HFS TOP 10 INFRASTRUCTURE AND ENTERPRISE CLOUD SERVICES 2018

The infrastructure and enterprise cloud market continues to evolve as as-a-service and hyperscale cloud put pressure on traditional delivery models. More and more enterprises are looking for partners to tackle challenges from writing off legacy to providing a platform for the expansion of digital services. As this market develops, providers are becoming more specialised—more providers are coming to the market armed with deep relationships with the major cloud providers, placing less emphasis on their own infrastructure assets. Indeed, some are coming to market with no assets at all—playing the role of a pure-play services broker.

 

While infrastructure and cloud may no longer be the buzzword on the lips of business and IT leaders, it’s the essential foundation for many of the digital technologies that take up more mindshare. To this end, Infrastructure spending is shifting away from specific IT components and instead is being reframed as an enabler for other engagements in contracts. Infrastructure and applications, for example, are becoming increasingly interchangeable for enterprises. The focus is on the outcome to be achieved not on the tools and levers used to achieve them.

 

In this second iteration of this research (but first in the developed HFS Top 10 methodology), we explore the emerging market in the provider ecosystem for infrastructure and enterprise cloud services.

 

WHAT YOU’LL KNOW AFTER READING

 

  • How the market is evolving to face the onslaught of hyperscale cloud and as-a-service delivery models
  • The movements of the biggest providers operating in the space, and how they are evolving offerings to meet the changing needs of enterprise clients
  • The strengths, challenges, and opportunities for the major providers servicing the infrastructure and enterprise cloud market.

Source: HSF.com-HFS TOP 10 INFRASTRUCTURE AND ENTERPRISE CLOUD SERVICES 2018

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Technavio Announces Top Seven Vendors in the Global IT Outsourcing Market Until 2019

Technavio has announced the top seven leading vendors for the global IT outsourcing market in their latest research report. This report also lists 13 other prominent vendors who are expected to contribute to this market’s growth over the forecast period.

Technavio announces top seven vendors in the global IT outsourcing market until 2019.

To identify the top vendors, Technavio’s market research analysts have considered the top contributors to the overall revenue of this market. To calculate the market size, the report considers revenue generated from infrastructure and application outsourcing services.

“Increased adoption of application outsourcing is predicted to fuel the growth of IT outsourcing until 2019. To meet the growing demand, vendors are providing application development outsourcing services that include modular architectures and are compatible with advanced IT infrastructures like cloud computing. In addition, IT outsourcing service providers are also developing applications that are embedded with intelligent systems for handling multiple features and high volumes of data,” said Amit Sharma, one of Technavio’s lead analysts for ITO and BPOs.

“For adding value to their service offerings, IT outsourcing service providers are giving prime importance to their clients’ application portfolio. Application development through DevOps and Agile are increasing innovative solutions for software development. Automation of applications is predicted to vastly improve performance of routine tasks over the next four years,” adds Amit.

Seven leading vendors in the global IT outsourcing market:

Accenture

Accenture was incorporated in 2009 and is headquartered in Dublin, Ireland. The company provides management consulting, and technology and outsourcing services globally. As of August 31, 2014, the corporation had 305,000 employees across the world and reported a net revenue of close to USD 28.56 billion in FY2013 and USD 30 billion in FY2014.

Accenture provides IT professional services, including management consulting, technology, and outsourcing services to clients across a wide range of industries globally. The company serves the communications, electronics and high-tech, media and entertainment, banking, capital markets, insurance, health, public service, air, freight and travel services, automotive, consumer goods and services, industrial equipment, infrastructure, life sciences, retail, chemical, energy, natural resources, and utilities sectors.

Capgemini

Capgemini was founded in 1967 and is headquartered in Paris, France. It provides consulting, technology, outsourcing services, and local professional services. As of December 31, 2014, the company had 137,747 employees and the revenue generated by the company was close to USD 14.05 billion in the FY 2014. Some of its subsidiaries include Capgemini North America, Capgemini Oldco, Capgemini Consulting Österreich, Capgemini Magyarorszag, and Immobilière les Fontaines.

