed) SaaS IU Reduce business risk Cloud Computing RIM BPU Source: Gartner (May 2010) Percentage of Respondents Percent Very High High Source: Gartner (May 2010)

6 Potential Impact of the 2009/2010 Recession and Service Industrialization on Prices IT Infrastructure Outsourcing Services Average Outsourcing Price Reductions Application Services Contract or Area Price or Rate Reductions Data center services 5% to 15% Desktop/help desk services 5% to 10% Network services 10% to 15% Application hosting services 10% to 20% Offshore rates in India 2% to 6% Offshore rates in China 10% to 20% U.S. on-site rates 12% to 17% Eurozone on-site rates 5% to 15% Typical multinational service providers' net margin is 6%; Indian providers' is 17.6%, decreased from 19.3% in 2007 Providers must increase their flexibility and decrease their cost: - Standardize services, consolidate, partner, aggregate, outsource - Restructure workforce, salaries, subcontractors - Accelerate toward alternative delivery modes, IT service value chain, new service/business models, cloud computing (= investments)

7 Key Issues 1. What are the key trends affecting the outsourcing and IT service market in 2010? 2. How market trends affects service providers and what are the potential outcomes for the outsourcing and IT service market?

8 The Services Market Is Changing (refer The Reshaping of the IT Service Market, 2 April 2001; M ) Optimization Vertical/Proce ss- Specific Horizontal Business Business Process Utility Process SaaS Utility Business Strategy Consulting IT Consultin App. g Develop. Enterprise & One-to- Integration One Data Center Outsourcing Management Business Value-Add Custom BPO~HR~ Logistics~F &A Custom Solutions ERP~SCM~ CRM Call CRM~BI Center Transaction Processing App. Mgmt. Desktop Management Network Services Help Desk Outsourcing IT Efficiency Remote Managed Services Hosting/ Colocation Storage on Demand Network Utility Value Creation Infrastructu re Utility Access Cloud-Based Application Delivery Services Cloud-Based Business Process Services Cloud-Based Application Infrastructure Services Cloud-Based System Infrastructure Services Shared One-to- Many

9 Role of Recessions in the Industrialization of the IT Services Market Optimization Business Value-Add Creation Traditional Service Models Enterprise One-to- One Global Delivery Process Standardiz ation & Portfolio Rationaliz ation Consumerization Alternative Delivery Models Shared One-to- Many Dot-Com Crash Economic Crisis Management IT Efficiency Access

10 Examples of Application Service Providers in Nearshore Locations Czech Republic: IBA, Infosys, TietoEnator Romania: Ness, Wipro Hungary: EPAM, Neoris, SIS, TCS, Unisys Morocco: Atos Origin, Capgemini, Logica Poland: Capgemini, CGI, HCL, HP, TietoEnato Spain: r Atos Origin, Capgemini, CGI, Softtek South Africa: Fujitsu, Patni, Zensar Slovakia: HP, Lionbridge, Ness, SIS Latvia: Exigen, TietoEnator Russia: Aplana, DataArt, EPAM, Luxoft, Ukraine: Reksoft Aplana, DataArt, Exigen, Luxoft Belarus: EPAM, Exigen, IBA Group, TietoEnator

11 Examples of IT Infrastructure Outsourcing Providers in Nearshore Locations Poland: AtosOrigin, Capgemini, TechTeam Czech Republic: CSC, HP, IBM, TietoEnator, T-Systems Hungary: HP, Getronics, T-Systems, Unisys, IBM Romania: Capgemini, TechTeam, SIS Slovakia: HP, T-Systems Latvia: CSC, TietoEnator Estonia: Fujitsu Bulgaria: HP Ireland: Fujitsu, HP, SIS Italy: EDS Portugal: Fujitsu, Logica Scotlan d: Getroni cs Spain: Computacenter, HP, T-Systems, BT Russia: Fujitsu South Africa: Fujitsu, IBM, T-Systems

12 Colocation, Hosting and DCO: Toward Infrastructure Utility and the Cloud Outsourcing/ Hosting Data Centre Outsourcing Application Hosting Dedicated Managed Hosting AT&T, Rackspace, Telefonica, Savvis, Sungard, DataPipe, AppNexus, StrataScale Colocation VPS Hosting Shared Hosting Infrastructure Utility Capgemini (SAP Run), IBM (AoD for SAP), HP USS for SAP T-Systems Dynamic Services for SAP, Logica SAP ODIS HCL IU4SAP Specialized Platforms IU4 SAP, Exchange, Dynamics, AtosOrigin (x86 Utility), CSC Instance2Go, HP AiaaS, IBM FSO, Logica ODIS, FSC IaaS, HCL BRI, Capgemini COD, T-Systems Dynamic Services Utility Servers, Storage, Utility Hosting Terremark (Enterprise Cloud) Layered Tech, Enki, BT ServePath's GoGrid AT&T (Synaptic Hosting), Savvis (Virtual Intelligent Hosting), Terremark (Infinistructure) 1&1, Yahoo, GoDaddy and BlueHost Virtual DC Cloud Computing Amazon SimpleDB, Google App Engine, Cloud Application Infrastructure (Application Platform as a Service) Microsoft Azure Service Platform, salesforce.com Force.com, LongJump Application Platform Amazon EC2, S3, EBS, SQS Cloud System Infrastructure Joyent, Linode, Rackspace Cloud Sites/ Servers, Nirvanix Storage Delivery Network, Vaultscape, Joyent Accelerators, Bingodisk Note: Sample list

