claranet research report 2015

7/23/2019 Claranet Research Report 2015

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2

Innovation inEuropean ITClaranet Research Report 2015

Contact us:

www.claranet.co.uk

[email protected]

0845 355 1000

@claranet


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2 European summaries

The European view - 4

Benelux - 6

France - 8

Germany - 10

Portugal - 12

Spain - 14

UK - 16

The IT department

1.1: The changing business - 20

1.2: IT challenges - 21

1.3: How are IT budgets changing? - 23

1.4: Understanding between the IT department and the business - 24

1.5: Measuring IT department performance - 26

1.6: The role of the IT department, 2015 and 2020 - 27

1.7: Skills in the IT department, 2015 and 2020 - 29

Innovation2.1: Time management - 32

2.2: Formalising innovation - 33

2.3: Driving innovation - 34

2.4: Digital leadership - 35

Applications

3.1: Application development - 38

3.2: Application development, 2020 - 39

3.3: The future of DevOps - 41

3.4: Application hosting and management - 42

3.5: Application delivery - 43

IT services providers

4.1: IT services provider usage, 2015 and 2020 - 46

4.2: Services taken from IT services providers - 47

4.3: Why use an IT services provider? - 484.4: What factors were important in the choice of your IT services provider(s)? - 49

4.5: The ideal IT services provider vs the reality - 51

4.6: Where do IT services providers help most? - 53

Case study

Peugeot - 54

elcome to the Claranet

Research Report 2015:Innovation in European IT.The report, in its fourth year, isthe first to analyse the IT trendsof the six Western European

markets that Claranet operates in: previous reportsfocused solely on the UK and specifically its cloudadoption trends.

Cloud is an established delivery model, and haschanged the way we consume, create and manageapplications and data. However, cloud in its variousforms is just one important part of the larger,more complex and increasingly co-dependentrelationship that business and IT share.

This report aims to examine the entire ITecosystem in order to understand the waysthat organisations are using IT to innovate anddifferentiate. Initially focusing on the state of theEuropean IT department, the report investigatesinnovation, applications and finally therelationships European businesses have withtheir IT services providers.

In the process of compiling this report, 900 seniorIT decision-makers from mid-market organisations(1002000 employees) in Benelux (100), France(200), Germany (200), Portugal (100), Spain (100)and the UK (200) were surveyed.

Contact us:[email protected] 355 1000@claranet

3

Introduction

Claranet

Founded in 1996, Claranet is one ofEuropes leading IT services providersoffering businesses integrated hostingand network services.

The company has annual revenues inexcess of 140 million (195 million*)with over 800 employees in sixcountries. While Claranet has growninternationally, the focus has alwaysbeen on local service, out of localoffices, using local data centres.

Claranet brings together the bestpeople, process and technology toprovide flexible, secure and cost-effective managed services thatguarantee network and applicationperformance. We allow customers

to focus on their core business, notIT management.

Vanson BourneThe research was carried outby Vanson Bourne. Vanson Bourneis an independent specialist inmarket research for the technologysector. For more information, visitwww.vansonbourne.com

* Correct as of 06/04/2015. Conversion rate 1 GBP = 1.36 EUR.


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4he European IT decision-maker is facing anincreasingly complexlandscape. IT departmentsacross Europe are both

tasked with performing both theirtraditional roles as administrators andreactive problem solvers, and are alsoexpected to drive innovation, which,in turn, should result in businesssuccess and market differentiation.

With finite resources available, ITleaders have to use their resourceswisely to innovate solutions thatreduce costs while increasingbusiness effectiveness. However,IT departments are still, for the mostpart, functioning as administrativecentres, unable to give innovation theattention that it needs. By failing to get

the balance right, many IT leaders willultimately make their IT departmentsmore expensive than is sustainableand fall into a decreasing cycle ofeffectiveness and value for money.

Ensuring that business IT workscorrectly is of course vital to the day-to-day success of a business, but tosurvive, and even thrive in the longerterm, businesses will need to use theirtechnology in ever more advancedand integrated ways. This meansembedding the IT department deeperinto business strategy, investing more,introducing board representation,and building joined-up innovationprogrammes and digital strategies.

EUROPEAN SUMMARIES

Spain

60%of Spanish organisations havean innovation programme

Portugal

62%of Portuguese respondents seethe role of the IT services provideras understanding and helping guidefuture priorities

The European view

Across the six nations we surveyed,IT budgets rose by an average of3 per cent in the last year, and willcontinue to rise with this there willbe more opportunity to re-evaluate thedeployment of resources in order todrive the business forward.

Complexity is, however, rising; skillsshortages, data analysis, applicationmanagement and development,shadow IT, mobile working andmany other challenges lie in theway between reality and the idealimplementation of IT in business.

By establishing trusted relationshipswith IT services providers withexpertise in their respective fields,IT departments can begin toconcentrate on the things they excel

at and which will truly differentiatetheir business in the long term.However, as our research found, ITservices providers need to do more toprove that they are the right option forIT departments, providing guidanceand working in ways best suited toindividual businesses.

How IT leaders and servicesproviders respond to these challengestoday will affect not only theirbusinesses, but also their nationalmarkets and the European economyin the longer term.

3%average IT budget increase this year

26%of IT leaders completely

understand their business

9%of IT department time

is spent innovating

36%of organisations have an

innovation programme

89%of organisations have a digital strategy

3services are taken from IT servicesproviders on average

Europe

UK

15%of UK IT infrastructure is currentlymanaged by third parties

France

5%average increase in IT budgetsin France in the past year

Germany

12%of German IT departmenttime is spent innovating the joint highest in Europe

Benelux

31%of IT estate is anticipated tobe managed by third partiesby 2020 in Benelux

5


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6

EUROPEAN SUMMARIES

Beneluxf all of the respondentsquestioned as part ofthis research project, it isthose from Benelux thatappear to be the most

comfortable with the use of thirdparties to develop their applicationsand the use of IT services providersto manage them. Looking to the nextfive years, these practices are set togrow substantially.

Already adept at working withexternal providers to develop theirapplications, seven in 10 respondentsexpect their level of in-houseapplication development to declinefurther still by 2020. Similarly, the shiftto third-party application management

in the region is set to continue. While14 per cent of the estate is managedby IT services providers today, thisfigure will swell to 31 per cent by2020, and the average number ofservices taken is set to increase fromthree to five. If these predictions holdtrue, the Benelux region will be theheaviest user of IT services providersin Western Europe.

Using IT services providers couldfree time for the IT department tobe more strategic and innovative,and innovation no doubt plays a parthere. However, the primary driversof this trend towards using thirdparties appear to be more practicalin nature. Around half of respondentsindicated that a reason they use ITservices providers is due to a lack of

1218 billionGDP (2014)

1

56 billionIT market spend (2014)2

excluding Luxembourg

1%average IT department

budget increase (2014)

78%of organisations have

a digital strategy

25%of organisations have aninnovation programme

33%

38%

Unifiedcommunications

31%

51%

Business continuityand disaster

recovery

30%

18%

Telephony

29%

50%

Infrastructurehosting

28%

19%

Applicationmanagement

26%

36%

Storage

+15%

1 Source: www.tradingeconomics.com. Conversion rate: 1 USD = 0.89 EUR. 2 Source: Gartner Market Databook, 1Q15 Update, 31 March 2015 G00272883. Conversion rate 1 USD = 0.89 EUR.

+65% +72%

+38%-40% -32%

WHICH OF THE FOLLOWING SERVICES DOES YOUR ORGANISATIONCURRENTLY PROVISION FROM IT SERVICES PROVIDERS?

Europe

Benelux

Innovation

Business projects

IT operations projects

General maintenance

Responding to user problems

Changes

Unplanned work

Talking to vendors

Other tasks

7

26%

14%

24%

29%

18% 20%

16%14%

16%

8%

14%

Security Backup Consultancy/professional

services

Systemsintegration

My organisationdoes not currently

use IT servicesproviders

Monitoring andreporting

internal skills the highest nationalresponse rate of its kind. Further,skills shortages are a reality for someBenelux IT departments and this issueis expected to intensify over the nextfew years.

An additional reason may relate tocost. IT budget increases last yearwere some of the most modest inthe research and the year aheadlooks likely to be only marginallybetter. Against this backdrop,working with IT services providersis eminently sensible.

In order for IT departments from theBenelux region to make the movetowards a more strategically alignedrole within the organisation, thedepartment and the business need to

work towards viewing IT as a driverfor innovation. Working with the rightIT services providers to alleviateresource issues will continue to helpmaintain a functional IT department.More importantly, moving towards amore strategic perception of the ITdepartment will ensure that the fullpotential of both the department andthe business is realised.

4%

+21%+11%

-46%

-13% -50%-71%

HOW MUCH TIME DOES THE IT DEPARTMENTSPEND ON THE FOLLOWING ACTIVITIES?

