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This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Helen Huntley
Vice President, Research
Outsourcing 2020: Get Your Vision Right for the Future
IT’s Impact on the Business Has Increased Over Time
IT
Business
IT
BusinessBusiness
Past Present Future
Present Outsourcing Era – Sizeable Shifts
VerticalSpecialization
ITO/BPO
Selective Sourcing
Internet,Cloud,
EmergingTechnology
Business Executing
Deals
Global Delivery
Shorter Deal
Duration
Custom to
Standard
IT
Business
Future Outsourcing – Leveraged
• Global and Domestic Delivery Optimization
• Externally Owned Assets
• Leveraged IP/Solutions
• Micro Verticalization
• Multi Provider Aggregation
• External Innovation through Strategic Suppliers
• Redefinition of Leading Suppliers
86%IT's strategic contribution to
the business will increase
in the next two years
50%Agree that IT is the way
to change the rules of
business competition
Results From the Gartner-Forbes
2012 Board of Directors Survey…
Gartner-Forbes 2012 Board of Directors SurveyTop 5 Priorities
1. Attracting new customers
2. Retaining and enhancing
existing customers
3. Focusing on core
competencies
4. Maintaining competitive
advantage
5. Fostering innovation
What are CEOs and senior business
executives’ views on the quality or capability they would most like to see improved
in CIOs?
Evolving CIO Role
Data: Gartner CEO and Business Executive survey
Changing Expectations for CIOs, Areas for Improvement
1. Business Awareness, Understanding
and Acumen
2. Communication Skills
3. Vision & Big Picture
4. Situational Awareness, Realism &
Pragmatism
5. Efficiency & Productivity
6. Leadership
7. Investment, Value & Financial Acumen
8. Flexibility
9. Innovation
10. Integrity, Trust & Accountability
Deliver better49%Business
focus23%
Incorporate new tech
trends 14%
Engagement/communication
7%
Other4% No reply
3%
Business understanding/awareness 9%
Business strategy alignment 6%
Rev. growth + end customer focus 3%
Business process focus 2%
Competitive advantage focus 2%
Anticipate/predict business need 1%
Proactive change and innovation 5%
Keep pace with technology 4%
Cloud modernization 2%
Mobile business enablement 2%
Tech selectivity and hype filtering 1%
Social media business enablement 1%
IT management improvement 8%
Cost effectiveness 8%
Security and risk management 5%
Speed and agility 5%
Core responsibility excellence 5%
Add business value beyond IT cost 4%
Business productivity improvement 3%
Integrated change management 3%
Simplification 2%
Balance local and global needs 2%
User friendly systems focus 2%
Talent management 1%
IT demand management 1%
Regulation agility 1%
Challenges for the CIO
"We brought in 40% of new
product revenue."
“Expanding into new markets and
geographies will drive our business growth."
“We must hire IT resources with
business skills."
"Predictive markets and gamingpsychology
help us uncover brilliant ideas."
"We are all about differentiation.
We seize advantage."
“How do we change the rules of competition."
"Innovation catalyst teamskeep us several steps ahead of
our competitors."
"Yes, I'm in linefor CEO succession."
CIO
The Board and CEOs Rising Expectations will Influence the CIO
2014 – 2020 Represents Significant Change for the Business and IT
Evolving CIO Role
Nexus of Forces
IT Skills Shift
Growing Information
Business Model Evolution
Emerging Technology
DIGITAL PRESSURE
The Digital Dragon Is Upon Us, 2339 WW CIOs from 77 Countries Agree
"My business and its IT organization are being engulfed by a torrent of digital
opportunities. We cannot respond in a timely fashion, and this threatens the
success of the business and the credibility of the IT organization."
"The IT organization has the right skills and capabilities in place to meet upcoming
challenges."
4
We have nothing we recognize as digital
strategy14%
We have some strategy in that area, but not called out as
digital, 37%
We have a digital strategy, separate to our main business
strategy16%
Digital strategy is an integrated part of our
main business strategy, 32%
Our digital strategy is our business
strategy2%
Digital Strategy Is Advancing
"To what extent does your organization have a digital strategy today?"
49% have a digital
strategy
Data: Gartner CEO and Business Executive survey
The Chief Digital Officer Role Is on the Rise
Industry %CDOs
Media 21%Communications 13%Services 11%Banking 10%Insurance 9%Retail 9%Healthcare Providers 5%Government 5%Manufacturing & Natural Resources 5%Wholesale Trade 3%Education 3%Transportation 4%Utilities 1%
Gartner predicts a tripling of the CDO role by 2015
9
Nancy McKinstryCEO, Wolters Kluwer
CNBC Interview 2013
"When I took over as CEO
70% of our revenue came
from print products.
10 years later over 75% of
our revenue come from
online, software and
services."