13 Emerging IU Categories That Lead to Subcategories and Stand-Alone Offerings Storage as a Service/Storage Utility Subcategories Outsourced Hosted Attribute on Premises Remote Cloud Storage Drive in the Sky Location Client site Provider site Provider/cloud Provider/cloud Latency Low Low High High Price Custom quote $1-$8 Gb/month allocated RAID 5 $.15-$.25 Gb/month + transport fee Free to $.20 Gb/month raw space Examples CSC, EDS Rackspace, Savvis, outsourcers Amazon AWS, Nirvanix Yahoo, Google Virtual Servers/Utility Hosting Attribute Subcategories Shared Hosting Virtual Private Server Dedicated/Managed /Flexible Provision Utility Hosting/VDC Cloud Hosting Server Access Control panel, limited shell Hosting to full admin. Full admin. Programmatic Virtualization Partition/hypervisor None Hypervisor Unknown Price (month) ($5-$200) - $70-$300 $700-1,000 or more $300 or more $0.10 CPU/hr. Examples 1&1, Yahoo, Verio, Lunarpages Savvis,Rackspace, Outsourcers Terremark, AT&T, BT, Savvis, Amazon, Rackspace, GoGrid, Joyent

14 Emerging Model: Infrastructure Utility for SAP IU for SAP: Industrialized managed service that supports and delivers SAP production, tests and develops environments (based on clients' licenses and their customized implementations). Support: SAP: Help Desk Virtualization: VMware LPar VPar Integrity VM Infrastructure: AIX HP-UX Solaris Linux Win 2003 Connectivity: Internet + VPN 1-5 Language s Direct Account Manager ECC 6.0 R/3 Standar d Reportin g Service Portal All Standard Modules Database: MS SQL Oracle MaxDB Solaris Containers MPLS Dedicated Frame Relay Virtualization used in every solution; automation still a work in progress. Clients get some choice of platforms but not all are available. Standard SLAs and T&Cs Geographic availability is expanding (Germany, Europe, US, APAC) Transition Two weeks to six months. Most providers indicate four to eight weeks. Entry level price moved from 15 PUPM (2008) to 10 PUPM (2009) More than 450 clients and named users by 5 providers more providers are coming Revenue growth of %+ and IU/OS revenue at 40%+ for key players

15 Cloud Computing is Driving Net New Business Opportunities ( ) Optimization Business Strategy Consulting Vertical/Proce ss- Specific Horizontal Business Business Process Utility Process SaaS Cloud-Based Utility SaaS 5 B$ nnbapplication Delivery Services IT Consultin App. g Develop. Enterprise & One-to- Integration One Business Value-Add Data Center Outsourcing Desktop Management Network Services Help Desk Outsourcing Management Custom BPO~HR~ Logistics~F Custom &A Solutions ERP~SCM~ CRM Call CRM~BI Center Transaction Processing App. Mgmt. ITS/cloud 4 B$ nnb IT Efficiency Cloud Aggregation Remote Managed Services Hosting/ Colocation Storage on Demand Network Utility Value Creation Infrastructu IUS re 10 B$ nnb Utility Access Adv 26 B$ nnb Vertical/Process BPU 17 B$ nnb Cloud-Based Business Process Services Enterprise BPU 11 B$ nnb Cloud-Based Application Infrastructure Services Cloud-Based System Infrastructure Services Shared One-to- Many

16 Main Implications 1. Cloud computing and alternative delivery models enable a new balance of service quality, flexibility and price for outsourcing and IT services. 2. The market is changing, with traditional and new offerings co-existing, and new offerings cannibalizing revenue. 3. This is leading providers to focus on protecting their margins and investing in new offerings and delivery models to maintain and gain market share. 4. It's leading customers to focus on managing risk, integrate multi-sourcing initiatives and take advantage of industrialized services.

17 IT Outsourcing Enters a New Decade: Current and Future Trends IFCLA 2010 Conference - Helsinki Click Claudio to Da edit Rold Master subtitle style VP, Distinguished Analyst Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via [email protected]. Gartner is a registered trademark of Gartner, Inc. or its affiliates.