The predicted uptake in services

from third parties demonstrates

a strategic response to the

challenges facing IT leaders in theBenelux region.

Bert Verhoeff, Sales Director,Claranet Benelux

18%

10%

15%

14%

16%

16%

5%7%

9%

14%

17%

13%

13%

11%

7%

3%

12%

Europe Benelux


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8

EUROPEAN SUMMARIES

Francerench organisationsemerged as some ofthe most dynamic andforward-looking in Europe,focused on innovation,

collaboration, innovative applicationdevelopment techniques and digitalstrategies. Fully 97 per cent ofFrench respondents expect theirorganisations to change radically overthe next two years, and it looks likelythat the IT department will sit at theheart of this transformation.

Responses from our French surveygave a strong indication that theFrench IT department is well equippedto navigate IT challenges today andin the future. Though the traditionaladministrative and responsive ITdepartment clearly exists, and to

some extent always will, it is clearthat French organisations granttheir IT departments licence to thinkand act strategically. For example,French respondents were the mostlikely to report enabling businessagility and inspiring new initiatives ascore functions of the IT department.Furthermore, just one in four identifiedtechnological support of employeesas a core function, pointing to a morestrategically important role.

This supports the idea that Frenchorganisations are concerned withcross-business innovation, andunderstand the crucial role that theIT department can play in facilitatingthis. Respondents indicatedthe second-highest number of

organisations with a formalisedinnovation programme and the highestnumber thinking of implementing one.Unsurprisingly, the time spent oninnovation by IT departments (12 percent) was also above the Europeanaverage (9 per cent).

It is worth noting, however, thatinnovation does not appear to bethe preserve of IT departments,and is, instead, likely to be led by arange of stakeholders within Frenchorganisations. Indeed, Frenchrespondents gave the most balancedview of any country surveyed as towhere innovation originates fromwithin their respective organisations:the IT, operations, marketing andsales departments were all found toplay a significant role here.

In a similar vein, French organisationsare highly attuned to the importanceof possessing digital strategies; 97per cent report having one. Roughlya quarter of these strategies areled by the Chief Executive Officer,demonstrating recognition of the

value of digital at the highest levels ofmanagement.

The strong adoption rates of aDevOps approach (32 per centcurrently, with 43 per cent planningadoption in the next two years) placeFrance second only to Spain andcement the French IT departmentsreputation for innovation andcollaboration. This approach toapplication development does notcurrently extend to the outsourcingof much development work, with 72per cent of the current applicationdevelopment in France understood tobe carried out in-house.


1





a digital strategy



9

ARE THE APPLICATIONS YOUR ORGANISATIONUSES DEVELOPED INTERNALLY OR EXTERNALLY?

HOW MUCH TIME DOES THE IT DEPARTMENTSPEND ON THE FOLLOWING ACTIVITIES?

Developed internally

Developed both internally and by an external partner

Developed by an external partner

Europe France

41%

42%

39%

23%

22%

27%

29%

34%

41%

36%

Ecommerce

Corporate website

Mobile applications

Extranets/portals

Databases

Finance/ERP/HR

CRM

Collaboration and communication

Authentication and security

Industry-specific applications

45% 14%

35% 23%

20%41%

48% 29%

32%46%

27%46%

31%40%

33%33%

18%41%

29%35%

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

17%

16%

11%

9%

12%

9%

12%8%

5%

The research shows how much French

organisations are at the forefront of change

through IT innovation in Europe. Over the last

two years, we have seen a rapid change inour customers requests in France, leaning

more and more towards a more agile DevOps

approach to IT services.Olivier Beaudet, Managing Director,Claranet France

9%

14%

17%

13%

13%

11%

7%

3%

12%


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10

EUROPEAN SUMMARIES

Germanyf all the European marketsexamined in this report,the German marketwas the most security-conscious. Strict data

laws ensure that organisations placean above-average focus on securityprotocols in IT and security wasranked the highest priority in muchof the research. While it could beassumed that this emphasis onsecurity would stifle innovation, theGerman IT department presents adifferent view.

Most likely to report that it is notcurrently facing any IT challenges,the figures point to a German ITdepartment that is in a healthy stateand one that is well supportedby the wider business. Budgetshave shown healthy increases andrespondents believe interdepartmentalunderstanding to be strong. Thismutual understanding suggests thaton the whole German organisationsmaintain a well-aligned andtransparent approach to IT andbusiness integration.

Security remains a persistent worry,but, importantly, it does not appearto be an insurmountable one. Ratherthan being an absolute barrier tousing IT services providers, securityis something that can be managed assuming the correct hostingarrangements and hosting partnercan be found.

German IT leaders have the most

stringent criteria when selectingan IT services provider and appearto be highly prescriptive about thecharacteristics of their preferredpartners, ranking trust, securityexpertise and in-country serviceprovision among their top priorities.

That said, their expectations of whatan IT services provider should be andtheir views of their own IT servicesproviders are the closest match inEurope, suggesting that IT servicesproviders are largely satisfying theircustomers requirements.

This may go some way to accountfor the expected increase in the useof IT services providers. AlthoughGerman respondents tend tomanage a relatively high proportionof their IT estates in-house today,when compared to their immediateneighbours, those that currently useIT services providers expect to extendmore of their applications to them overthe next five years, bringing them to alevel comparable with France, Spainand Portugal.

The projected rise in the procurementof third-party services is significant asit suggests that German IT decision-makers are increasingly beginningto look outside their departmentto support the IT needs of theirbusiness. The message here isthat once German IT departmentshave been convinced through duediligence and experience that their ITservices provider is trustworthy, theyare increasingly willing to embraceworking with a third party.


1





a digital strategy



WHAT IS THE LEVEL OF UNDERSTANDING BETWEEN THE ITDEPARTMENT AND THE REST OF THE BUSINESS?

11HOW MUCH TIME DOES THE IT DEPARTMENTSPEND ON THE FOLLOWING ACTIVITIES?

Business has complete understanding of IT department Germany

Business has complete understanding of IT department European average

IT department has complete understanding of the rest of the business Germany

IT department has complete understanding of the rest of the business European average

Europe Germany

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

12%

15%

17%

12%

12%

10%

9%

8%4%

41%

24%

5

6%

33%

42%

28%

44%

31%

43%

26%

41%

28% 3

1%

23%

35%

27%

36%

22%

39%

27% 3

2%

22%

41%

24%

32%

25%

43%

29%

Operations

Finance Sales Marketing Legal/compliance

HR Product

These findings show that while

German IT decision-makers

continue to show valid concerns

around security and compliance,there is also an increasing

understanding of the benefits that

working with IT services providers

can bring to their business.

Olaf Fischer, Managing Director,Claranet Germany

9%

14%

17%

13%

13%

11%

7%

3%

12%


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12n spite of signs of economicrecovery, Portuguese ITdepartments remain someof the most cost-consciousin Europe, with a drive for

cost efficiencies a common threadthroughout our research in the region.Given their stagnant budgets, thiscomes as scant surprise. There is,however, reason for optimism as theeconomic recovery takes hold.

The Portuguese IT departmentappears to be the most pressurisedof the markets examined. In starkcontrast with the other Europeanmarkets in this report, IT budgets inPortugal contracted last year, andfurther contractions are expected inthe year ahead. The implications ofthis are clear, with innovation beingsacrificed in favour of keeping thelights on; Portuguese IT departmentsdevote just nine minutes each workingday to innovation, instead focusing themajority of their time on administrativeand reactive work.

One way of better aligning IT andbusiness strategy would be toaddress the low rates of existing orplanned innovation programmes,which stand far behind those in theother countries included in this report.Tied to this is the reported absence ofdigital strategies amongst Portugueseorganisations. Key to adopting andsustaining a forward-looking approachto IT, this will need to be addressed.

The desire to drive cost efficiencies

is a recurring theme amongPortuguese respondents, informingtheir perceptions of the role of theIT department and organisationsrelationships with IT servicesproviders. Half of those surveyedconsider cost reduction to be a core

EUROPEAN SUMMARIES

Portugalfunction of the IT department thehighest proportion by some margin and where Portuguese organisationsuse IT services providers, they are themost likely to do so in pursuit of costsavings.

That said, cost is not the only driver,and Portuguese IT decision-makersappear to be using IT servicesproviders for the tangible businessbenefits they can offer: easing internalskills shortages, gaining access toadvice and expertise, while improvingdata analysis and data delivery.

Indeed, business transformationappears to be high on the agenda,something which IT servicesproviders are expected to play acentral role in. Although PortugueseIT departments are currently thesecond least likely to use IT servicesproviders, with just 8 per cent ofestate managed this way on average,they are expected to match theirEuropean counterparts by 2020, witha rise to 14 per cent predicted.