Capgemini focuses on the IT professional services market and has implemented various strategic initiatives for this market. In July, 2015, the company entered into a services agreement with SSP, a provider of insurance technology, to expand its legacy systems and digital ambition. Under this agreement, Capgemini can strengthen its deep insurance expertise, process improvement and systems integrator expertise across the insurance value chain. In May 2014, Capgemini France, a subsidiary of Capgemini, completed the acquisition of the French IT service company, Euriware (which provides advanced consultancy and IT services to the energy, industry, and defense sectors) and its subsidiaries.

CSC

CSC was founded in 1959 and is headquartered in Falls Church, Virginia, US. The company is a global leader in supplying next-generation IT services and solutions. The company offers a wide range of business solutions to various industries, including aerospace and defense, automotive, banking, chemical, communications, media and entertainment, energy, financial services, healthcare, life sciences, retail, technology, and travel and transportation. For FY2015, the company reported revenue of close to USD 12.2 billion and has around 70,000 employees in over 60 countries.

Fujitsu

Fujitsu was established in 1935 and is headquartered in Tokyo, Japan. Fujitsu is an ICT company that offers a range of technology products, solutions, and services. The company operates in over 100 countries in Japan, EMEA, APAC, China, and the Americas. They provide solutions to various industrial and technology sectors such as automotive, healthcare, financial, retail, telecommunications, biometrics, smart network technology, and technical computing. The company has around 97,000 patents worldwide and has around 159,000 employees. For FY2015, the company generated revenue of around USD 43.25 billion.

Fujitsu offers innovative, managed solutions that enable employees to work more productively. Their offerings include virtual client services, classic client services, managed mobile, and unified communication and collaboration services. Fujitsu Virtual Client Services is a streamlined approach to desktop transformation harnessing Citrix virtualization technologies. Its classic client services provide employees with localized access to applications and data. The company also provides a complete life cycle management solution.

HP

HP was founded in 1947 and is headquartered in Palo Alto, California, US. It is a global provider of products, technologies, software, solutions, and services to individual consumers, SMEs, and large enterprises. It has customers in various sectors such as government, health, and education. As of October 2014, the company has around 302,000 employees and more than 34,000 patents worldwide. This segment provides a broad portfolio of enterprise technology infrastructure solutions for a variety of operating environments. The company’s integrated solutions enable organizations of all sizes to efficiently utilize IT staffing resources and deploy applications faster.

The company offers a single-point-of-contact IT service desk software and solutions that utilizes a dependable set of automated processes to handle service delivery and support. It brings together a broad range of ITSM capabilities, big data, and social collaboration to enable a workforce with connected intelligence.

IBM

IBM was founded in 1911 and is headquartered in New York, US. The company provides a wide range of computer products and services. they offer various types of hardware, software, consulting, and infrastructure services. IBM serves various industries, including automotive, banking, chemicals and petroleum, communications, insurance, life sciences, media and entertainment, metals and mining, and retail. They have around 379,592 employees and operations in more than 175 countries. IBM offers a broad array of IT infrastructure and business solutions through two reportable segments that include global technology services and global business services.

Infosys

Infosys was established in 1981 and is headquartered in Bangalore, India. Infosys is a global provider of business IT services, consulting, technology and outsourcing services, and software products. As of March 2015, the company had 176,187 employees and reported a net revenue of close to USD 8.71 billion. Globally, the company has 85 sales and marketing offices and 100 development centers.

During FY2014, the company reported revenue of around USD 8,711 million, an increase of 9.6% over the previous year, which generated around USD 6,041 million worth of revenue. This growth in revenue is attributed to, among other factors, an increase in the number and volume of executed projects.

 

Source: businesswire.com- Announces Top Seven Vendors in the Global IT Outsourcing Market Until 2019

Should your small business outsource IT?

