Managed Services moving to the cloud. Ari Karppinen
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1 Managed Services moving to the cloud Ari Karppinen
2 Managed Services Based on the new structure effective 2013 (pro forma) Customer sales 1 9/2012: EUR 370 million (pro forma) Personnel: ~ (pro forma) Market position: #1 in Finland #4 in Sweden Sales by country Sales by industry Finland Sweden Denmark Germany Norway Other Financial Services Pro forma figures in this presentation are preliminary and may be subject to changes during the completion of the company s operating model design Public, Healthcare & Welfare Manufacturing, Retail & Logistics Telecom, Media, Energy & Utilities
3 Managed Services customers Key customer City of Stockholm If Kesko OP-Pohjola Region Skåne 2012 Major deals Telenor City of Stockholm (contract renewal) Swedish Governmental Service Center Tapiola Outokumpu
4 Market trends New customer requirements are reshaping the business models Consumerisation of IT Ecosystems Asset Free IT Services Consumerisation of IT IT Services are expected to be delivered as consumption based and business need driven. Rise of Big Data due to explosion of data amount Asset Free IT Services Change in buying behavior buying services instead of outsourcing the whole IT Reshaping funding/recharging models Ecosystems Multi-provider aggregation Integration of legacy and private/public clouds 4
5 Cloud drives worldwide IT services market growth CAGR +3 4% +25% Cloud offerings (as-a-service) Software-aaS Platform-aaS Data-aaS Infrastructure-aaS New or emerging types of services (CAGR) Complementing services Implementation and consulting Integration and orchestration Product development -1 to -3% Current standard offerings IT consulting Systems integrations Outsourcing 2010 Multiple sources Traditional offerings (CAGR)
6 Tieto s response to the change
7 Tieto s response to the change Proactive Fast Innovative new services 2010: Service transformation initiated 2011: Testing the technology 2012: First cloud services introduced Cloud services Tieto s cloud services fulfil various customer needs: from mission critical to development Hybrid solution to maximize benefits from existing legacy investments Self services Close collaboration with partners Gives Tieto competitive advantage to harness latest technology into IT services Example: Tieto Productivity cloud, a collaboration with Microsoft 2013: First larger deals of cloud services Continuous customer transformation
8 Managed Services contribution to Tieto s competitive edge Differentiation Efficiency SaaS PaaS IaaS Lifecare as a Service SAP PaaS Sharepoint PaaS Tieto Cloud Server MS CSI Industries Drive efficiency & quality via standardization and automation Build repeatable platforms and core capabilities Drive competitive differentiation, flexibility and agility
9 Positioning Managed Services in cloud offerings Cloud consultants & strategists Cloud service brokers Cloud service providers Managed Services Tieto Managed Services competitive edge: Largest customer base in our core markets for managed services Capability to integrate legacy and new cloud and execute the transformation Mature offshoring model Most advanced Infrastructure as a Service offerings
10 Managed Services The Cloud Offerings Tieto Cloud Server Tieto Productivity Cloud Unified Communication as a Service Tieto Hosted Desktop Platform(s) as a Service E.g. Dynamic SAP Landscape itap IaaS for IBM I-Series
11 Customer transformation from legacy to cloud Tieto Transformation Office Applications Data Runtime Middleware Operating systems Virtualisation Servers Storage Networking DC facilities Staffing Applications Data Runtime Middleware Operating systems Virtualisation Servers Storage Networking DC facilities Staffing Value Based Applications Data Runti me Mi dd l ew are Operating systems Virtualisation Servers Storage Networking D C facilities Staffing Applications Da ta Runtime Middleware Operating systems Virtualisation Serv ers St ora ge Networking DC facilities Staffing Service Based Virtualised Consolidated Standardised Basic Legacy systems Consolidation Optimisation Automation Transformation roadmap Applications Infrastructure Cloud ecosystem
12 Automation improves productivity Before Now Business need Corporate IT Server order 1 day 10 min Business need Corporate IT Self-service server order Define SLA Server ready Create invoicing items I&C monitoring Submit server installation Order operating system Server order received Manual process 5 7 days Secured private cloud SLA / Invoice Automatic process 3-5 minutes Customer notification Setup SD & incident mgmt I&C OS I&C firewalls etc.
13 Customer case example: How to adapt IT services to changing business needs Global Manufacturing Customer is experiencing big changes and needs IT services which are able to adapt to their business needs. Tieto provides solution with centralized governance, improved availability, scalability, best practices service production and reduced operational expenditure. Tieto success case Infrastructure Outsourcing -30% Up to 20-30% cut on IT operating costs anticipated. Source: Tieto Customer business opportunity: Customer wanted to improve the way they provide IT services and operate their core infrastructure services. ERP platform management services that are possible to scale according to the customer's use. How Tieto helped: Tieto transformed the legacy IT to centralized and on-site capacity services Solution: Tieto Cloud capacity solutions for remote and central x86 capacity Solution: Tieto SAP Dynamic Landscape for SAP Hosting platform and services What customer achieved: More efficient, flexible and responsive service delivery Reduced capital expenditures Reduced risk for business Access to a larger resource pool and utilize economy of scale benefits About Customer : A global leader in one of the manufacturing areas with a strong customer focus. Customers in a wide range of industries use products and services worldwide. Customer operates in more than 30 countries
14 Automation improves productivity Speed Tieto can respond to customer requirements instantly Quality and customer satisfaction Automation eliminates human errors improving the service quality Self services empower end users Profitability Increased productivity Potential to increase offshoring up to 60% Growth Easy-to-buy leads to higher volumes Transformation of legacy to cloud is business opportunity 2012 Cloud Based Offerings Traditional Managed Service Offerings 2016
15 This provides an opportunity for revenue growth and improved profitability Managed Services focus Key assumptions EBIT % Tieto target profitability 2016 MS 2012 MS 2016 Average market growth Growth Size of the bubble represents revenue in 2012 and 2016 (M ) Good potential for revenue growth Cloud services expected to grow over 100% (CAGR) during the 5- year period Traditional legacy revenues expected to reduce Cloud services are standardized, highly automated and offshored Legacy productivity and quality will be improved by Standardization Automatization Offshoring
16
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