Where IT services providers are used,their ability to bring value is mosthighly prioritised, and whether this isthrough immediate cost savings orthrough a greater ability to execute,some Portuguese IT decision-makersare realising the possibilities thirdparties can offer.

This perspective demonstrates aforward-thinking view, though whetherthe IT departments make-up will

change in time to bring in a moreanalytical approach, only time will tell.

174 billionGDP (2014)1


-3%average IT department

budget decrease


a digital strategy



13

WHY DID YOU CHOOSE TO USE AN IT SERVICES PROVIDER?

HOW MUCH TIME DOES THE IT DEPARTMENT

SPEND ON THE FOLLOWING ACTIVITIES?

Europe Portugal

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

6%

17%

16%

14%

19%

19%

6%

To improve data delivery 37% 44%

To improve data analysis 35% 48%

To increase efficiency 34% 26%

A shortage of the required skills 32% 40%

To improve the core business 32% 22%

To gain access to new technology, tools and best practices 29% 33%

A shortage of internal IT resources 27% 41%

Cost savings 27% 42%

To drive innovation 27% 15%

To allow internal resource to work on strategic initiatives 26% 21%

To gain access to advice and expertise 24% 33%

The convenience of the cost model of fe red by the IT services prov ider 11% 16%

Europe Portugal

IT departments are being tasked

with delivering cost efficiencies to

their businesses which IT services

providers are well positioned to helpwith. Over time, this relationship

should be directed towards a more

strategic partnership in order to

maximise the potential benefits.Antnio Miguel Ferreira, ManagingDirector, Claranet Portugal

9%

14%

17%

13%

13%

11%

7%

3%

12%

2%


8/28

14ealthy IT budgets,combined with aconsistent and pervasivefocus on innovation anddigital strategies, put

Spanish organisations in good steadto drive business change, of whichthere is much expected; 95 per centof respondents predict radical changewithin their organisation during thenext two years.

The Spanish market appears tobe dynamic and optimistic, withbusinesses harnessing their ITdepartment as a driver for businessgrowth and IT departments nurturingculturally progressive approaches. Inthis sense, the Spanish market seemsto be overcoming the economicuncertainty of recent years.

Spanish IT departments conduct thegreatest amount of IT performancemeasurement of any European market.By measuring their performance,Spanish IT departments are able tomake better-informed decisions whichimpact the business as a whole,promoting a high level of transparencyand ensuring the department iswell aligned with the businessobjectives. Another area whereSpanish IT departments commitmentto innovation is apparent is throughtheir high adoption rates of a DevOpsapproach; eight in 10 expect to haveimplemented a DevOps approachwithin the next two years.

IT departments in the region exhibited

both the greatest understanding ofthe rest of the business and werein turn the best understood of theEuropean markets surveyed criticalfor ensuring that IT services are fit-for-purpose. 98 per cent of organisationssurveyed had a digital strategy in

EUROPEAN SUMMARIES

Spainplace and 60 per cent an innovationprogramme both represent thehighest averages in Western Europe,exemplifying the progressive approachbeing adopted in the Spanish market.This commitment to innovation isfurther underscored by the fact thatSpanish IT departments spend aneighth of their time on innovation.

Respondents predict the emergenceof a more strategic, less technicalIT department by 2020. With asignificant amount of applicationdevelopment currently conductedin-house, this remains a vital part ofan IT professionals skillset. However,as Spanish organisations graduallymove more of their IT estates andapplication development to thirdparties, respondents anticipatea shift in the skills required by ITdepartments geared more towardsvendor and product management.

Spanish respondents indicated thatthey tend to view their IT servicesproviders as innovators, but alsoreturned one of the lowest averagesin Europe for viewing them astrusted advisers. One interpretationof this view is that some Spanish ITdecision-makers prize innovation intheir business and in the services ofthe IT services provider, but do notlook for guidance in innovating andmapping their organisations futurepath as strategic partners would. Insupport of this idea, the Spanishwere most likely to believe the roleof the IT services provider should be

transactional and not an extension ofthe business.






a digital strategy

60%

of organisations have aninnovation programme


15

HOW DOES YOUR IT DEPARTMENT MEASURE THE PERFORMANCE OF IT IN YOUR ORGANISATION?



Europe Spain

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

12%

15%

16%

11%

11%

11%

10%

6%

9%

52%

58%

User feedback(e.g. internal/external

interviews)

+12%

-24%

Europe

Spain

+26%

+27%-71%50%

73%

Performance-reportingtools

(e.g. APM tools)

33%

25%

Availability-reportingtools

(e.g. Uptime)

26%

33%

Surveys(e.g. Net Promoter)

21%6%

We do notmeasure the

performance of our IT

After a period of flat economic

growth, the Spanish IT market

has just begun to undergo a rapid

and deep transformation, not onlyin terms of technology adoption,

but also with processes such as

DevOps and agile methodologies.Carles Acero, Managing Director,Claranet Spain

9%

14%

17%

13%

13%

11%

7%

3%

12%


9/28

16T decision-makers from theUK appear to be strugglingto keep pace with the rateof change, and rely heavilyupon IT services providers

for support. While UK respondentstold us that the biggest challengetheir organisations currently face issecurity and compliance, they werefar more likely to highlight complexityand ensuring that IT is able tosupport a fast-changing businessas challenges, compared with theEuropean average.

The main casualty here is innovation.British IT departments devotejust 7 per cent of their time toinnovation, instead prioritising generalmaintenance and responding to userproblems. Additionally, respondentsfrom the UK were twice as likelyto report technological support ofemployees as a core function of theIT department, compared with theircounterparts in France, Germanyand Spain.

With the picture forming of a busydepartment torn between keepingthe lights on and supporting thebusinesss aspirations, it is nosurprise that the vast majority ofrespondents report the use of ITservices providers. Accordingly, theUK market currently has the highestfrequency of third-party IT estatemanagement in Western Europe,with 15 per cent. It is clear that thisapproach to IT is fast becomingcommonplace, and by 2020 it is

expected that 22 per cent will bemanaged in this way.

EUROPEAN SUMMARIES

UKThe success of this approach owesmuch to the strength of user-providerrelationships in the country: Britishrespondents are likely to see their ITservices provider as trusted advisersor as expert guides and appear to beopen to being led by their providers.

There is, however, clearly work to dofor IT services providers to assist withand accelerate the transformationof British businesses. Despitethe fact that 42 per cent of Britishrespondents think that the role of anIT services provider should be as aninnovator, just 23 per cent view theirIT services providers as innovative.

While IT services providers arehelping to support the pressures feltby UK IT departments, IT decision-makers need to do more themselvesto bolster innovation by collaboratingand understanding the wider businessand, in the process, promotingthemselves as drivers of innovation.For businesses dependent on certainapplication types, DevOps could becrucial to alleviating pressure andfostering collaboration. While a similarproportion of British organisationshave implemented a DevOpsapproach as France and Germany,growth rates will need to exceed theprojected levels to ensure that the UKis not left behind in this respect.






a digital strategy

34%

of organisations have aninnovation programme


3%

1%

17

WHAT ARE THE BIGGEST ITCHALLENGES YOUR ORGANISATIONIS CURRENTLY FACING?



Europe UK

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

7%

17%

16%

14%

17%

10%

5% 3%

10%

Security andcompliance

48%

53% +10%

Enabling collaborationacross the organisation

37%

39%

Mobility and the

consumerisation of IT

33%

43%

Increasingcomplexity

39%

48%

Improving/optimising IT

36%

50%

Innovation

29%

26%

Supporting thebusiness 24/7

38%

41%

Ensuring that IT can support

a fast-changing business

35%

48%

Data storageand analytics

26%

33%

Skills shortagesin-house

26%

Shadow IT

21% 13%

17%

We are not currently facing anyIT challenges in our organisation

+39%

+27%

+23%

+37%

+24%

+8%

+30%

+30%

+5%

-66%

-10%

Europe

UK

Given the intense pressures on

todays IT departments, and the

lack of available time to devote

to priorities like innovation,organisations should be able to

turn to their providers for their

guidance and expertise.Michel Robert, Managing Director,Claranet UK

9%

14%

17%

13%

13%

11%

7%

3%

12%


10/28

18

The IT department1.1: The changing business - 20

1.2: IT challenges - 21

1.3: How are IT budgets changing? - 23

1.4: Understanding between the IT department

and the business - 24

1.5: Measuring IT department performance - 26

1.6: The role of the IT department, 2015 and 2020 - 27

1.7: Skills in the IT department, 2015 and 2020 - 29

19


11/28

20

THE IT DEPARTMENT

1.1:The changing business

84%of companies across Europeexpect radical change

Business is becoming ever morereliant on IT to succeed, causingthe IT department to move to a morestrategic model, but this changeappears to be slow. While radicaloperational change is expected by84 per cent of organisations acrossEurope, the views of IT decision-makers are that challenges, roles andskillsets are broadly considered tostay the same with small but importantshifts towards an increasinglystrategic IT department. One potentialdanger with this situation may be

that the IT department is neitherready nor able to support radicalchange. While budgets are generallyincreasing, there still appears to bea lack of understanding between theorganisation and the IT departmentwhich will need to be addressed ifthe move towards an IT departmentbetter able to cope with the changingbusiness landscape is to be realised.