Depends on how small a business it is.

To outsource or not to outsource, that is the question many small businesses struggle with.

For certain support tasks, like payroll, outsourcing is universally considered the small business protein shake: without it there’s no way to compete with the big guys. But for other business functions, outsourcing is more like the candy bar: it’s tasty at first, but in the end, there’s little real benefit.

IT was once considered a no-brainer for small business to outsource. After all, good IT is expensive and hard to find. Why further stress a fragile revenue stream with another salary?

But in more recent years, IT evolved from a purely supportive department to an integrated revenue driver. For companies who rely on their IT for innovation, outsourcing IT is not a no-brainer; it’s unthinkable.

So what is right for small business: outsourced IT or an internal department? Let’s examine what they need to consider.

Real or perceived savings

It’s easy math: the more employees a company has, the higher its fixed costs. But fixed costs don’t always carry fixed benefit: staff salary, payroll taxes and healthcare premiums must be paid regardless of their contribution to the business.

Outsourcing turns this fixed cost into a variable cost: small businesses only have to pay for what they “use.” And though the hourly rate of a contractor may not be “cheap” (unless they are off-shore), the pay-only-when-needed model gives small businesses a cost-control flexibility that often leads to greater overall savings.

On paper, outsourcing almost always looks tantalizing, especially for revenue-strapped small businesses. But outsourcing has costs too, often hidden, that may outweigh these on paper savings.
“What are the overall savings?” then is the question small businesses need to ask when considering outsourced IT.

If you’re very small, outsource

Many startups and very small businesses view IT like they view their electric bill – something required for the business to exist, no more and no less. While the merits of that attitude are open to debate, nonetheless for those businesses IT just needs to set up the computers, keep them running, and if there’s an issue, fix them as fast as possible.

Thanks to its low headcount, the very small business will probably not generate enough helpdesk instances to warrant the hiring of full-time internal staff.

Furthermore, the very small business’s server needs (data backup, email hosting, remote access) are already so commoditized that a third party data center can handle them far cheaper than internal staff and maintenance hungry in-house servers.

Outsourcing does have its costs (as we’ll discuss below) in terms of speed and efficiency, but a VSB’s relatively minimal IT needs ensures those costs will rarely outweigh the potential savings on payroll.

Once a business hits twenty employees (on average), outsourcing IT makes less sense. SMB IT is just much harder to commoditize.

That’s because more staff means more hardware, more software, more cabling and more – and more complicated – servers. It also means more breakdowns, more lost passwords, and more sweating in Accounts Payable if an SMB outsources its IT. On paper savings evaporate if the contractor is sleeping over in the office.

Size matters

The higher volume of an SMB leads to slower turn around time as well. After all, contractors aren’t waiting in the office for one of the computers to explode. Their hour-long drive to the site can add up to a lot of lost productivity.
An SMB shouldn’t forget their contractor has other clients too – who also demand attention. A system wide-failure at one business in the contractor’s network might leave the rest with no IT support. Outsourcing puts SMBs at the mercy of their contractor’s personal calendar and priorities.

(And this is assuming the contractor is local. If the contractor is offshore, time zones and language barriers are even larger hurdles to quick servicing.)

Contractors are also unlikely to understand the foibles of either the small business’s in-house hardware or their prickly users – slowing service further. The time a contractor spends deciphering an employee’s exclamation point filled email is time not fixing the problem. But it’s all time that is billed to the business.

Businesses have no input in their contractor’s staff hiring, pay, or morale strategy either. If a contractor has high turnover, it’s the clients that must bear the parade of green engineers hammering away at their sensitive hardware.

In this way, small and medium sized businesses must consider the potential productivity loss of slow or inefficient IT. At their size, the up-front savings of outsourcing may be offset by their contractor’s other priorities and unfamiliarity with their systems.
At first blush, an in-house IT department seems expensive. But their intimate knowledge of a business’s systems, workflow and staff will prevent costly downtime, and their close proximity (just down the hall!) allows them to put out fires before they burn down the office.