Enterprises Are Also Dealing With The Rise of Extreme Information
59%Information is
growing annually
100%Stored information is
doubling YOY
80%Of data is
unstructured
2BIndividuals on the Web
(30% of global population)
Audit, archive and recovery is increasingly complex
275Exabytes per year in Global IP traffic
It is Imperative that We Apply Filters to Distinguish Information of Real Value
-55ºCMeasurement
270ºCThat which changes your
decision or course of action
28ºCThat which
reduces uncertainty
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graphy.jpg
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MATERIAL INFORMATION
INFORMATION
DATA
Information is Everywhere! The Rise of Strategic Information Management
TextSocial
Image MobileTransactional
DataAudio VideoIT/OT
SearchEngine
Documents
stIMStrategic Information Management – The
Purposeful Application of Superior and Distinctive Information for Competitive Advantage
There Are Many Examples of Organizations Wielding "Information as Strategy"
Iceland provides fish traceability
information for consumers on time of
catch, trawler and sea location.
Walmart collects sustainability
information and is defining a standard
index of measurement for food and CPG.
Copenhagen Airport collects location
information from people's Wi-Fi devices
— so it can model for better passenger
flow and punctuality.
http://upload.wikimedia.org/wikipedia/commons/b/b7/Best_Buy_Express.jpg
Increase Channel Sales & Change Customer Experience
Our Business Models Have Had to Change
Source: Tesco Home Plus
Online
sales
increased
130%
Increase Customer Access & Channel Sales
Source: TescoIncreased Ease of Shopping, Differentiated
Philip ClarkeCEO, Tesco
2013
"To compete in the
new era of retailing I
believe that Tesco has
to be more than a retail
company. We have to
become a technology
company too."
• 10 million+ lines of code & IP Addresses
• The need for operational training growing
• The US Government is proposing “distraction guidelines” for automakers
But - Can We Go Too Far with Technology? 2020 Could Be Very Complicated
Gen Y Entrepreneurs Think Differently
• Born: 1982-2000
• Increased use and familiarity media and digital technologies
• Influenced by the rise of instant communication technologies, and social networking sites
• Peer-oriented due to easier facilitation of communication through technology
Generation Y’s Business Models Are Different, Partner Intensive, Our Future is Changing
Soapbox Soaps Founded: 2009 by two 22 year olds
Mission: “Buy a Bar, Donate A Bar" Empower Consumers to Change the World through Everyday Purchases
Business Model:
•Heavily Leverage Partners, Manage Integration Tightly
•Extensive use of Mobile and Cloud Technology
•Minimize CAPEX and OPEX
•Brand Awareness - Strong Social Networking and Social Marketing
SoapBox Soaps Heavily Leverages 30 Partners in its EcoSystem
Careers in IT and NecessarySkills Required Will Change
Career Change
Ahead
Creation of the "T"-Shaped IT Staff
Critical Skills Needed
• Business Acumen
• Vertical Specialization
• Supplier Evaluation & Selection (More buy, less build)
• Supplier Integration/Mgmt.
• Digital Workforce Engineering
Technolo
gy D
epth
Value to the Business V
alu
e t
o t
he
IT
Gro
up
Business Breadth
Changing IT Models That Supports the Business Like Never Before
Driving a New IT Model & Focus
New
Thinking
in IT
There are no
IT projects,
only
business
projects
Enable New
Business
Value
IT is agile; it
provides new
capabilities
when the
business
needs them
Show
Value for
Money
IT provides
services at
market-
competitive
prices
Create
Extended
Value
IT drives
business
performance,
measured
with KPIs like
market share
and EPS
• ROI
• Risk Mgmt.
• Vendor Mgmt.
• Governance
• It's no longer what you do, it's how you get it done through externalized sourcing
IT
What Else Does the Future Hold that Impacts Outsourcing?
Expanding Globalization of Business
Changing Value
Propositions
Changing Requirements
Source: www.botinacalls.com
Source: IHS Global Insight August 2013
31
Forecast: 2014 v 2013 Real GDP Growth = + 3.4% +2.4%
* = European Union
Note: Smaller Sized Numbers = GDP Growth in 2013 versus Bar / Larger Numbers = Forecast GDP Growth in 2014
4.7%
5.4%
7.5%
7.8%
1.7%
1.9%
3.0%
3.9%
5.1%
6.5%
5.0%
5.5%
-0.3 %*
0.9 %*
2.4%
3.3%
3.0%
3.6%
1.6%
2.7%
1.7%
2.4%
3.1%
3.6%
Global Opportunities – GDP Growth
What You Must Do Between Now and 2020?
Today’s Realities
• Budget
• Traditional projects
• Legacy support
• Customization
Requirements
• Aging technology
• Traditional skills
and staffing
Your Future Relies On:
• Harnessing the Power of
Your Information
• Mobile computing
• Social and
gaming capabilities
• Changing Your IT
Staffing Vision
• Partnering with the
Right Suppliers
• Using Emerging
Technology to Your
Business Advantage
IT = Business
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Helen Huntley
Outsourcing 2020: Get Your Vision Right for the Future