1.1

DO YOU EXPECT YOUR ORGANISATION TO RADICALLY CHANGE IN THE WAY

THAT IT OPERATES OVER THE NEXT TWO YEARS?

Europe

84%

Benelux

72%

France

97%

Germany

85%

Portugal

61%

Spain

95%

UK

81%

21

THE IT DEPARTMENT

1.2:IT challenges

48%of IT decision-makers currently viewsecurity and compliance as the

biggest IT challenge

Organisations face, and expectto face, a broad variety of issueswith their IT. Although there arefluctuations, IT leaders largely expectto face the same challenges in 2020as they do today.

For example, the most often citedchallenges today are security andcompliance, selected by roughly half(48 per cent) of respondents. By2020 this figure stands at 47 per cent.

Similarly, the challenge of innovationis set to remain constant. The samepercentage (29 per cent) expectinnovation to be one of the biggest ITchallenges in 2020 as it is today.

In-house skills shortages stand asthe issue most likely to challenge ITleaders in five years time comparedwith today: 21 per cent state thatthis issue is currently one of theirbiggest IT challenges, comparedwith 25 per cent by 2020.

Fewer IT leaders anticipate thatfacilitating collaboration andsupporting the business 24/7 will bea challenge by 2020. That may be dueto the anticipated uptake in the useof IT services providers (detailedlater in this report), which could makethese tasks easier to manage.

UK IT decision-makers are, onaverage, more likely to report thatsomething is a challenge today thantheir European counterparts. They do,however, predict the sharpest dropin terms of the challenges that theywill likely face by 2020. Half state thatimproving/optimising IT is a challengetoday, but just 32 per cent expect it toremain one in 2020.

Although there are differencesfor each challenge, overall, Germanand Spanish organisations expecttheir IT challenges to decrease by2020. However, IT leaders fromFrance, Portugal and Benelux expectto face more challenges over thenext five years.

Both Portugal and Benelux predictbig increases in in-house skillsshortages and complexity. Forexample, a quarter (26 per cent) ofIT decision-makers in the Beneluxsee in-house skills shortages as oneof their biggest challenges today, afigure that is expected to climb to47 per cent by 2020.

1.2

WHAT ARE THE BIGGEST IT CHALLENGES YOUR ORGANISATION IS CURRENTLYFACING AND WHAT CHALLENGES WILL IT FACE BY 2020?

13%

21%

26%29%

33%35%36%37%38%

39%

48%

14%

25%27%

29%

35%33%

30%32%33%

41%

47%

Security and

compliance

Increasing

complexity

Supporting

the business

24/7

Enabling

collaboration

across the

organisation

Improving/

optimising IT

Ensuring IT

can support a

fast-changing

business

Mobility and

the consumer-

isation of IT

I nn ova ti on Data s to rag e

and analytics

Skills

shortages

in-house

Shadow IT

+5% -13%

-2%

-14% -17% -6%

+6%0%

+4%

+19%

+8%

2015

2020


12/28

2322

Europe Benelux France Germany Portugal Spain UK

Security and compliance 48% 44% 47% 48% 56% 34% 53%

Increasing complexity 39% 45% 36% 40% 38% 25% 48%

Supporting the business 24/7 38% 43% 37% 30% 39% 42% 41%

Enabling collaborationacross the organisation

37% 44% 40% 31% 36% 31% 39%

Improving/optimising IT 36% 28% 34% 37% 25% 29% 50%

Ensuring IT can support a

fast-changing business

35% 46% 27% 28% 42% 25% 48%

Mobility and the consumerisation of IT 33% 26% 27% 40% 22% 34% 43%

Innovation 29% 24% 27% 38% 22% 35% 26%

Data storage and analytics 26% 22% 21% 26% 31% 26% 33%

Skills shortages in-house 21% 26% 10% 18% 36% 21% 26%

Shadow IT 13% 23% 9% 6% 14% 16% 17%

THE IT DEPARTMENT

1.2:Continued

1.2a

WHAT ARE THE BIGGEST IT CHALLENGES YOUR ORGANISATION IS CURRENTLY FACING?

THE IT DEPARTMENT

1.3:How are IT budgets changing?

75%of organisations saw their budgetsincrease in the last year

At a European level, IT budgets aresteadily increasing and, looking to

the year ahead, IT leaders remainoptimistic about their budgets. Lastyear, 75 per cent of organisations sawtheir budgets increase, with over one-third having experienced an increaseof 5 per cent or more. Next yearlooks similarly positive for EuropeanIT departments, with the averageEuropean IT budget predicted toincrease by a further 4 per cent.

These increases are, however,largely weighted in favour of biggerbusinesses, with smaller businessesmore likely to face stagnant budgets.The average increase amongorganisations with more than 1000staff was just over 5 per cent roughly five times the figure for thosewith fewer than 250 employees.

The most modest increases werefound in the public sector, with anaverage increase of just 2 per cent.Around one-third (31 per cent) saw

their budgets remain the same,while 9 per cent actually saw their

budgets decrease.

The average budgets in France,Germany, Spain and the UK all grewby more than 4 per cent in 2014, withincreases of a similar order expectedin 2015, indicating that IT is generallybeing prioritised in these countries.

Organisations in Portugal andBenelux stand apart from those inother countries as the most likely tohave had, and most likely to continueto have, their IT budgets reduced:the average Portuguese budgetdecreased by 3 per cent last year,and is expected to decrease byroughly 1 per cent next year; similarly,although IT budgets in Beneluxshowed a marginal increase overalllast year, roughly one in five (18 percent) saw their budgets decrease.

1.3

HOW HAS YOUR ORGANISATIONS IT DEPARTMENT BUDGET CHANGEDTHIS YEAR AND HOW MUCH WILL IT CHANGE NEXT YEAR?

Average IT budget change this year

Average predicted change in IT budget next year


3%

4%

5% 5%

4%

5%

-3%

5%

6%

5%

4%

1% 1%

-1%


13/28

2524

THE IT DEPARTMENT

1.4:Understanding between the IT

department and the business

26%of IT departments have completeunderstanding of the IT needs of the

rest of the business

One measure of a well-alignedstrategic IT department is how well it

understands the wider business, andhow well the business understands it.High levels of mutual understandingcan be viewed as a barometer ofprogress for the business and the ITdepartment as they seek to becomebetter integrated.

Its clear from the results thatthere is more work to do. Only26 per cent of European IT decision-makers are able to claim they havecomplete understanding of the rest

of the business. Worse still, thereis perceived to be even less of an

understanding about the role ofthe IT department, with only 22 percent of respondents feeling as ifthe wider business had a completeunderstanding of their function.

Operations was viewed as thedepartment best understood byIT leaders, potentially due to itsbusiness-critical function, whileHR was deemed to be the leastunderstood, which could, to someextent, stem from the secure, oftenthird party-managed applicationsfavoured by the department.

1.4

DOES YOUR IT DEPARTMENT HAVE COMPLETE UNDERSTANDINGOF THE IT NEEDS OF THE REST OF THE BUSINESS?


Operations 30% 11% 37% 56% 4% 44% 25%

Finance 31% 30% 34% 44% 7% 52% 19%

Sales 25% 9% 39% 41% 4% 40% 18%

Marketing 24% 5% 38% 35% 0% 48% 20%

Legal/compliance 23% 2% 42% 39% 1% 41% 19%

HR 22% 7% 26% 41% 2% 34% 21%

Product 25% 0% 43% 43% 0% 42% 24%

All departments 26% 9% 37% 43% 3% 43% 21%

THE IT DEPARTMENT

From the other direction, ITdecision-makers were most likely to

suggest that finance had the bestunderstanding of the role of IT asa department.

Respondents from Germany andSpain answered that they had themost complete understanding of allthe IT needs of all the departmentsacross the business, with 43 percent of IT leaders indicating this. Ingeneral, rates of IT department andbusiness understanding correlatedwith only a few points difference,suggesting that seeking to understandthe wider business leads to a mutuallyadvanced level of understanding.

The rates of understanding of theIT department in Germany and Spain

were accordingly 37 per cent and39 per cent respectively. Oneexception was the UK, whichexpressed a much higher rate ofunderstanding of the business(21 per cent) than the business hadof the IT department (12 per cent).

1.4a

DOES THE REST OF THE BUSINESS HAVE COMPLETE UNDERSTANDINGOF THE ROLE OF YOUR IT DEPARTMENT?


