by Jennifer Thomson, 24 May, 2013 | feedback
Top Line: In 2013 organizations apply caution to spending and investment plans in application services, but there is high focus on increasing quality while gaining access to always-on services, at lower cost.
IDC has just published its latest forecast for application services demand in Western Europe. Overall, European companies are investing in application services, albeit at a slower rate than previous years. We see demand for application services growing 1.2% in 2013, driven by a rebound in project-based "application modernization" services off the back of pent up demand and some cash expected to be released. Growth will pick up over the forecast period with a 2.2% compound annual growth rate (CAGR) over the 2012–2017 period.
Bottom Line for ICT Buyers:
1. Budgets are tight or reduced but the business demands change – sound familiar? Push projects that aid in both achieving business flexibility and reduced costs. We find that project spend that increases business flexibility while simultaneously cutting costs, such as application consolidation, virtualization, and automation projects continue to be approved.
2. Balance new business opportunity and risk through information (legacy) optimization. Application portfolio rationalization, modernization and transformation is critical – both to remain competitive and to reduce the impact of shadow IT. You should continue with initiatives to reduce the size, weight and complexity of application estates, while ensuring the ability to integrate with new business models (cloud, mobile, and social); this is essential in meeting the needs of the 21st century business user and client. Look to service providers for help in pulling together application portfolio rationalization strategies and modernization road maps, and opt for more integrated modular packaged applications that can scale easily with demand.
3. Focus on putting in place an integrated application procurement plan. To meet the constantly changing needs of business users, clients and top management and enable real business flexibility, you need to be able to manage and deploy applications everywhere. Start to evaluate your service providers integrated application provisioning strategy – to ensure that you will be able to access factory based software components, an enterprise business application store and/or access a partner ecosystem where you can tap into a plethora of partner apps through one single platform. The service orchestration and service brokerage capabilities of your incumbent provider become critical moving forwards.
by Douglas Hayward, 23 May, 2013 | feedback
Top Line: 2013 will be a year of subdued growth in demand for business consulting services, but there is some interesting technology-driven business change at work
IDC has just published its latest forecasts for business consulting demand in Western Europe. Enterprises are still buying business consulting, and indeed they are still buying more of it year-on-year, but the growth of this demand is modest. We see business consulting demand growing 2.3% in Western Europe during 2013, although a slight pick-up in demand over the following years means we're predicting a compound growth rate of 4.3% over the 2012–2017 period.
Bottom line for ICT Buyers:
1. If you're conservative in using consultants this year, you're not alone. Despite the fact that some bolder (and more cash-rich) organizations are expected to invest aggressively in organizational, process, and technology change aimed at growing their revenues or driving up customer/citizen satisfaction, we expect another year of conservative attitudes towards business consulting investment. According to our survey of consultancy buyers, European organizations headed into 2013 with an agenda dominated by cost cutting (priority #1), operational efficiency (priority #2) and regulatory compliance (priority #3). Significantly, these were the same top three priorities as in early 2012.
2. It might be time to think about technology-driven innovation. Some of the new demand for business consulting in 2013 is being driven by adoption of what IDC calls the "Third Platform", the next-generation ICT landscape that is being shaped principally by the "four pillars" of cloud, mobility, social media, and analytics/Big Data. These technologies are revolutionizing the world of work but also the world of leisure/lifestyle, creating huge implications for the operating models (and even the business models) of both private and public organizations. This will drive some organizations to rethink and streamline their operating models and possibly to create potentially disruptive new business models. Helping with that is the bread and butter work of consultants.
3. In the report, we urge consultancies to create strong links between project strategy and execution, to stay ahead of that important technology shift we mentioned above, to stay focused on the organizational "cost agenda" but to address the accompanying "growth agenda" as well, to stay competitive and value-focused, and to be proactive and have a stimulating point of view on critical issues. We advise consulting buyers to focus on mid-term and long-term business value of engagements, not just on the short-term price or day rate, to look for vendors that understand the power of technology-enabled innovation, to demand industry insight and expertise from consultancies, and to remember the need for "cultural fit" between client and consultancy. The latter point is more important than many buyers realize: remember that, despite everyone's best intentions, you may be working closely alongside the consultants you brought in for longer than you expected.
by Douglas Hayward, 22 May, 2013 | feedback
Top Line: Investment in IT security and in network infrastructure is top of mind for European IT services buyers in 2013
Earlier this month, IDC published its analysis of the strategic and technology priorities of IT services buyers in Western Europe, based on our annual survey of just under 800 end-user organizations. Last week, we looked at the strategic priorities (see: "End User Strategic IT Services Priorities in 2013: "Business Is Back", 16 May 2013), while this comment looks the technology priorities.
IT security is once again rated by our respondents as the most important technology investment area. This year it is followed by network infrastructure investment, followed in turn by application implementation. Storage, application consolidation, mobility, cloud, Big Data, desktop/workplace infrastructure and social media (in descending order) make up the other seven priorities we asked about.
Bottom Line for ICT Buyers:
1. It's striking that IT security is once again rated by our respondents as the most important technology investment area. In some ways, this is understandable. Organizations are conducting an increasing amount of their business online, and attacks are getting more common. Nevertheless, European organizations generally consider applications to be the technology that creates the most value for the enterprise, so shouldn't application implementation/deployment be the top technology priority? Maybe, but while organizations see applications as the main value-creating technology layer, they are pragmatic and realize that investment in security is urgently needed. In our view this is not the ideal order of priorities, but it's prudent.
2. The other striking finding was the rise in importance ascribed to the network. In last year's survey, "network improvements" was the eight-ranked technology priority, but in this year's survey, "network infrastructure" (note the slight rewording) is the second-ranked technology priority. The fact that network investment is a higher priority in 2013 makes sense, given the critical role of the network in supporting online activity, including next-generation applications and cloud services - many of which are bandwidth-heavy. Companies investing in new applications and IT modernization will need to migrate to more efficient higher-capacity wide-area network services.
3. Mobility, cloud, Big Data and social media are all in the lower half of the list of 10 priorities ranked by mean score. Everyone's talking about these "four pillars" of technology transformation, so why are they not higher ranking? First, while organizations are experimenting with (for example) social media and Big Data, they are not going to freeze or cut investment in everything else, and these new technologies are still a relatively small part of total IT services spend. Second, these technologies are not necessarily standalone priorities - they may well be rolled into other technologies and activities, particularly into application development and deployment. Indeed, this embedding of the four pillars into the ICT landscape will increasingly happen by default, particularly as packaged software vendors build support for these "four pillars" into their offerings.
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