If you rely on innovation, hire internally

From startups to enterprise, any business that relies on IT for innovation should have a full-time IT Manager and/or support staff.

IT innovation requires familiarity with workflow and business processes, a deep knowledge of the company’s business plan and constant communication with staff and management.

Contractors, by the very nature, do not possess the knowledge needed to accomplish such a unique mission – and if they do, it’s often at “all the gold in Fort Knox” prices. Small businesses are advised to save on the armored trucks and keep IT innovation in-house.

If you require top-notch security, hire internally

Data centers and cloud vendors are great for storing and maintaining small business data, but once data is moved outside the business, the odds of compromise greatly increase.

A contractor’s security standards, despite their assurances, are nearly impossible to verify. And if there is a breach, a contractor’s mea culpa rarely wins back customer or employee trust, or covers the fines or penalties a small business may face.

Data isn’t like a broken stool. A contractor can’t simply offer a free replacement and make the business whole.

The only truly known security protections are the ones the small business sets up itself. If data integrity is critical to a business, it should not be left to a third party.

Can’t we all just get along?

Outsourcing can still be an important part of a small business’s IT strategy even if it employs in-house staff. Many SMBs farm out low-level functions to contractors, giving their internal staff the bandwidth to tackle more business critical IT tasks.

As automation and Software-as-a-Service become ubiquitous, a hybrid outsource/in-house strategy will likely become the dominant IT paradigm (if it isn’t already). This is a win-win for small business. They can access the economies of scale of outsourcing, as well as the control and efficiency of an internal IT department.

So the question for small business shouldn’t be “should I outsource” but “how much should I outsource and when?”

 

Source: Techradar-Should your small business outsource IT? By Jacob Grana

Former GM CIO says BPO/ITO mega-deals wrong for current IT climate

This year’s World BPO/ITO Forum will focus on how the cloud is shaking up IT outsourcing. Conference chairman Jim Noble talks to SearchCIO about why mega-deals are a losing proposition for CIOs.

Jim Noble, former CIO at General Motors, AOL Time Warner, and Philip Morris and former chief strategy officer at BP, has done his share of IT outsourcing deals. So when Noble, who recently launched his own CIO coaching business, says that IT outsourcing mega-deals kill innovation and may actually put a CIO career in jeopardy, readers might want to take note.

Noble is the conference chair of the World BPO/ITO Forum’s 8th annual summit in New York City, June 16-17, where he will address this year’s theme: harnessing the cloud for successful transformation.

  • Your keynote talk at the BPO/ITO Forum is titled, “The Technology Climate: Clouds and Shadows.” I assume this is a not about global climate change — or is it?
  • Jim Noble: No, it is about winners and losers in the IT function.
  • What about the current technology climate will result in winners and losers?
  • Jim Noble, former CIO at General Motors, AOL Time Warner, and Philip Morris and former chief strategy officer at BP, has done his share of IT outsourcing deals. So when Noble, who recently launched his own CIO coaching business, says that IT outsourcing mega-deals kill innovation and may actually put a CIO career in jeopardy, readers might want to take note.
  • What about the current technology climate will result in winners and losers?
  • Noble: Well, the traditional concept was nobody ever got fired for outsourcing to — put in a name — Big Blue, or HP or Capgemini. The strategy was based on having a small number of very large providers. For example, when I was head of IT strategy for a big oil and gas company, we decided to standardize on six global, third-party IT services companies, and we would parse out the work to them. I know that is also the case with a number of Wall Street firms. For example, Deutsche Bank announced recently that they are awarding a very large infrastructure contract to HP. And so, the mega-deal is not dead. But, in my view, the ability of these companies to continue to innovate will be more than a little restricted by these mega-deals. And I much prefer the concept of a large number of small relationships rather than a small number of large relationships.

That’s pretty radical for a BPO/ITO strategy.