Operations 21% 6% 32% 41% 0% 35% 14%

Finance 28% 17% 36% 42% 3% 59% 11%

Sales 23% 7% 42% 43% 2% 34% 10%

Marketing 21% 9% 41% 31% 2% 31% 12%


HR 21% 8% 32% 32% 1% 44% 10%

Product 22% 1% 46% 32% 0% 40% 14%

All departments 22% 7% 38% 37% 1% 39% 12%

22%of businesses have completeunderstanding of the role of

the IT department


14/28

2726

THE IT DEPARTMENT

1.5:Measuring IT department performance

As data-driven analysis increasesits bearing on business strategy,

measuring the importance of theIT department will become evermore crucial as a way of deliveringtransparency across the organisationand improving the way the ITdepartment works.

Across the European markets, amixture of different approaches to IT

performance measurement is beingused. Spain leads the way with the

use of performance-reporting tools,while the UK is the biggest user ofavailability-reporting tools such asUptime. IT leaders will have to choosethe right measurement options fortheir individual IT needs, as failingto measure the performance of ITwill prevent the adoption of a clearstrategic approach to IT.

70%

60%

50%

40%

30%

20%

10%

0%

70%

60%

50%

40%

30%

20%

10%

0%

User feedback (e.g.

internal/externalinterviews)

Performance-reporting

tools (e.g. APM tools)

Availability-reporting

tools (e.g. Uptime)

Surveys

(e.g. Net Promoter)

We do not measure the

performance of our IT

Europe

Benelux

France

Germany

Portugal

Spain

UK

Europe

Benelux

France

Germany

Portugal

Spain

UK

1.5

HOW DOES YOUR IT DEPARTMENT MEASURE THE PERFORMANCE OF IT IN YOUR ORGANISATION?

21%of European businesses do notmeasure the performance of their

IT department

THE IT DEPARTMENT

1.6:The role of the IT department, 2015 and 2020

34%of businesses expect big dataanalytics to be a core function of

the IT department by 2020, making

it the second most importantfunction after security

The views of European IT leaderssuggest the role of the IT department

differs widely from organisation toorganisation though data securitywas consistently viewed as the corefunction of the IT department, whichshould not be a surprise given theproliferation of threats facingbusiness data.

Worryingly for the strategicpositioning of IT was the commonlyregarded view of the IT departmentas a cost centre, charged with drivingdown costs, rather than as a businessenabler. Twice as many respondentsviewed cost reduction as a corefunction (34 per cent) as those thatselected enabling revenue generationin the business (17 per cent),improving competitiveness (16 percent) and improving customer loyalty(14 per cent).

Many of the core functions of ITdepartments are expected to remainthe same in 2020. There are, however,a few notable exceptions, which likelyreflect the predicted increase in theuse of IT services providers (detailedlater in this report).

One of the most significant changesrelates to big data analytics, demandfor which is set to increase byroughly 30 per cent over the nextfive years. Over one-third (34 percent) of businesses expect big dataanalytics to be a core function of theIT department by 2020, making it thesecond most sought-after function ofthe IT department, behind security.

While security is currently regardedas a core function for IT departments

across Europe, not all focus on itto the same extent. For example, ITleaders in the UK (66 per cent) andGermany (63 per cent) were twiceas likely to identify data security as acore function than those from Spain(32 per cent).

French IT departments appear to beadopting more strategically importantroles than those in the other countrieslooked at. French respondentswere the most likely to state thatenabling business agility and inspiringnew business initiatives with newtechnologies were core functions,and the least likely to state thattechnological support of employeeswas a core function. These figurespoint towards a more progressivealignment of the IT department as avehicle for innovation and the drivingforce behind business strategy.

Perhaps reflecting the stuntedgrowth in their IT budgets, thecountries most likely to report thatcost reduction was a core functioncame out as Portugal (52 per cent)and Benelux (40 per cent).


15/28

2928

Benelux France Germany Portugal Spain UK 2015 2020

Data security 49% 53% 63% 57% 32% 66% 56% 50%

Technological support of employees 37% 24% 32% 42% 30% 61% 38% 32%

Cost reduction 40% 32% 31% 52% 29% 30% 34% 31%

Acquiring new technologies to supportbusiness initiatives

50% 27% 20% 36% 17% 42% 31% 26%

Enabling business agility 24% 35% 31% 19% 22% 30% 29% 31%

Big data analytics 32% 21% 29% 30% 25% 25% 26% 34%

Inspiring business initiatives withacquisition of new technologies

13% 30% 24% 14% 21% 28% 23% 25%

Contract management 22% 30% 22% 19% 34% 16% 23% 21%

Accelerating introduction of newproducts/services

12% 20% 27% 12% 16% 17% 18% 18%

Enabling revenue generation for thewider business

14% 16% 18% 14% 20% 20% 17% 19%

Making us more competitive 14% 15% 17% 11% 17% 18% 16% 18%

Increasing customer loyalty 12% 21% 17% 10% 10% 8% 14% 13%

Procurement 12% 9% 12% 14% 17% 16% 13% 11%

Setting frameworks for other departmentsto make purchasing decisions

13% 11% 18% 12% 17% 8% 13% 12%

Improving supply-chain efficiency 7% 9% 14% 14% 8% 11% 11% 11%

Having a distinct IT department 19% 3% 2% 37% 1% 14% 10% 8%

Expanding into new geographical markets 13% 10% 7% 7% 12% 5% 8% 13%

Executing new business models 14% 4% 7% 6% 4% 7% 6% 12%

1.6

WHAT DO YOU CONSIDER THE CORE FUNCTIONS

OF THE IT DEPARTMENT TO BE?

THE IT DEPARTMENT

1.6:Continued

Europe

THE IT DEPARTMENT

1.7:Skills in the IT department, 2015 and 2020

66%of IT leaders predict data analysisskills will be needed by the ITdepartment in 2020

Mapping to the perceived corefunctions of the IT department,

the most required skills for ITprofessionals are technical expertise(84 per cent), followed by projectmanagement (83 per cent), andsupport desk and security andcompliance (each 81 per cent). Allfour of these skills point towardsthe average IT department primarilyseeing itself as a reactive andadministrative department. However,by 2020, responses suggest theformation of an increasingly analyticalIT department.

All but two of the skills currentlyrequired by IT departments today areless likely to be required by 2020.Data analysis and business analysisskills are predicted to increase indesirability, with 66 per cent and

65 per cent respectively, predictingthey will be required by 2020. Thissupports the view that data analyticswill become a core function of theIT department in the future.

The biggest difference in the numberof IT leaders predicting that skills

would no longer be required in 2020was the support desk, with 21 percent fewer respondents statingthat this skill would be required.This supports the idea that the ITdepartment will do less reactive workas more third parties manage moreof the day-to-day running of IT estate.Another large decrease, which alsosupports this theory, is the reductionof those believing technical expertisewill be required in 2020.

While it is still viewed as themost important skill for an ITprofessional in 2020, security andcompliance also sees a reducednumber viewing it as a required skillthen, further supporting the argumentthat IT departments are movingtowards a more strategic, innovativeposition within an organisation.

1.7

WHAT SKILLS ARE CURRENTLY REQUIRED BY THE ITDEPARTMENT AND WHAT SKILLS WILL BE REQUIRED BY 2020?

75%

66%

83%

72%

81%

64% 62%66%

62%65%

81%74%

84%

73%69%

63%

Currently required

Required in 2020

-12%

+6%

Applicationdevelopment

Projectmanagement

Supportdesk

Dat a a na ly sis Bus inessanalysis

Security andcompliance

Technicalexpertise

Vendormanagement

+5%

-13% -21% -9% -13%

-9%


16/28

30

Innovation2.1: Time management - 32

2.2: Formalising innovation - 33

2.3: Driving innovation - 34

2.4: Digital leadership - 35

31


17/28

3332

Europe

14%

17%

13%13%

12%

11%

9%7%3%

Germany

17%

15%

12%

12%

10%

9%

12%8%4%

France

17%

16%

11%

9%

12%

9%

12%8%

5%

Benelux18%

10%

15%14%

16%

16%

5%7%

Portugal

17%

6%

16%

14%

19%

19%

2%6%

Spain

16%

15%

11%11%

11%

10%

12%

9%

6%

UK

16%

17%

14%

17%

10%

10%

7%5%3%

INNOVATION

2.1:Time management

9%of European IT department timeis spent innovating

Organisations that dont innovatestagnate. With IT touching every part

of the business, setting aside time tothink and implement new approachesthat improve the businesss abilityto deliver is crucial. However, whileorganisations may be implementinginnovation programmes (detailed laterin this report), IT departments do notappear to be focusing their resourceson innovation on a day-to-day basis.The average European IT department

spends a good deal more timeresponding to business issues than

driving the business forward.General maintenance, respondingto user problems, changes andunplanned work equates to 49 percent of their time, while just 9 per centof time is spent on innovation. Thisholds true for all countries, althoughFrench, German and Spanish ITdepartments appear to devote slightlymore time to innovation.

2.1

HOW MUCH TIME DOES THE IT DEPARTMENT SPEND ON THE FOLLOWING?

Innovation

Business projects


General maintenance


Changes

Unplanned work

Talking to vendors

Other tasks

INNOVATION

2.2:Formalising innovation

36%of organisations across theEuropean nations surveyed havean innovation programme

Formalising innovation into strategicprogrammes ensures that it becomes

an important part of the way anorganisation operates. Of theorganisations across the Europeannations surveyed, 36 per cent havean innovation programme, anda further 37 per cent state thatthey have plans to implement one,suggesting that the majority areconscious of the need to implementformal processes to drive innovation.

There is a direct correlation betweenthe size of business and the likelihoodthat they have already implemented, orhave plans to implement, an innovationprogramme: in organisations withmore than 1000 staff, 53 percent already have an innovationprogramme, and a further 33 percent have plans to develop one; for

organisations with fewer than 250employees, these figures were 21 percent and 39 per cent respectively.

Organisations from the media,leisure and entertainment industries

are most likely to have innovationprogrammes, followed by those in theprofessional services and financialservices sectors.

Spanish and French organisationsappear to be most advanced inthe move towards formalisedinnovation models. Among therespondents, 93 per cent of Spanishand 89 per cent of French statethat their organisations have eitherimplemented or have plans toimplement an innovation programme.

The Portuguese were the least likelyto have an innovation programme, with8 per cent stating that one is in place,and over half stating that they had noplans to implement one. Slightly less

severely, though still far short of theaverage, 38 per cent of respondentsfrom the UK stated that they have noplans for an innovation programme.

2.2

DOES YOUR ORGANISATION HAVEAN INNOVATION PROGRAMME?

Yes

No, but we are planning to implement one

No and we are not planning on implementing one

Europe

Benelux

France

Germany

Portugal

Spain

UK

36% 37% 27%

25% 45% 30%

11%

26%

57%

7%

47%

38%

33%

33%

29%34%

60%

35%

41%

43%

8%


18/28

3534

INNOVATION

2.3:Driving innovation

45%of respondents stated that IT wasthe department most likely to driveinnovation

For those organisations with, orplanning to implement, an innovation

programme, the IT department playsa pivotal role in driving innovation inEuropean businesses. Almost half(45 per cent) of respondents statedthat IT was the department mostlikely to drive innovation, and it rankedin the top three for 78 per cent ofrespondents. Given the relatively lowamount of time dedicated to innovationamong all European IT departments, itwould seem prudent for organisationsto encourage IT departments toinnovate further to achieve more.

Innovation appears to be driven inconjunction with a number of otherstakeholders within the organisation:50 per cent stated that marketingplayed a significant role, withoperations the next most likely to have

a hand in driving innovation.

For organisations of all sizes, the ITdepartment was viewed as the mostlikely to drive innovation, though thereare clear differences when looking atthe other stakeholders involved. Forexample, the product team is threetimes more likely to play the lead role

in driving innovation in organisationswith more than 1000 employees than

in those in the 100250 bracket.

Although the IT department wasfound to play a key role in drivinginnovation in all countries surveyed,its influence from country to countrydiffered considerably. For example,55 per cent of British and 55 per centof German IT decision-makers statedthat the IT department was the mostlikely to drive innovation, comparedwith just 31 per cent of French and37 per cent of Portuguese.

Looking at the three departmentsmost likely to drive innovation inFrance, IT, marketing and operationswere found to have roughly equalinfluence, pointing to a collaborativeapproach to innovation within

French organisations.

Interestingly, the marketingdepartment was found to play agreater role in driving innovation inPortuguese organisations than theIT department (42 per cent and37 per cent respectively).

2.3

WHICH DEPARTMENT IN YOURORGANISATION IS MOST LIKELYTO DRIVE INNOVATION?

IT

Operations

Marketing

Product

Finance

Sales

Legal/

compliance

HR

45%

14%

12%

10%

9%

7%

2%

1%


IT 78% 90% 51% 87% 93% 83% 87%

Marketing 50% 83% 50% 39% 79% 51% 33%

Operations 47% 33% 51% 47% 44% 37% 58%

Product 38% 4% 41% 48% 5% 41% 50%

Finance 35% 23% 39% 32% 42% 43% 32%

Sales 34% 47% 48% 30% 21% 20% 29%


HR 7% 17% 5% 4% 9% 6% 6%

2.3a

WHICH ARE THE TOP THREE DEPARTMENTS IN YOUR ORGANISATION MOST LIKELY TO DRIVE INNOVATION?

Europe

INNOVATION

2.4:Digital leadership

11%of European businesses lacka digital strategy

In a similar way to the formalisedinnovation programme, a digital

strategy seeks to bring various partsof the business together, notablythe marketing and IT functions, tooptimise the way IT and contentinteract. More organisations are likelyto have a digital strategy, thoughit does not touch as much of thebusiness as an innovation programme.Like the innovation programme, it canbe driven from many different angles.

The person most commonly heldaccountable for an organisationsdigital strategy is the Chief InformationOfficer, with this being the norm in31 per cent of European businesses,followed closely by the ChiefTechnology Officer (29 per cent).The Chief Executive Officer came inat a distant third.

Notably, 11 per cent of respondentsdo not have a digital strategy.

This is most likely to be the casein organisations with 100250employees, where a quarter(23 per cent) do not have a digitalstrategy. Somewhat more surprisingly,5 per cent of organisations with morethan 500 employees similarly lack adigital strategy.

Organisations from the not-for-profitand professional services sectorswere more likely to have a ChiefTechnology Officer in charge of theirdigital strategy as opposed to a ChiefInformation Officer.

2.4

ORGANISATIONS WITH A DIGITAL STRATEGY

89%Europe

78%Benelux

97%France

96%Germany

74%Portugal

98%Spain

85%UK

2.4a

WHICH PERSON IS RESPONSIBLE FOR YOUR ORGANISATION'S DIGITAL STRATEGY?

31%

29%

15%

6%

6%

11%

23%

18%

4%

13%

20%

22%

25%

42%

24%

7%

3%

53%

21%

17%

5%

2%

4%

22%

9%

9%

8%

16%

36%

20%

47%

23%

5%

3%

2%

31%

31%

10%

2%

5%

15%

Chief Information Officer

Chief Technology Officer

Chief Executive Officer

Chief Digital Officer

Chief Marketing Officer

My organisation does not

have a digital strategy



19/28

36

Applications3.1: Application development - 38

3.2: Application development, 2020 - 39

3.3: The future of DevOps - 41

3.4: Application hosting and management - 42

3.5: Application delivery - 43

37


20/28

3938

APPLICATIONS

3.1:Application development

47%of organisations developdatabases in-house the mostcommonly internally developed

application type

Application development in Europeis more likely to be carried out in

conjunction with an external partnerthan developed internally. More thanhalf of the IT leaders questionedindicated that their applicationswere developed externally or with acombination of external providers andinternal development. The applicationmost likely to be developed internallyis the database, which may be due toconcerns around security.

Smaller organisations (100250)are more likely to develop their ownapplications than larger ones. Forexample, over half (52 per cent)of these organisations developtheir extranets/portals themselves,compared with just 31 per cent ofthose at the top end of the sample.

Organisations in the not-for-profitsector appear to undertake the mostin-house application development,with 63 per cent developing their own

ecommerce platforms and 60 per centtheir finance and HR tools. By contrast,

firms in the professional servicesappear to be the most comfortablewith outsourcing their applicationdevelopment, typically outsourcingmore of their development to externalproviders than other sectors.

The Benelux region and Portugalappear to be significantly morecomfortable with outsourcing at leastpart of their application developmentto external partners than the othercountries included in the research.Those that undertake the least werefound to be Germany and Spain.

There are huge variations in thedevelopment of corporate websitesfrom country to country. For example,in Benelux, 17 per cent of corporate

websites are developed solely in-house, compared with 62 per cent inGermany and 57 per cent in Spain.

Developed in te rnal ly Developed bo thinternally and by anexternal partner

Developed by anexternal partner

Ecommerce 40% 20% 39%

Corporate website 43% 25% 33%

Mobile applications 37% 27% 37%

Extranets/portals 37% 28% 35%

Databases 47% 29% 24%

Finance/ERP/HR 39% 29% 32%

CRM 37% 25% 38%

Collaboration and communication 34% 30% 36%

Authentication and security 39% 23% 37%

Industry-specific applications 37% 30% 33%

3.1

ARE THE APPLICATIONS YOUR ORGANISATION USES DEVELOPED INTERNA LLY OR BY AN EXTERNAL PROVIDER?