  • Noble: It’s hard to do, because it requires a very different skill set on the part of the client company. If you put all your eggs into one basket, you just have to watch that one basket. But after a while, that supplier becomes complacent, they have run out of good ideas, they probably used up all of their marketing investment money to delight their customers, and eventually it becomes engrained. A lot of these contracts are renegotiated after a few years because they have become obsolete.

You can’t really surround yourself with people who are thought leaders and also great at execution. At least, I’ve never found that there are many people like that in the world.
Jim Noble
conference chair, World BPO/ITO Forum
Now, if you believe in the cloud, which I do, then you don’t need to have these large mega-deals. You can engage with much smaller niche suppliers — boutique suppliers, if you like, best-of-breed — and you keep them agile by having an easy exit strategy. So, for example, if you were to use Box for your cloud storage then you could easily move your data to Microsoft or Amazon or Apple or Dropbox or whatever — and avoid the lock in. It keeps your third-party suppliers agile and innovative and fresh and best-of-breed. But, it is very hard to do, and you shouldn’t underestimate the difficulty of making it work.

Just making the decisions about who to go to, I would imagine, requires a tremendous amount of judgment.

  • Noble: Tremendous amount of judgment and dedication to understanding the supply side. I just wonder how many CIOs — or chief IT strategy officers or chief enterprise architects — how many of them are in touch with what is available on the supply side. How do they stay current, and how do they stay aware of new products and services? That is really tough.

The obvious answer is the advisory firms, like Gartner and Forrester and, of course, my own group [The Advisory Council International]. I have a vested interest here. And if you seek advice from these third parties, you’ll at least know who the major players are, and then you have to make a decision. But the good news is these decisions are not career-ending decisions. If you get it wrong, you can change it. It’s not a $100 million deal you’re doing; it’s maybe a $5 million dollar deal you’re doing, and so it’s relatively easy to change horses in midstream.

The reality today is you have to be alert to products and services out there; you have to piece them together. It’s like a jigsaw puzzle, and you have to be able to orchestrate. I use the word ‘orchestrate’ not in the technical sense as it’s used in service-oriented architecture, but more in a supplier management sense: How do you orchestrate 10 different vendors who are part of a business process? If you outsource a business process to a third party, you don’t have to orchestrate anything; but if you choose best-of-breed for the different links in the chain, then you’ve got to be pretty good at making them sing in harmony.

IT soft skills essential to ‘operating model 2.0’
What attributes do you need to have to do that orchestration? Or, is there technology out there that will help?

  • Noble: The technology is called ITSM — information technology service management — and some of the big players like BMC and CA Technologies and some others have good ITSM tools. That’s part of the solution space. BMC has Remedy. CA has Clarity, and there are others.

These are OK, but they don’t deal with the human skills you need to manage and orchestrate. I compare it to what I call operating model 2.0. The IT operating model 1.0 is conventional wisdom. IT’s all the usual stuff of holding meetings with our suppliers and having a good contract and having good incentives — all the normal conventional wisdom. Operating model 2.0 says you’ve got to make the orchestra sing together: the percussion instruments, the wood instruments, the string instruments — you get it. That is a soft skill and IT people are hopeless at soft skills. We’re good at hard skills — we can tell you how to do C++ and Java, but we cannot make two business partners pull together. And that is what the IT operating model 2.0 should be about.

CIO as systems integrator: Surround yourself with thought leaders

If you think about all the things a CIO has to be expert in — one year it is social media, and the next year big data, and the next year cybersecurity, machine learning– it seems like the CIO job is being stretched to the breaking point. Any thoughts on how the role of the CIO is evolving or what the CIO role should be?

Noble: My first thought is if you don’t step up, then you will become irrelevant. The end-user community is now much more sophisticated than when I was young. When I was young, the business people didn’t understand computers and they needed to come to us because they couldn’t do it any other way. That is no longer true. Today they can go to Salesforce and get their CRM. They can go to Workday and get their HR. They can go to Box and get their cloud storage. And they don’t need approval from the IT function. So, if the IT leadership doesn’t step up, then they will be marginalized — and that is shadow IT, run riot.