APPLICATIONS

3.2:Application development, 2020

30%fewer applications are predicted tobe developed internally by 2020

European IT decision-makers appearto be split about the future of in-house

application development. On average,24 per cent believe that they willundertake more in-house applicationdevelopment by 2020, while 22 percent expect to undertake less.

On average it is predicted thatorganisations across Europewill develop 30 per cent fewerapplications internally by 2020.However, when we examine eachindividual application, a mixedpicture emerges.

For example, the internal developmentof mobile applications is likelyto remain static at 37 per cent,though the internal development ofecommerce (23 per cent), CRM(21 per cent) and industry-specific

applications (18 per cent) is set todecline by roughly half.

The biggest change in developmentpractices will likely be felt in

organisations with fewer than 500employees, with ever more of theirapplication development set tobe outsourced. Although thesebusinesses currently undertake themost internal application development,this shift will bring their developmentpractices in line with the rest of thebusiness community.

The figures suggest that the greatestgrowth in in-house applicationdevelopment will come out of the UKand Germany: 37 per cent of UK-based organisations and 35 per centof those based in Germany expectto engage in more of this activity.These figures contrast sharply withthe projections from Portugal andBenelux, with 51 per cent and 70 per

cent respectively predicting that theywill reduce their amount of in-houseapplication development.

3.2

WILL THERE BE MORE IN-HOUSE APPLICATION DEVELOPMENT IN YOUR ORGANISATION BY 2020?

Yes, there will be more

There will be the

same amount

No, there will be less

Don't know

Europe Germany

24%

FranceBenelux

Portugal Spain UK

44%

22%

10%

1%

12%

70%

17%

5%

17%

72%

7% 11%

35%

45%

10%

14%

18%

51%

17%

3%

25%

66%

6% 10%

37%

32%

22%


21/28

4140 3.2aWHICH OF THE FOLLOWING

APPLICATIONS ARELIKELY TO BE DEVELOPEDINTERNALLY IN YOURORGANISATION BY 2020?

Corporate website

Mobile applications

Databases

Extranets/portals


Finance/ERP/HR

Ecommerce

Authentication and security

CRM


43%

40%

37%

37%

47%

33%

37%

28%

34%

26%

39%

24%

40%

23%

39%

23%

37%

21%

37%

18%

APPLICATIONS

3.2:Continued

Developed internally - 2015

Developed internally - 20200%

-7%

-30%

-24%

-24%

-38%

-43%

-41%

-43%

-51%

APPLICATIONS

3.3:The future of DevOps

26%of organisations currently have aDevOps approach in place

With application development andmanagement being approached

in an increasingly collaborativeway, DevOps looks set to be a keyand ongoing focus for Europeanbusinesses. Although, on average,just a quarter (26 per cent) of theorganisations surveyed had alreadydeveloped a DevOps approach, afurther 42 per cent expect to doso in future.

Broken down by size, however,it would appear that the largestorganisations in the sample aresignificantly further advanced in thisspace and have plans to develop theirDevOps strategies further still. Today,48 per cent of organisations with morethan 1000 staff have developed aDevOps approach, contrasting sharplywith smaller organisations, where this

figure stands at just 15 per cent.

The public sector appears to havethe least amount of enthusiasm for,or experience with, DevOps. Fully39 per cent have no plans to go downthis route, 14 points higher thanthe average.

Although the percentage of UKorganisations that have implemented a

DevOps approach is roughly on apar with those in France and Germany(30 per cent, 32 per cent and 24 percent respectively), it looks likely tobe left behind over the coming twoyears. By 2017, 41 per cent of UKbusinesses expect to have developeda DevOps approach, significantlylower than France (75 per cent) andGermany (62 per cent).

However, Spanish IT decision-makers appear to be most optimisticabout the role of DevOps withintheir organisations. Just 7 per centhave no plans at all to develop aDevOps approach, and within twoyears, 86 per cent expect to havedeveloped one.

At the opposite end of the spectrum,only one in 12 Portugueseorganisations has rolled out a DevOpsapproach roughly one-third of theEuropean average. Although somegrowth is expected, over half have noplans to go down that route.


Yes 26% 24% 32% 24% 8% 35% 30%

No, but we are planning to in thenext two years

29% 14% 43% 38% 10% 51% 11%

No, but we are planning to beyondthe next two years

13% 23% 7% 11% 20% 4% 19%

No, and we are not planning to 25% 28% 14% 27% 51% 7% 31%

3.3

HAVE YOU DEVELOPED A DEVOPS APPROACH AT YOUR ORGANISATION?

DevOps is a methodology for code

deployment that uses new toolingand working practices to reduce

traditional handoffs between

development and operational

teams. It enables teams to

work closer together, resultingin greater business agility and

increased productivity.Neil Thomas, Product Director,Claranet UK


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APPLICATIONS

3.4:Application hosting and management

55%of databases are

hosted internally

Although a significant number ofIT departments still manage their

applications internally, the figures pointto a collaborative approach beingadopted across Europe wherebybusinesses work with externalparties to manage the hosting andadministration of their applications:38 per cent of mobile applications,36 per cent of extranets/portals and35 per cent of collaboration andcommunication applications aremanaged in this way.

Databases, authentication andfinancial applications stand as theapplications most likely to be managedinternally in the countries surveyed,kept in-house by more than half of ITdecision-makers, most likely out ofsecurity concerns.

It appears that organisations withmore than 500 employees are

consistently more likely to outsource themanagement of their application estatethan those with fewer. For example,65 per cent of those in the sub-500category manage their finance, HRand ERP applications themselves,compared with 45 per cent of theirlarger counterparts.

The picture across Europe is varied,but it would appear that organisationsin Germany and the UK tend to bemore reticent about outsourcing thehosting and administration of theirapplications than other WesternEuropean nations. For example, just35 per cent of British and 38 per centof German organisations outsourcethe management of their databases,compared with over half of French.

36% 32%

29%45% 26%

38%37% 25%

36%39% 24%

28%55% 17%

27%54% 20%

25%46% 29%

35%41% 25%

26%54% 20%

31%45% 24%

33%

3.4

HOW DOES YOUR ORGANISATION MANAGE THE HOSTING ANDADMINISTRATION OF THE FOLLOWING APPLICATIONS?

Ecommerce

Corporate website

Mobile applications

Extranets/portals

Databases

Finance/ERP/HR

CRM


Authentication a nd security


Managed internally

Managed both internally and by an external partner

Managed by an external partner

In Benelux, more outsourcing seemsto occur: around nine in 10 IT leadersstated that their corporate websiteis managed externally, and as manyas 95 per cent of organisations usean external partner to some extent tomanage their mobile applications.

APPLICATIONS

3.5:Application delivery

Given a choice between availability,performance and security, European

businesses prize the availability oftheir ecommerce applications aboveall others, selected by 46 per cent ofrespondents. Considering the criticalityof these applications to businesses,this comes as little surprise.

Organisations felt that the applicationsthat required the best performancewere industry-specific applicationsand CRM tools, chosen by 40 percent and 39 per cent respectively.Security, meanwhile, came out asthe most important consideration forauthentication (49 per cent),financial (40 per cent) and mobile(39 per cent) applications.

Split by size of organisation, thoseat the lower end of the scale appear

to be marginally more concernedabout security than thoseorganisations with more than1000 employees, which tend toprioritise application performance.

On balance, German organisationswould appear to be marginally moresecurity-conscious than other countriesin the survey: 40 per cent statedthat the most important factor in thedelivery of collaboration applicationswas security, compared with 28 percent in France and just 20 per centin the UK.

IT decision-makers in Portugal favoursecurity and performance aboveavailability in all but a handful ofapplications. Just 23 per cent stated

that availability was the most importantfactor for CRM tools. This is 10 pointslower than the European average and16 points lower than Spain.

35%

34%

31%

36%

31%

39%

36%

28%

40%

28%46% 26%

39% 25%

27% 39%

35% 34%

26% 38%

29% 40%

33% 28%

34% 30%

49%

32% 28%

Ecommerce

Corporate website

Mobile applications

Extranets/portals

Databases

Finance/ERP/HR

CRM


Authentication a ndsecurity


3.5

WHAT IS THE MOST IMPORTANT FACTOR IN HOWTHE FOLLOWING APPLICATION TYPES ARE DELIVERED?

Meanwhile, the Benelux nationsappear to prioritise the performance

of their application estate over theother available options. For example,whereas one might reasonably expectsecurity to be the most important factorfor financial applications, performancecame out as the most important,chosen by 44 per cent, 15 pointshigher than the European average.

Availability

Performance

Security

23%


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44

IT services providers4.1: IT services provider usage, 2015 and 2020 - 46

4.2: Services taken from IT services providers - 47

4.3: Why use an IT services provider? - 48

4.4: What factors were important in the choice of

your IT services provider(s)? - 49

4.5: The ideal IT services provider vs the reality - 51

4.6: Where do IT services providers help most? - 53

45


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IT SERVICES PROVIDERS

4.1:IT services provider usage, 2015 and 2020

86%of European businesses currently

use an IT services provider to

manage some of their IT

Among European businesses,86 per cent currently use an IT services

provider to manage some of their ITand the average European businesshas 13 per cent of its IT estatemanaged in this way, demonstratingthat the vast majority are comfortablewith outsourcing at least part of theIT estate. However, penetration varieswidely between countries, size oforganisation and sectors.

Respondents predict that by 2020 theaverage European business will have18 per cent of its IT estate managedby third parties, while 89 per cent willuse an IT services provider to do this.Also predicted is a three-point increasein organisations using third partiesto manage more than half of t heirinfrastructure.

From a national perspective, the UKleads the way in the use of third-partyproviders, with an average 15 percent of the estate managed by ITservices providers, although Spanish

organisations appear to be the mostadvanced in terms of penetration. In

Spain, 82 per cent outsource morethan 10 per cent of their IT estates considerably more than in Germanyand Portugal. German organisationsare the most likely to manage all of theirIT estate in-house, with 28 per cent ofrespondents answering this way. Thiscan possibly be attributed to tighterGerman data laws.

It is anticipated that the Benelux regionwill experience a huge shift towardsusing third-party providers to managethe IT estate. Respondents suggestthat, on average, 31 per cent of theirtotal IT estates will be outsourced, upfrom 14 per cent today.

French and Spanish IT decision-makershave more modest predictions about

the use of third parties to manage theirIT estates, each expecting an increaseof around 10 per cent from the currentlevel of usage.

35%

30%

25%

20%

15%

10%

5%


35%

30%

25%

20%

15%

10%

5%

4.1

WHAT PERCENTAGE OF YOUR IT ES TATE IS CURRENTLYMANAGED BY THIRD PARTIES AND WHAT PERCENTAGEWILL BE MANAGED BY THIRD PARTIES BY 2020?

Average percentage of IT estate currently

managed by third parties

Average percentage of IT estate estimated

to be managed by third parties by 2020

German businesses continue toanticipate managing much of theirinfrastructure in-house. Although thehard core of organisations not currentlyusing any third parties is set to remainroughly the same, those organisationsthat do outsource expect to move moreof their IT estate across to third parties.These statistics suggest that whiledata laws are still predicted to slow theprogress of third-party IT management,there is a pragmatic move towards thisapproach occurring.


4.2:Services taken from IT services providers

The average European businessprovisions three services from IT

services providers, with the mostpopular being unified communications(33 per cent), business continuityservices (31 per cent) and telephony(30 per cent). The services used are,however, wide ranging and, with noclear majority held by any individualapplication, we can determine thatthe use of IT services providers isdependent upon the particular needsof each organisation.

IT services providers can anticipateorganisations requesting furtherservices from them within the next fiveyears, with more of the IT estate setto be provisioned by third parties. In2020, IT decision-makers anticipatethe average number of servicestheir organisations provision from IT

services providers will increase fromthree to four. They are most likely to

provision unified communications(37 per cent), infrastructure hosting(37 per cent), and business continuityand disaster recovery services(37 per cent). The biggest increasesare expected to be in monitoringand reporting, up by 60 per centfrom today, and systems integrationservices, up by 40 per cent.

By 2020, the UK and Benelux lookset to take the most services fromIT services providers, with anaverage of five predicted, up from fourand three respectively. Elsewhere,Portuguese organisations expect totake four services on average, upfrom three currently.

3services from IT services providers

are taken on average

2015 2020

Unified communications 33% 37%

Business continuity and disaster recovery 31% 37%

Telephony 30% 33%

Infrastructure hosting 29% 37%

Application management 28% 34%

Storage 26% 31%

Security 26% 31%

Backup 24% 33%Consultancy/professional services 18% 23%

Systems integration 16% 22%

Monitoring and reporting 16% 25%

My organisation does not/will not use IT services providers 14% 11%

Average number of services provisioned f rom IT services providers per organisat ion 3 4

4.2

WHICH OF THE FOLLOWING SERVICES DOES YOUR ORGANISATION CURRENTLYPROVISION FROM IT SERVICES PROVIDERS AND WHICH WILL IT PROVISION 2020?


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4.3:Why use an IT services provider?

The primary motives for using ITservices providers emerged as

the need to improve data delivery,

improve data analysis and to

increase efficiency

Organisations that use IT servicesproviders do so for a wide range of

reasons, from a shortage of in-houseskills to the need to reallocate internalresources. However, the primarymotives for using IT services providersemerged as the need to improve datadelivery, improve data analysis and toincrease efficiency. Interestingly, theconvenience of the cost model offeredby the IT services provider ranked asthe least important for respondents,chosen by just 11 per cent.

IT leaders from Portugal and Beneluxwere the most likely to suggest thata shortage of internal IT resourcescontributed to their usage of IT ser vicesproviders, potentially correlating withtheir available budgets. With permanentstaff and infrastructure seen asa greater and more long-term

investment, working with an ITservices provider and a operationalexpenditure model would allow forgreater business flexibility.

The largest organisations in thesample (10012000 employees)

appear to be keener to driveinnovation with the use of IT servicesproviders than smaller ones (100250employees): 35 per cent of the formerstated this was a reason to use anIT services provider, compared withjust 14 per cent of the latter.

The variety of motivations for choosingan IT services provider is furthershown in the fact that the most oftenreported reason also varies fromcountry to country: respondents fromorganisations in Benelux are mostlikely to report gaining access to newtechnology and improving data delivery;those in the UK are most likely toreport increasing efficiency, and thosein Portugal are most likely to reportimproving data analysis.

Benelux France Germany Portugal Spain UK

To gain access to new technology, tools and best practices 50% 16% 28% 33% 26% 34%

To improve data delivery 50% 43% 34% 44% 39% 22%

A shortage of the required skills 46% 30% 27% 40% 29% 31%

A shortage of internal IT resources 44% 17% 22% 41% 16% 32%

To improve data analysis 44% 39% 32% 48% 43% 18%

To increase efficiency 41% 25% 41% 26% 21% 47%

Cost savings 30% 19% 27% 42% 13% 33%

To allow internal resource to work on strategic initiatives 28% 26% 21% 21% 24% 34%

The convenience of the cost model offeredby the IT services provider

27% 1% 11% 16% 4% 11%

To drive innovation 24% 33% 34% 15% 28% 20%

To improve the core business 23% 37% 35% 22% 33% 31%

To gain access to advice and expertise 23% 15% 30% 33% 22% 27%

4.3

WHICH OF THE FOLLOWING WERE REASONS YOUR ORGANISATIONCHOSE TO USE AN IT SERVICES PROVIDER?


4.4:What factors were important in the choice

of your IT services provider(s)?

Application expertise stands as themost important factor in helping

decision-makers choose their ITservices providers: 76 per cent ofthose surveyed felt that this was eitherimportant or very important. The nextmost important attributes came outas the levels of support offered bythe provider, with 72 per cent statingthis was important or very important,security expertise (72 per cent) andprice (71 per cent). These factorsbroadly reflect the challenges facing ITdecision-makers today, suggesting thatorganisations are actively looking to ITservices providers for support.

At the other end of the scale, just57 per cent felt that breadth ofportfolio was important or veryimportant, though this will likelychange as IT leaders start to extend

the management of more of theirapplications to IT services providers.

Organisations with more than 1000employees are significantly more likely

to expect more from their IT servicesproviders than those with fewer than250. There may be any number ofreasons for this, though this mayowe something to experience with ITservices providers and customer clout.

UK IT decision-makers value supportover all other factors, by a largemargin: 86 per cent felt that supportwas important or very important. Thenext most important attributes weresecurity expertise at 75 per cent, andclear SLAs at 73 per cent.

German organisations appear to be themost prescriptive about their preferredIT services provider attributes, andare more likely than any other countryto state that something is important

or very important. Security expertisetopped the list of wants, with

76%of IT decision-makers ranked

application expertise as an

important reason for choosing

an IT services provider

90 per cent. Less of a priority, thoughstill the highest of the countriessurveyed, was local in-country serviceprovision (81 per cent).

No single characteristic holds aclear majority in France, suggestingthat French IT decision-makers holda range of criteria that are equallyimportant. Clear SLAs, support andapplication expertise came out as themost important factors in the decision-

making process, followed closely byflexibility and price.

4.4

WHAT WAS THE MOST IMPORTANT FACTOR IN THE CHOICE OF YOUR IT SERVICES PROVIDER(S)?

86%Support

90%Securityexpertise

73%Breadth ofportfolio

69%Applicationexpertise

85%Applicationexpertise

Benelux

France Germany

PortugalSpain

UK 73%Clear SLAs


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Benelux France Germany Portugal Spain UK

Trusted

claranet research report 2015

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