My other observation is this: There’s a saying, ‘You’re only as good as the people you surround yourself with.’ Jack Welch at GE knew that, and all of the great business leaders I’ve ever worked for, they knew that. They knew that they couldn’t possibly know everything but they had to have a team of direct reports who were really good in their disciplines. [In IT] it might be cloud, it might be big data, predictive analytics or whatever.

You can’t really surround yourself with people who are thought leaders and also great at execution. At least, I’ve never found that there are many people like that in the world.

And so, what I would advise an IT leader to do today is to surround themselves with thought leaders and then engage third parties to do the work, and the IT leadership team of the company coordinates that work. It puts us back in the role of SI — systems integrators — and it is a much more complicated, multi-dimensional, fast-moving job and that’s what makes it so exciting.

Source: TechTarget- Former GM CIO says BPO/ITO mega-deals wrong for current IT climate by Linda Tucci

10 reasons that trigger dissatisfaction in outsourcing

According to recent research from Giarte, 50% of all outsourcing clients would recommend their current provider. The remaining 50% of clients feedback ranges from negative to neutral. Menzo de Muinck Keizer, Partner at Qhuba, a consulting firm based in the Netherlands, explores the top 10 reasons for dissatisfaction in the outsourcing domain.

1. Execution power
Success of an outsourcing operation is determined by the providers’ operational excellence as well as the creativity and willingness to adapt to specific client situations. Strangly enough, the importance of the vendor’s execution power is often underestimated. Cost level  and technology are usually the main criteria for vendor selection.

2. Inexperienced client, experienced vendor
When clients close an outsourcing contract, it’s often new to them, while the vendor has gone through it many times before. Instead of coaching the client, many vendors ‘use’ (or abuse) the lack of experience on the client side, leading to one sided agreements and finally to dissatisfied clients.

In many cases clients fail to put together requirements, to set priorities and to manage their provider. In old fashioned ‘waterfall software development’ this would cause incomplete and changing requirements. Using a modern (agile) software development method it will be even worse as long as IT direction isn’t properly implemented. Clear requirements and a long term goal no longer exist. What was meant as ‘product owner’ role is sometimes degenerated into a collection of contradictory guidelines and priorities and finally to a dissatisfied client. A professional provider or an external advisor should coach the client to properly organise its IT direction.

3. Internal support
Contracts won’t do any job. People should do it. Internal communications to execution level staff  is often neglected. Staff doesn’t feel involved and therefore not committed. This may lead to a lack of internal support and finally to poor deployment.

4. SLA versus XLA
Outsourcing contracts are based on Service Level Agreements (SLA’s), including measurable parameters like system availability, incident frequency, response times etc. Client satisfaction – even when it is measured – isn’t included in most contracts. Why not?

Providers fear contractual issues when they have met the SLA criteria but still have a low level of client satisfaction. No surprise that process managers focus on SLA criteria rather than clients satisfaction, resulting in dissatisfied clients. When clients and providers close an Experience Level Agreement (XLA) satisfied clients will be more likely.

5. The world is changing
Many service processes are based on the situation at the start of the contract, assuming this is a static situation. However, technology, client demand and cost levels are changing and the chosen solutions may be less adequate for future situations. Therefore many outsourcing contracts are very strong at solving problems from the past. Flexibility and agility need to be built in to cope with new/unknown challenges.

6. Relations
On the day a contract is signed (the ‘champagne’ moment) putting effort in the relation between client and provider seems unnecessary. This is a common mistake. Later on a good relation will appear to be crucial to avoid and solve misunderstandings, issues and conflicts. At the time a good relation is needed, it will be too late to build it. Therefore effort should be put into relation building maintenance from an early stage.

7. Underqualified staff
New clients may regard outsourcing as a beneficial way to get rid of overpaid staff, without affecting the quality of service. The reality may be the opposite: valuable staff being replaced by junior or low cost resources leading to a decreasing the quality and to financial benefits for the provider. Some providers assign dedicated ‘juniorisation managers’ for each large contract. Realism on both sides before the business case is completed and the contract is closed, is the only solution.

8. Blaming, shaming and claiming
Most clients and providers focus on short term financial results, especially on senior management levels. When an issue arises, both parties start looking at the contract, resulting in blaming and shaming the other party, while they’d better tried to fix the problem. On the longer term the blaming, shaming and claiming culture will result in dissatisfaction.

9. Benefit realisation
In most cases benefit targets – as presented in the business case – aren’t achieved. Why? Personnel cost reduction is often the largest component of the projected benefits.  But people aren’t passive assets, sitting and waiting to be moved or sent away. They are aware what’s going on and trying to find their most beneficial way. During planning, implementation, transition and transformation the new processes suffer from initial imperfections.

For employees on the move it’s easy to emphasize the imperfections and offer help to solve the issues. This may lead to additional jobs being created at various places in the organisation. The only way to really achieve the projected benefits is to plan and execute staff reductions as a (HR led) redundancy operation from day one.

10. Fall back scenario
Process descriptions for outsourcing agreements are usually more accurate than for in-house operations. The pitfall: often the newly described processes assume their own perfection. In other words, when the process fails in a specific situation, there is no fall back scenario, leading to escalation up to senior management and a highly dissatisfied client.

Clients, vendors and advisors who will take the top 10 seriously, will be able to significantly increase the client satisfaction.

Source: www.consultancy.uk-10 reasons that trigger dissatisfaction in outsourcing

How to govern your IT outsourcing provider after the ITO deal is done

The best ITO deals need tweaking as time goes on. Good governance ensures that you and your IT outsourcing provider are on the same page.

This is the last installment of a three-part tip from expert Andy Selaock on de-risking large IT outsourcing deals. In part one, Sealock, managing director at outsourcing advisory firm Pace Harmon, outlined the strategic mistake many CIOs make when deciding which IT functions to outsource and which to keep in-house. Part two explained how to future-proof an IT outsourcing contract. Here, Sealock takes on the third area where an ITO deal often goes awry: poor post-deal governance.

Failure to govern for change

Information technology moves fast. Two years into a large IT outsourcing (ITO) deal, it is likely that the original terms go stale, Sealock said, no matter how good the Statement of Work or service-level agreements (SLAs) or contractual levers to ensure high performance.
“A big reason why deals fall apart is that not enough time and effort goes into the governance process to keep the relationship and contract alive and adding value over time,” Sealock said.

ITO deal governance operates on multiple levels. The governance process requires having the right technical and business intelligence tools to effectively and efficiently measure the performance of the IT outsourcing provider against the contract, Sealock said, but it’s also critical to have the right people in place.

“You need people in place whose job it is to stay on top of the relationship with the service provider, to stay on top of the contract and be able to nip problems in the bud,” he said.

Having the right people in place is especially critical when something brand new happens in technology or in your business — the company divests or acquires, for example. The ITO governance team needs people on it who understand the implications of these changes well enough to make adjustments to the IT outsourcing strategy.

Who’s on the ITO governance team?

ITO governance teams are not easy to staff, Sealock said, requiring people who understand IT well enough not “to get snowed” by the service provider and people who can read and understand a contract well enough to understand the company’s rights in these deals.

“But they also need to be people who are able to go out and interface with the business,” Sealock said. For the governance team to proactively keep tabs on the deal, part of its job is catching business changes early and communicating those changes to the IT outsourcing service provider.

“Surprises happen, but if you can give the service provider three to six months’ notice, they can get in front of the change too,” Sealock said.

Vendor and contract management people who are skilled in all facets of ITO deal governance are out there, Sealock said — and “they are in high demand.” Service provider relationship manager is the preferred title du jour. A good relationship manager knows the contract levers inside out but also has the smarts to know when to enforce the requirements and when to cut a deal. Business acumen and poise are critical.

“They tend to be multiskilled people who can multitask, are comfortable talking tech, are OK at talking contract and have the people skills to present demands to the service provider as a partner rather than an antagonist,” Sealock said.

Source: TechTarget-How to govern your IT outsourcing provider after the ITO deal is done

IT outsourcing deal values hit 10-year low

Amid increasing automation and decreasing prices, the IT outsourcing industry has just recorded its worst first quarter in terms of annual contract value of deals awarded since 2004. However, the current slowness is not necessarily a negative thing.

The IT outsourcing industry just logged its worst first quarter in terms of annual contract value of deals awarded since 2004, according to analysis by outsourcing consultancy and research firm Information Services Group (ISG). Just $3.5 billion in annual contact value was awarded in the three-month period, down 27 percent from the same time last year, said ISG.

The mega-deal market showed particular softness this quarter, says ISG president John Keppel, but it was weakness in the Asia Pacific and the Europe, Middle East, and Africa (EMEA) regions that brought contract values down so significantly.

“For Asia Pacific it was really [a] tough comparison. In the first quarter last year, the region’s performance was at near record levels and this was simply impossible to repeat,” Keppel says. “Overall outsourcing activity, however, looks strong for the region so we put this largely down to timing with such a strong recent showing.”

The IT outsourcing deal slowness now is NOT a sign of things to come

After one of the strongest years yet for the IT outsourcing industry, the sluggish tempo of the quarter is unsurprising, according to ISG. Ultimately, 2014 turned into the third best year for the industry in the last decade—driven by a buyers’ market, a rise in contract restructuring, and an increase in mega relationships. But ISG’s analysts say early 2015 slowness is not necessarily a sign of things to come.

“IT outsourcing strength in the U.S. bodes well for the full year, and the first quarter dips in Asia Pacific and EMEA also suggest there should be more in the pipe,” says Keppel. “IT outsourcing solutions and client demands are changing rapidly, and as these change, they bring new opportunities for improved capabilities, improved flexibility, and lower costs—a combination we would expect most buyers to find irresistible.”

In a continuing trend from last year, buyers are testing the status quo and are willing to switch providers when they don’t think their current deals are serving them well in a dynamic technology environment. “We expect to see significant client interest in market-testing current provisions and looking to change to more modern, cloud-enabled IT outsourcing solutions,” says Keppel.

Larger deals (those worth more than $30 million annually) declined by 25 percent both in number and value over the previous year, while the volume of smaller deals continued to flow steadily, according to ISG.

An increasing push for automated solutions and robotics embedded in IT services may also help to explain this year’s early activity.  “There’s nothing surprising about the trajectory of the findings,” says Katharine Rudd, managing director of technology consultancy Alsbridge’s transformation services.

“The market has been changing over the last several years, with the automation of people and processes and with the enablement of cloud and robotic process automation. Sourcing strategies and transactions are also evolving, with non-traditional challengers in the [IT and business process outsourcing] space like Amazon Web Services changing the game on how customers procure and buy. All of this is blurring the lines and driving a migration away from the traditional outsourcing deals,” says Rudd.

The combination of more contracts being signed at lower value is an early indication that service provisions are becoming more efficient, says Keppel. That is “something we would associate with more widespread adoption of automation and robotics solutions,” he adds. “We are not seeing a massive uptick in specific automation deals, per se.  But, based on our volume and value numbers, we believe that the technology is increasingly being embedded within provider solutions.”

As the IT outsourcing price wars continue, those providers with strong automation propositions “will likely gain market share,” Keppel adds, “while others with less-well-developed capabilities will scramble to adopt the technology to remain competitive in an increasingly price-conscious marketplace.”

Source: networkworld.com-IT outsourcing deal values hit 10-year low By Stephanie Overby